Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I am happy to have the opportunity to address the Dáil regarding what is a positive transaction for Aer Lingus and for Ireland. I commend the Minister, Deputy Donohoe, on his concerted efforts over the last number of months.

Today’s motion to dispose of the State’s minority shareholding in Aer Lingus and the commitments contained within it delivers the best possible outcome for the Irish economy, Aer Lingus, connectivity and jobs. It is a good outcome for the country. I also thank the Government steering group which has supported the Minister in his efforts and has also worked to secure the commitments we are discussing today.

I also understand the concerns of employees of Aer Lingus and, in this regard, I note and welcome the commitments from Aer Lingus management to secure high quality jobs today and into the future.

We have come a long way in the last number of years in taking the positive incremental steps necessary to build a strong investment case to recover our financial stability, create jobs and secure economic growth for Ireland. This has not happened by accident, but through a concerted and deliberate effort led by this Government and supported by the people of Ireland to move our country forward.

In the last number of years we have created an environment of certainty conducive to growth and investment. We have established certainty around the stability of our financial system; established certainty around our public finances; reaffirmed certainty around our corporate tax position; and reaffirmed certainty that Ireland is a growth-friendly environment for foreign direct investment and local business investment.

Through this transaction we are now establishing certainty around connectivity to and from the island of Ireland for the foreseeable future, including valuable certainty for areas crucial for economic growth across the country and not just in Dublin.

The long-term commitment to connectivity provided by this transaction will de-risk investment into the island of Ireland through guaranteed connectivity to Dublin, Cork, Shannon, Knock and beyond. Long-term investment decisions, such as foreign direct investment into Ireland, are much easier to make in an environment of certainty. The level of certainty provided by this transaction, as part of our broader efforts, is supportive of economic growth and will help encourage investment decisions into Ireland.

With this transaction, we are eliminating any potential concerns around long-term reliable air transport to and from Cork, Shannon, Knock and the rest of Ireland through Dublin, further enhancing Ireland’s attractiveness as a destination for investment. This transaction will give us, for the first time, the ability to provide businesses, consumers, tourists and investors with long-term certainty regarding connectivity for business development and tourism into Cork, Shannon, Knock and more broadly across the island of Ireland.

For the first time, the IDA and all of us can point to this certainty with regard to island-wide connectivity in attracting foreign direct investment to, and creating jobs in, the regions. This significantly enhances the investment case and the resulting potential for job creation. Securing the future of Aer Lingus and securing the commitments on jobs and connectivity will deliver growth and opportunities across the country. IAG also recognises the value of, and is committing to protect, the Aer Lingus brand as a visible positive symbol of Ireland. This growth and IAG’s commitments through this transaction will bring significant benefits to Ireland, including increased numbers of passengers, hub traffic, regional connectivity, stop-overs, city breaks, tourists, restaurant dinners served, and hotel beds filled.

I am encouraged that a number of representative groups around the country are seeing this opportunity for themselves in stating their support for this transaction and are demonstrating that confidence in Ireland’s potential. All of the Irish airports are supporting this transaction and see the significant potential benefits and positive opportunity this transaction offers for Ireland and their respective regions. The tourism industry, represented by Tourism Ireland, ITIC and Fáilte Ireland, is also supportive of the transaction. It cites the long-term sustainability this brings to Aer Lingus, as well as the major boost for tourism from North America, continued growth in visitor numbers and revenue for the Irish tourism industry.

The tourism sector is a key source of economic growth and job creation across the country. The Government has made a major investment in the tourism sector through the reduction of the VAT rate to 9% and the abolition of the air travel tax. The reaction of the tourism sector to these initiatives over the past four years has been outstanding and overall visitor numbers are up 26% since the low point of 2010. Thousands of new jobs have been created and I am confident that our dynamic tourism sector will be able to capitalise on today's announcement.

Business groups, including the Irish Exporters' Association and regional chambers of commerce, such as those in Cork and Shannon, have also welcomed the sale citing the improved connectivity it will bring to the region and improved access to export markets supporting Irish economic growth. It is clear to me that a combination with IAG will contribute to Ireland’s economic growth and job creation. It enhances our position as a natural gateway connecting Europe and North America through additional routes and additional aircraft leading to more direct Aer Lingus jobs; increased passenger numbers travelling through Irish airports and travelling to Irish cities; and, significant indirect job creation through increased airport support services, tourism spend and business investment. Aer Lingus joining the IAG group will give Irish travellers, tourists, exporters and importers greater access to major traffic flows, which will increase travel connectivity as part of a much larger network and also provide improved access for business interests and for cargo.

I want to spend some time explaining how the commitments which have been described by the Minister, Deputy Donohoe, are to be secured, as there has been some discussion and speculation on the strength of these commitments. These commitments will be secured by providing certain rights to the Minister for Finance through the retention of one share in Aer Lingus which will be re-designated as a B share. The benefit of these commitments will be conferred on the Minister for Finance as holder of the B share through changes that will be made to the Aer Lingus articles, which will also set out the rights attaching to the B share.

The rights attaching to this B share, as would be enshrined in the Aer Lingus articles, would allow the holder of the B share - that is, the Minister for Finance - to object to any proposed disposal of Aer Lingus’s Heathrow slots; any proposed cessation of operation of Aer Lingus’s Heathrow slots on certain Irish routes for the five and seven-year periods as previously described; any proposed change of Aer Lingus's company name; any proposed change to the Aer Lingus brand; any proposed change to the Aer Lingus head office location; and, any proposed change to Aer Lingus’ place of incorporation outside Ireland. Apart from these rights to object to certain matters, which are the subject of the proposed commitments, the B share would have limited other rights.

For example, the B shareholder will not have rights to receive dividends or to vote at general meetings.

The Government steering group and the Minister, Deputy Donohoe, have secured these commitments following an extended and intensive engagement with IAG. They have clarified their understanding of IAG’s proposal and future plans for Aer Lingus and the commitments offered by IAG on the future ownership and operation of Aer Lingus’s Heathrow slots and other matters. The Department of Transport, Tourism and Sport has also engaged with European authorities regarding these commitments and is confident that they are acceptable to the authorities in Europe.

A new connectivity fund from the potential sale proceeds will be established within and managed on a commercial basis by the Irish Strategic Investment Fund. The fund will allow for much-needed investment in a range of commercially viable connectivity projects. The projects should help generate economic impact and competitiveness benefits for Ireland through enhancing our regional connectivity, improving attractiveness and competitiveness in the tourism sector and promoting investment and enhanced opportunities for growth. For the purposes of the fund, connectivity will be broadly defined. Therefore, connectivity will be taken to include traditional transport-type projects, such as ports and airports, and access to such assets. However, it will also take a wider definition of connectivity to include, for example, data connectivity, including broadband and energy connectivity and other related projects. Under section 46 of the National Treasury Management Agency (Amendment) Act 2014, I am empowered to bring a resolution to the Houses of the Oireachtas setting out the proposed payment to the Irish Strategic Investment Fund. I propose to do this in due course.

The opportunity has presented itself and it is up to us as a nation, confident in our ability to perform at the highest level on the world stage, to take advantage of this opportunity, not through protectionist measures and fear of loss but through confidence in our abilities to attract the tourists, bring in the foreign direct investment, establish the small businesses and create the jobs. We have been doing this and it is now even more possible with the commitments we have secured.

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