Brendan Howlin (Wexford, Labour) | Oireachtas source

That speaks volumes. I am glad to have this opportunity to contribute to the debate on the sale of the State's remaining shareholding in Aer Lingus. I echo the comments of the Minister for Finance in commending the efforts of the Minister for Transport, Tourism and Sport, Deputy Donohoe, and the Government's steering group in bringing the potential deal to the point where the Government is now prepared to seek the approval of the House for it.

The decision taken by the Government yesterday represents an opportunity, not a threat, for Ireland, its regions and particularly for the new people who will be employed at a reinvigorated Aer Lingus. It will provide security for the existing workforce and, ultimately, the best return for the taxpayer. There should be no crocodile tears on the other side of the House. Fianna Fáil privatised Aer Lingus and received terms for 75% of its shareholding that were far less substantive than those negotiated by this Government for the balance of shares now proposed to be sold. We should not pretend that the decision facing the Government was between the IAG offer or a rosy status quothat might endure forever. Everybody in Aer Lingus knows that jobs and profitability, which are connected, are ultimately determined by the sale of seats. That is the only constant in the airline business. The airline business is one of constant change and it was by adopting to the changing market that Aer Lingus evolved from a State airline at a time when only the most advantaged could afford anything but the occasional flight into a successful era of mass air transit in which we now live.

The Government's decision was arrived at following one of the most extensive debates about State assets that has ever taken place here. This is the fourth time the Irish State has had to consider proposals for the takeover of Aer Lingus since it was originally privatised by the Government of which Deputy Martin was member. The State's shareholding in Aer Lingus is one of the assets originally included in the State asset disposal programme agreed by the Government in 2012. However, at that time, the Government made it clear that the shareholding would only be sold when market conditions were right and on terms and at a price that were acceptable to the Government and in the best interests of the Irish people. Since that time, the Government has rejected a bid from Ryanair to take over Aer Lingus, and in February this year, the Minister for Transport, Tourism and Sport indicated that the information and commitment provided at that time by IAG did not provide the basis on which this Government would be prepared to commit to accept IAG's offer on its shareholding. This demonstrates that the Government is prepared to refuse to sell its shareholding in Aer Lingus in circumstances where the Government is not convinced this is the right thing to do.

This is now no longer the case. Since the Minister for Transport, Tourism and Sport outlined the Government's position on the IAG offer last February, the steering group appointed by the Government and its advisers has continued to engage with IAG on the details of the offer. The engagement included detailed discussions on future plans for Aer Lingus, its route network, attention and use of all its Heathrow slots and employment in the company. Crucially, it also took in commitments that IAG was prepared to offer on these matters. I am pleased to tell the House that these negotiations have been fruitful and the proposed terms of the deal now on offer have been considered and accepted by the Government. They are now recommended for approval by this House.

I will not repeat the detailed terms of the deal, which have already been outlined by my colleague, the Minister for Transport, Tourism and Sport who is present beside me. However, I am satisfied that the deal now on offer is in the best interests of Aer Lingus, its employees, the Irish travelling public, and also the Irish State. The addition of Aer Lingus to the IAG group will be as a separate and distinct airline, which is important. Brand Aer Lingus flying the flag will not only be retained but the shamrock will be seen in ever more places because of this deal. The airline will retain its logo and brand and this process will safeguard the future of Aer Lingus and its employees. The commitments secured from IAG and which will be enshrined in the articles of association of the company will ensure continued international connectivity for Ireland and ensure the continuation of existing Government aviation policy, which is based on competition between at least two airlines with significant home bases in the Irish market.

I welcome too the commitments offered to the existing workforce in Aer Lingus. As the chief executive officer has indicated to the Minister, he remains committed to an employer-employee engagement model that has unions and the State's industrial relations apparatus at its heart. I have no doubt in the capacity of our trade union movement to represent their members effectively in that environment.

Whereas the future plans for the operation of Aer Lingus and the commitments that IAG have offered in that regard were crucial factors in the Government's consideration of the deal on offer, the Government also had to consider the issue of the price being offered for its shares. We know that the board of Aer Lingus has publicly stated that the financial terms of the proposal are at a level which it is willing to recommend to Aer Lingus shareholders. The Government's steering group has also considered this issue of price, and it has received detailed valuation advice from its independent financial advisers, appointed specifically to do that job. The financial advisers have considered a range of different valuation methodologies and their conclusion is that the price on offer of €2.50 cash per share, which values the State's shareholding at €335 million, is a fair price. The steering group has therefore advised the Government that it considers the price on offer to be acceptable as a fair price for the State's shareholding, and the Government has accepted this view.

It should also be remembered that the original rationale for including Aer Lingus shareholding in the programme for sale of State assets was to realise proceeds that the Government could use to the greatest extent possible to support and sustain economic opportunities, employment and jobs. I am pleased to say that, in so far as that objective is concerned, the Government has agreed that the proceeds of a sale of the Government's Aer Lingus shareholding are to be made available exclusively for this purpose.

Unfortunately, the proceeds arising from the sale of the State's shares in Aer Lingus will be classified under EUROSTAT rules as proceeds from a financial transaction and, as such, the money received will not have any beneficial impact on Ireland's general government balance. As a result, from a budgetary perspective, the proceeds received will not provide the Government with any capacity for additional direct government expenditure, whether capital or current, without this impacting on our general government balance. Therefore, the proceeds cannot be used to fund additional direct Exchequer expenditure. However, the Government has always been determined that the proceeds should be utilised to assist in supporting and sustaining jobs and our recovery. The Government has therefore agreed that the proceeds received if a sale proceeds are to be used to establish a new fund to be called a "connectivity fund" which will be dedicated to enhancing connectivity both within and without the State. The fund will be structured as a sub-portfolio of the Irish Strategic Investment Fund, ISIF, and will be managed and controlled by ISIF in the same way as it manages its existing portfolio. The fund will operate on a commercial basis in order not to have any negative impact on Ireland's GGB. It will be able to support commercial projects with a connectivity theme. I refer to both domestic and international connectivity. For the purposes of the fund "connectivity" has been broadly defined. Therefore, in addition to being available to support traditional transport projects including the development of airports and ports and access to those, the fund will also be open to providing support for projects that involve a wider definition of "connectivity". This will include data connectivity, broadband, fibre optic cables, interconnectors and so on as well as energy connectivity including energy interconnectors. These wider connectivity requirements are becoming increasingly important as our country's core infrastructure meets the need to improve as the economy grows. It is particularly important as we are an island nation and ours is an open economy.

Accepting the deal on offer from IAG is in Ireland's best interests. The proceeds arising from the transaction if it proceeds will be made available by the Government to enhance connectivity and to support the ongoing main task of the Government of sustaining full employment. I commend the general principles of the sale to the House.

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