Róisín Shortall (Dublin North West, Labour)

The Labour Party strongly opposes the sale of Aer Lingus and supports the sentiments of tonight's motion. In recent weeks and months, media attention on the Government's dithering on the second terminal at Dublin Airport has completely overshadowed the decision to proceed with one of the biggest privatisations in this country's history. The reason is obvious. The political dogfight in Cabinet over the second terminal, so loved by the media, did not just happen with respect to selling off Aer Lingus. It is not just that the Fianna Fáil backbenchers stood idly by while the Progressive Democrats got their way, they actually agreed with them. Privatisation really is the new religion.

The media blindfold on Aer Lingus privatisation has meant little or no public scrutiny of the implications for all of us of the sale of the national airline. The Government's inaction on the second terminal has been repeated in its attitude to Aer Lingus. Since 2001, it has offered no direction to the company. It has been a decidedly disinterested shareholder and has failed to take key strategic decisions about the company. The only decision it did make was that it would never again invest in the airline. The Government's case for privatisation is based on the airline's potential future capital needs, on EU developments, on a distorted interpretation of EU law and in particular on the yellow pack ideology that runs through the Cabinet.

No one can say for certain what Aer Lingus's future capital needs will be and we have never had an adequate explanation from Government on this point. Various figures up to €1 billion have been suggested for expanding the long-haul fleet. However, such an expansion is only feasible if a satisfactory conclusion is reached on US-EU negotiations on the open skies policy, a process like our own aviation matters that is taking much longer than it should. An open skies agreement could potentially open up new routes for Aer Lingus but the outcome of those negotiations is, as yet, difficult to predict. How can we base such a major privatisation on the outcome of negotiations that are not yet concluded? How can a Government that took three years to reach a fudge agreement on a second terminal have such supreme confidence in EU and US negotiators to reach a satisfactory conclusion to a much larger and more complex issue?

Even if new routes are opened, as we all hope, Aer Lingus has a number of options in terms of expanding its fleet. It would have no difficulty in borrowing. It could enter into long-term leasing arrangements, which are standard practice for all airlines, or the State as shareholder could invest in the company's expansion. It can still do so. Why has the Government ruled out these options and put the long-term strategic interests of the country at risk? The reason is clearly ideological.

Nothing displayed the Government's prejudiced attitude to Aer Lingus more clearly than the Goldman Sachs report. Last September it was announced that Goldman Sachs had been selected to provide advice and assistance to the Department of Transport on the future of Aer Lingus. At that time, it was stated that the advice would "primarily relate to the implications of maintaining the current ownership arrangement, strategic and public policy issues, as well as transaction issues." However, that assurance turned out to be a complete lie. The Goldman Sachs report makes it quite clear that the authors were asked to advise on the future of Aer Lingus subject to one overriding stipulation:

The current policy of the State is to provide no further equity funding to the Company. The State will not provide further capital to the Company either to fund expansion or in the event of a financial crisis.

In other words, the most obvious and basic choice available to any commercial operation — to secure investment for its expansion from the existing shareholders — was ruled out by the Government in advance of the advice being sought, which was an entirely ideologically motivated decision. This has nothing to do with European law. The European Commission and, more importantly, the European Court have made clear that nothing in EU law prevents a government from investing on a rational and arms-length basis in any of its commercial enterprises.

The implications of this privatisation for Ireland are enormous and affect the key strategic interests of our country. As an island dependent on tourism and inward investment, we rely heavily on air travel. The high number of direct flights to and from various destinations, which Aer Lingus operates, has been critical to our tourism industry. These destinations have proved very attractive to Irish travellers for holidays and short breaks abroad. Central to our ease of travel also is Aer Lingus's access to more than 30 landing slots at Heathrow Airport, the fourth largest share of any airline. These slots greatly facilitate onward travel to other destinations as well as bringing more tourists here. In response to a parliamentary question a few weeks ago the Minister admitted that these slots were vital to the company and that he could not be certain that EU law would assist him in retaining control and yet he still reached a decision to sell off Aer Lingus.

Privatisation puts such services and assets at long-term risk and we should not just abandon them at the ideological whim of the coalition partners. Aer Lingus has demonstrated that it is possible for a State-owned enterprise to operate successfully in a cutthroat commercial environment. Its future successful operation requires additional capital. The private sector is willing to invest because it sees the potential for profit. However, the Government rejects a sane and rational investment opportunity that would be embraced by any commercially minded business because of an obsession with private profit and a conviction that commerce is good but only in private hands.

Claims by Government sources in recent days that despite its plan to sell off a majority shareholding in Aer Lingus, it would ensure the preservation of the company's name and crucial strategic assets, such as its landing slots at Heathrow, are absolute fantasy. The bottom line is that once a majority shareholding in the company is ceded to private interests the majority say in the decision-making process is handed over also. This is a basic law of business. Even if the Government were to extract some initial commitments from those who purchased the majority shareholding, nothing could be done to prevent those shares being sold on to others who would not be bound by such commitments.

Fianna Fáil backbenchers appear to have clearly been sold a pup and have foolishly accepted assurances from Cabinet members that some sort of golden share could be retained by the Government in order to protect the national interest. The European Court of Justice has made it quite clear that the notion of holding golden shares is unacceptable and it has ruled them anti-competitive. This point was also made abundantly clear in the Goldman Sachs report commissioned by the Minister.

I hope that some Fianna Fáil backbenchers will at least acknowledge the extent of the Government's betrayal of the national interest. They should wise up and be honest with their constituents. Fianna Fáil and the Progressive Democrats have sold out on our national airline. The experience of the privatisation fiasco in Eircom should sound alarm bells for us all. We cannot prevent venture capitalists from repeating the devastation of Eircom by stripping Aer Lingus of its assets, reducing services, putting it into serious debt and walking off with the proceeds. We have to ask whether the Minister is incapable of learning from the mistakes of the past.

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