Fergus O'Dowd (Louth, Fine Gael)
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Question 59: To ask the Minister for Transport his position on the proposed takeover of Aer Lingus by a company (details supplied); the implications that would have on aviation policy; if competition law would allow such a takeover; the communication he has had with Aer Lingus and the company's management on the latest takeover bid; and if he will make a statement on the matter. [46631/08]

Tommy Broughan (Dublin North East, Labour)
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Question 60: To ask the Minister for Transport his national aviation strategy in view of his recent comments that he will consider a takeover bid for Aer Lingus by a company (details supplied) in the context of the national aviation strategy; the directions he has given to the three Government-appointed directors to the board of Aer Lingus in view of the recent €748 million proposal by the company to acquire Aer Lingus; and if he will make a statement on the matter. [46527/08]

Noel Dempsey (Meath West, Fianna Fail)
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I propose to take Questions Nos. 59 and 60 together.

I wish to bring to the attention of the Deputies the fact that under the applicable takeover rules there are constraints on any comments I can make about the matter at this stage. The reply is given in that context.

Ireland's aviation policy, as set out in my Department's current statement of strategy, is to promote regular, safe, cost-effective and competitive air services linking the country and key business and tourism markets. The priority, from an Irish economy perspective, is to maintain the highest possible levels of connectivity between Ireland and key markets around the world. That remains the strategic context against which any proposal for the purchase of the State's shareholding in Aer Lingus will be considered.

Following its initial announcement on 1 December, Ryanair posted a detailed offer to Aer Lingus shareholders on 15 December. In accordance with the takeover rules, the board of the company must set out a detailed response within 14 days following the release of the detailed offer so that shareholders can make a decision on the acceptance of the offer or otherwise. The Deputy will be aware that the board of Aer Lingus has publicly announced its rejection of the proposed offer.

I have said that the Government would consider the Ryanair offer when received. It is now being examined by my Department. The State's nominees on the board were issued with a mandate to seek to reconcile commercial and public policy objectives on 31 January 2008. I have not given any specific directions to the State's nominees on the board in regard to this matter. All members of the board of directors are subject to the requirements of the Companies Acts to uphold their fiduciary responsibilities and to act in the interests of the company and its shareholders.

Even if a sufficient number of Aer Lingus shareholders were willing to accept Ryanair's offer, the completion of a merger between Ryanair and Aer Lingus would only be possible with the approval of the European Commission. The Deputy will be aware that Ryanair's previous takeover bid, initiated in 2006, failed to obtain the necessary approval and that decision is now under appeal by Ryanair to the Court of First Instance.

On 11 December, I agreed to meet with the CEO and chairman of Aer Lingus who wished to convey to me their opposition to the Ryanair offer. The Deputy will be aware that the company made a public statement following the meeting.

Fergus O'Dowd (Louth, Fine Gael)
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What is Government policy on this issue and how does it impact on the board members nominated by the Minister? If the Government were to decide to accept this offer, would the Minister be in a position to instruct his nominees on the board to do so or are they separate to and independent of his policy decision?

On 1 December, the Minister said there were two key issues. He did not include competition today. What is his view on competition? Would it be bad for consumers if there was only one airline option in Ireland, in other words, if Aer Lingus and Ryanair were part of the one fleet and under the same ownership?

Does the Minister consider that the recent Ryanair offer, which is much less than a previous offer, is bad for the taxpayer in the context of the Government investment in Aer Lingus? The key point is that on 1 December the Minister said the Government's shareholding was being held, in particular, to prevent hostile bids or takeovers. Can he define what he means by a "hostile bid"?

Noel Dempsey (Meath West, Fianna Fail)
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As I indicated at the outset, I must be careful in what I say until such time as the Government makes a final decision on the issue. To try to be helpful to the Deputy, I repeat that it is Irish aviation policy to have maximum connectivity and competition. We have pursued a two-airline policy for many years, in the sense that we believe two airlines is the minimum number that should fly in and out of Ireland. We have more than that and we would want to see more than that, but in the context of that particular aviation policy I will present to Government when I know the full facts of the offer, and when I have the full response from Aer Lingus, which is due to be made on 29 December. At that stage I will make my recommendation to Government on the shareholding we have. I will take into account the matters the Deputy legitimately and correctly raised, namely, whether the offer is good value for taxpayers and whether it will enhance or hinder competition.

I have explained the specific details regarding the directors to the Deputy. The directors of the Aer Lingus board have already made their views on the offer known, but they have to make a formal response to it. The directors must have regard to the general aviation policies of the Government, but they must also ensure their fiduciary responsibilities are fully met. I cannot dictate to them how they should act but I can point out what is Government policy at the time. I will not make a decision on the matter until, first, I have seen the offer, which I have now seen and that is being examined, and second, Aer Lingus has made a full response to the offer.

Tommy Broughan (Dublin North East, Labour)
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On behalf of the Labour Party, I have heard from both sides and I have read the Coinside Limited offer document. I have also heard from Aer Lingus. I agree with Mr. Conor McCarthy. I think this is an ego trip and a complete distraction by the chief executive of Ryanair. On competition and connectivity grounds, but above all on behalf of the Irish travelling public, I believe the offer should be rejected out of hand and Aer Lingus should stay as a totally independent airline. That is where my party stands. Tomorrow we will have an opportunity to question again representatives of the two airlines in public.

The Minister outlined the Government's aviation policy. Does it encompass a two major airline policy? In other words, are we in favour of two major airlines connecting this island nation to the United Kingdom and to Europe?

I understand the three Government-appointed directors to the board of Aer Lingus are Mr. Hackett, Mr. Wall and Dr. Hunt. Has the Minister been in contact with them in any way? Has he spoken to them and will they fulfil the objectives of the national aviation policy? Has the Cabinet discussed the matter? Has the Minister spoken to any of the other large shareholders, such as, for example, Bank of Ireland, which I understand owns 4% of Aer Lingus, Mr. Denis O'Brien and, above all, the ESOT itself and Aer Lingus?

Will the Minister comment briefly on the competition issue? Is it not a fact that if the takeover were to be achieved, the number of routes out of Ireland would increase by approximately 20% or 25% immediately, that it would increase in terms of being a single airline route and there would be much less competition? Is it not the case that this would be a major blow, that we would have a dominant, monolith airline with 75% or 80% of traffic?

In terms of connectivity, regarding the slots in Heathrow, for example, and Shannon, is it possible for the kind of guarantees Mr. O'Leary has said he would give to be incorporated into any takeover agreement, given the comments of the Stock Exchange on a number of offers?

Most Members would agree that Ryanair has a dismal record — sometimes an appalling record — in regard to the conditions and salaries of workers who work for the company on this island and in other parts of Europe. Does the Minister have concerns about the future treatment of the workforce of any merged airline?

Noel Dempsey (Meath West, Fianna Fail)
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I thank the Deputy for his contribution and his statement of Labour Party policy. I trust he will appreciate that Fianna Fáil has a party policy on the matter also but I cannot act on the basis of party policy. I have a particular role as adviser to the Government and to the shareholder, who is the Minister for Finance. I am somewhat constrained in what I can say. On aviation policy, which I outlined to the Deputy earlier, it is not that we just have two major airlines coming in here. If we could have ten major airlines, that would be Government policy, but at a minimum we should have competition — the point the Deputy made.

As I explained in the House the last day, very specific rules have been put in place by takeover panels, competition authorities, the Stock Exchange and everything else as regards shareholders acting in concert during a bid period. Therefore, when Mr. O'Leary requested a meeting with me, I felt it necessary, as did he, to have a legal adviser present to ensure these rules were obeyed. From that viewpoint, I can confirm that I have not had conversations with other shareholders, nor would it be right or proper to have had, as this could give rise to competition difficulties — and Stock Exchange difficulties.

As regards the slots at Heathrow, the "initial offer" suggested the Government would have to give its approval for changes to those. In the offer document it is now suggested that the Houses of the Oireachtas is the body that should have the say in that regard. I do not know, legally, whether that is a possibility and we shall take legal advice on that as we will on the other aspects.

Fergus O'Dowd (Louth, Fine Gael)
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On the Government policy to have at least two airlines, is it not implicit that there will not be two separate airlines if Ryanair owns both? In terms of the hostile bid — the point the Minister referred to on 1 December — a hostile bid means that something would not be in the best interests of the company or of the Government's shareholding, which is what I presume the Minister is talking about. It seems that implicit in what the Minister is saying is that he will reject this, even though, perhaps, he cannot say that.

What Ryanair is guaranteeing is the connectivity from Heathrow to Ireland. If Aer Lingus is taken over by any other company, that guarantee will not necessarily be there. Will the Minister please comment?

Tommy Broughan (Dublin North East, Labour)
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At the time of the first attack on Aer Lingus by Ryanair, which the Minister's predecessor should have expected, Commissioner Kroes demolished the bid on economic grounds, in terms of the severe lack of competition and connectivity and pointed out that this was different from other takeover bids in Europe. Has the Minister had any contact with the Commissioner?

Looking at the two airlines over the past year or so, is it not a fact that Ryanair has performed quite badly from its shareholders' viewpoint, with massive losses and a serious failure in the hedging of fuel costs as well as other problems on the closure of bases and so on? At the same time, the smaller airline has had a relatively good six months and looks as if it will break even in this very difficult period. Is this not really a smash and grab exercise by Michael O'Leary, in his typical buccaneer fashion, on an enormous asset which is worth three or four times the valuation he has put on it?

Noel Dempsey (Meath West, Fianna Fail)
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I do not know whether I can add much. However, Aer Lingus has done well in very difficult circumstances this year and the agreement reached with the trade unions and workers will help it to do even better, into the future.

I do not agree with knocking Ryanair, however. Ryanair employs a good many Irish people as well. It is a very successful Irish company, and we should bear that in mind, whatever our views might be as regards the current offer, or anything else. There are sufficient people across Europe knocking the airline, who are competitors of Ryanair, and would like to see it going out of business, without us starting to do so in this House. It employs a good many Irish people and while I would not share Mr. O'Leary's attitude to trade unions, people who work in the airline are, by and large, well paid. That should be kept in perspective.