Pat Gallagher (Donegal South West, Fianna Fail)

From the outset as regards the Aer Lingus IPO the Government has been committed to ensuring that our strategic interests are protected. It was always the intention that the State should retain a significant minority shareholding for this purpose. The State's shareholding currently stands at approximately 28.3% of the capital in Aer Lingus and will be approximately 25.4% from tomorrow following completion by the employee share ownership trust, ESOT, of the exercise of the share option agreed in advance of the IPO. A shareholding at this level is important for a number of reasons. It means that the company's memorandum and articles of association cannot be changed and other changes requiring special resolutions cannot be made, without Government support; the safeguard arrangements for Heathrow slots, while requiring the support of other shareholders, are linked to the State's minimum level of shareholding which was targeted at 25.1%. The safeguard arrangements are built into the company's memorandum and articles of association. It ensures that another company cannot acquire the 75% shareholding that is required to force delisting from the official list of the Irish Stock Exchange.

I reject Deputy Crowe's assertion that the IPO has been a fiasco. On the contrary, as a result of the successful flotation of the airline, Aer Lingus now has the means to fulfil its potential and contribute in a positive way to the country's economic development. The company's capital requirements have been met though the IPO which will enable it to implement its business plan.

The hostile bid for Aer Lingus by Ryanair has been the subject of much media comment since it was launched. My view is that the Ryanair bid is unlikely to succeed. Ryanair has yet to achieve the majority it requires to gain effective control of the company and the prospects of it doing so now seem limited. Indeed, the Ryanair chief executive stated at a press conference on 20 October that Ryanair would be "unlikely" to get 50.1% of the company without the support of the ESOT. While the ESOT has not publicly declared its position as regards the bid, it stated in a press release issued on 26 October that the figure quoted by Ryanair in its offer document as to the cash proceeds ESOT members would receive if the offer succeeded, was "inaccurate".

Additional information not given on the floor of the House.

In addition to the difficulties Ryanair faces in achieving the majority that it requires to gain control of the company, it is also the case that the proposal will require regulatory clearance from a competition perspective and it cannot be taken for granted that such approval will be forthcoming. I have previously stated that the Government's view is that Ireland's strategic interest in aviation is best served by the provision of regular, safe, cost-effective and competitive air services linking the country to key business and tourism markets around the world and that the Government's strategic objectives would not be well served by a takeover of Aer Lingus by Ryanair.

Earlier this week Ryanair applied to the European Commission for approval of its bid. My officials have already had initial contacts with European Commission officials to outline the Government's position in relation to the proposed takeover and will make further representations to the EC on this in the coming weeks.

See this speech in context