Noel Dempsey (Meath West, Fianna Fail)

The Government's legal advice is that, having regard to the duties of the board of directors pursuant to the Companies Acts and the memorandum and articles of association of Aer Lingus, shareholders do not have the power to overrule management decisions on business matters. In effect, this means that even if the Government on its own, or in combination with other shareholders, called an EGM, management of Aer Lingus is not obliged to follow any directions from shareholders regarding business matters or to obey any resolution regarding such matters.

Regarding the appointment of directors, the State is entitled under the memorandum and articles of association to appoint three directors to the board of Aer Lingus. Currently, there is one State appointed director serving on the board and it is now proposed that two further appointments will be made in the near future.

The State's appointees will seek to ensure that all future decisions of the company that have significant implications for wider Government, aviation or regional development policies are considered at board level. This will give the State appointees the opportunity to raise the public policy implications of each decision and to ensure that the full commercial implications for the company are taken into account. The State appointees to the board do not have a veto on board decisions. It is not possible for the State to avail of its shareholding to seek to impose non-commercial obligations on the company.

With regard to questions raised regarding industrial relations at Aer Lingus, these are matters for the company and the trade unions to address. The assistance of the industrial relations machinery of the State is regularly used to good effect by both parties and the need to avail of the provisions of section 38 of the Industrial Relations Act does not arise. I welcome, as I am sure Deputy Broughan does, the recent agreement reached at the LRC between management and Aer Lingus pilots.

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