Dáil debates

Tuesday, 2 November 2004

3:00 pm

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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Question 111: To ask the Minister for Transport his views on the full or partial privatisation of Aer Lingus; the Government's position with regard to the future development of Aer Lingus; when a final decision will be made on the airline's future; and if he will make a statement on the matter. [27077/04]

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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As I indicated in response to Question No. 411 on 19 October last, my officials and I are considering the Goldman Sachs report on the future of Aer Lingus. The report has been circulated to the members of the Cabinet sub-committee that was established to examine all issues relating to the future ownership of the airline and to report to the Government. A meeting of the sub-committee will take place in the near future. The report relates primarily to the implications of maintaining the current ownership arrangements, to the airline's future funding requirements and to the strategic and public policy issues arising in the event of the State reducing its shareholding in Aer Lingus or exiting from the ownership of the airline. The report will form an input into my deliberations and those of the Cabinet sub-committee before the Government makes a decision on the future of Aer Lingus.

In accordance with the terms of Sustaining Progress, the Department of Transport and the social partners will discuss the future of Aer Lingus before the Government finalises its consideration of the matter. While I cannot pre-empt the outcome of the Government's consideration, I strongly believe clarity on the future of Aer Lingus is needed as soon as possible. It is important that the main shareholder clearly signals its intentions regarding the company to facilitate the essential future planning of the airline from an operational and financial viewpoint.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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I understand the Minister cannot pre-empt any decision that may be made by the Government. What is the Government's response to Aer Lingus's immediate short-term request for funding? The airline wants the funds necessary to purchase the aircraft needed to allow it to continue its expansion plans and to pursue its business plan. I realise the decision cannot be taken outside the broader context of the future ownership and funding of the airline. Has the Government responded to Aer Lingus's request? Does it envisage a timeframe in that regard? The airline regards the allocation of funds as a critical short-term and immediate necessity, regardless of long-term and strategic considerations. I realise that the matters are connected.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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All Deputies are aware of the problems Aer Lingus faced. It has had an extraordinary turn-around, for which I congratulate the trade unions, management and board. It is an extraordinary achievement when considered in the context of the national carriers that have already disappeared from our skies and those that are in serious trouble. Aer Lingus has put itself in a very good position. The aviation industry market is fragile, as we know. The Government's objective is to do all it can to ensure that Aer Lingus continues to grow and to be a major aviation player in the years to come. Therefore, the point made by the Deputy about Aer Lingus's funding requirements is crucial. I have received the Goldman Sachs report, which has been circulated to the Cabinet sub-committee. I am studying the report with my officials. We hope the sub-committee will meet soon to consider the matter.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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I thank the Minister. While he was right to congratulate Aer Lingus on its turn-around, I am sure he appreciates that it is constrained in its activities. The airline sector is prone to jolts, which are often caused by matters outside its control. Given that things are quite rosy — options are open to the Government and the company — would it not be better to make a decision at this point rather than allowing things to drift? It may be that no options will be open to the Government or Aer Lingus when we find ourselves in a further crisis. I am anxious that a decision be made. I am conscious that Deputy Cullen is the third Minister in recent times to be charged with dealing with the future of Aer Lingus. The company is entitled to some clarity about its future.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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I believe, as I am sure all Deputies do, that Aer Lingus has potentially significant opportunities in the European and American markets, particularly on the transatlantic route. The company needs to make substantial investment at this point, therefore. It will take some time to come on-stream because one cannot make a decision today and turn on the tap, in terms of the delivery of airlines, tomorrow. That is important. I am conscious of all the views and the need to get it right. The decision we take now will have a major effect well into the future on the company's ability to be a major and substantial player in the airline sector, as it has always been. We can make the necessary decisions, in conjunction with the relevant players, all of whom I have met, because Aer Lingus has put itself in that position.

I have had good discussions with the Central Representative Council, management and the chairman of the board. Everybody has praised the work that has been done to date and accepted that substantial investment is necessary for the company's future. We can study the contents of the Goldman Sachs report instead of a range of options. I have said that I do not want to create the impression that the report represents a Holy Grail or gives an obvious answer. A suite of options requires careful judgment as we consider the best way to proceed, which should involve a consideration of the best interests of the company, the flying public and taxpayers, who ultimately own the airline.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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Did they make a recommendation?