Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I move:

That Dáil Éireann, pursuant to section 3(5) of the Aer Lingus Act 2004, approves the general principles of the disposal of shares in Aer Lingus Group Plc by the Minister for Finance in accordance with section 3(2) of the Aer Lingus Act 2004, which were laid before Dáil Éireann on 27th May, 2015.

The motion seeks the approval of the House for the general principles of the disposal of shares in Aer Lingus. The Aer Lingus Act 2004 contains a provision stipulating that the Minister for Finance may not dispose of any shares in the company without the general principles of the disposal being laid before and approved by Dáil Éireann. A document setting out the general principles was laid before the House earlier this week.

At the outset of this debate I pay tribute to Aer Lingus and to its management and staff. I want to recognise the contribution Aer Lingus has made to Ireland and to emphasise that I see the IAG proposal as an opportunity to ensure this company has the opportunity to continue to grow, to develop and become stronger. As a country, we are proud of the fact that Aer Lingus is one of the oldest airlines in the world still operating today. It was one of the first State companies established by the newly independent State in 1936. It pre­dates the likes of CIE, and Bord na Móna. The decision to establish Aer Lingus was more than just the setting up of an airline. It was an expression to the rest of the world of the optimism and openness of a fledgling country finding its wings. More than 75 years later, that recognition of its heritage, its importance, its contribution and its potential holds true for this country and this generation. Since its establishment Aer Lingus has served and continues to serve the country well. Aer Lingus and its employees have played a huge part in the development of the Irish aviation sector into the vibrant industry that it is today. The Irish aviation sector is rightly recognised and respected around the world. One of the great successes of Irish aviation policy over the past 30 years is that the two largest Irish airlines now have roughly 80% of the market in and out of the country. In most countries the market is split more equally between domestic and foreign airlines. The success of the Irish airlines means that the majority of people flying in and out of our country do so on an Irish aircraft.

Alongside this recognition, I must emphasise three factors that have been decisive in my evaluation of the IAG proposal. First, the airline industry is inherently cyclical and has been severely impacted in the past by a number of global shocks such as 9/11 and the 2008 financial crisis. The industry is currently in its fifth consecutive year of positive global airline profitability. However, as a relatively small albeit currently well capitalised airline, Aer Lingus is dependent on the capacity decisions of its larger competitors and may be more vulnerable to future industry shocks or aggressive direct competition than the larger airlines. Second, the European airline industry remains relatively fragmented compared to the USA. Many of the European legacy carriers have been forced to implement significant restructuring plans in recent years. This has also driven consolidation amongst European airlines with many formerly State-owned airlines either becoming part of larger groups or having failed. I do not want to leave it to chance only to find that it is a forced decision in difficult times. Third, Aer Lingus is no longer our national flag carrier. That decision was taken nine years ago when 75% of the shareholding was sold. Nor is the State the majority shareholder in the company.

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