Dáil debates

Thursday, 14 May 2009

4:00 am

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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I will now call on the Deputies who tabled questions on job losses at SR Technics to the Tánaiste and Minister for Enterprise, Trade and Employment in the order in which they submitted their questions to my office.

Deputy Joan Burton asked the Tánaiste and Minister for Enterprise, Trade and Employment the action she will take in view of the implications for employment and the economy in Dublin north and west of the announcement by a company, SR Technics, that it is to sell certain of its assets at Dublin Airport; the consultation she plans to have with the industrial development agencies to ensure the preservation of the maximum number of jobs possible; her assessment of the prospect of saving jobs; and if she will make a statement on the matter.

Deputy Thomas P. Broughan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will report to Dáil Éireann on the sale of landing gear and APU assets at a company, SR Technics, in Dublin Airport; if, in view of the fast approaching company deadlines for receipt of bids for the base maintenance, line maintenance and garage operations at the company, she will report on the action she and IDA Ireland are taking to facilitate the remaining expressions of interest in the company's facility and to maintain the 1200 critical jobs and centre of aviation engineering and maintenance excellence at Dublin Airport.

Deputy James Reilly asked the Tánaiste and Minister for Enterprise, Trade and Employment the provisions she has taken to protect the jobs of 1,100 people at SR Technics following the announcement today of asset stripping by the company.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I propose to take all of these questions together.

I have noted with serious concern yesterday's announcement by SR Technics regarding the proposed sale of certain assets on their facility in Dublin airport. I have had extensive contacts with SR Technics over the past number of months and am extremely disappointed at this development. The firm has indicated that the bids received for its Dublin operations, which were supported by IDA Ireland and Enterprise Ireland, were what was described as "well below" their assessment of the current market value of the assets there.

The company has said that it has reached a provisional agreement with a bidder for the sale of the APU and landing gear assets. As part of this process, it has agreed not to disclose the bidder's identity or any details pertaining to the details of the sale agreement until the transaction has been completed. The company has also said that it is still open to bids in any of the remaining parts of the business, including base maintenance, line maintenance, garage and the remaining tooling and equipment not included in the APU and landing gear transaction. I understand that SR Technics will accept bids up until next Friday, 22 May for base maintenance and Wednesday, 27 May for line maintenance or garage. Without the key assets and equipment in place, the location of Dublin Airport is less attractive for companies to start an APU and-or landing gear maintenance shop. The skills base of the former employees will, however, remain an attraction for a short time. The line maintenance and garage division continues to employ over 200 people and a ten year contract is in place between SR Technics and Aer Lingus for the line maintenance of the Aer Lingus fleet.

Following the announcement by SR Technics on 12 February 2009, I established a team comprising IDA Ireland and Enterprise Ireland to work with SR Technics and interested parties to find the best possible solution. We also hired outside expertise on the aviation sector to help secure the best possible outcome. IDA Ireland and Enterprise Ireland established a team to market the operation internationally through their overseas office network and received over 16 expressions of interest in the facility. The team contacted the companies to evaluate their level of interest in the operation and encourage them to bring forward investment proposals to take over all or part of the operation. In all, SR Technics received over 30 expressions of interest and five bids from interested parties for parts of the business and carried out its assessment of these bids. The plan was that, following the assessment process, SR Technics would select a successful bidder, following which the State agencies, IDA Ireland and Enterprise Ireland, would evaluate the proposals to ascertain if they could support the proposals submitted. It is clear that SR Technics has moved to accept a bid for part of the business that was not among those expressions of interest received by the IDA Ireland and Enterprise Ireland team. Notwithstanding this move, I intend to continue to work with IDA Ireland, Enterprise Ireland and the Dublin Airport Authority, as well as the remaining bidders and any other interested parties, to maximise employment opportunities at the plant, in addition to the 250 plus jobs which remain in line maintenance and design.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I thank the Tánaiste and Minister for Enterprise, Trade and Employment for her reply which strongly suggests she is throwing in the towel on the survival of an operating facility in Dublin for anything more than one quarter of the current workforce at SR Technics. She seems to accept as a reality that SR Technics can asset-strip key equipment from the Dublin facility, thus disabling SR Technics Dublin's potential to restart operations and thereby compete with the revamped SR Technics operation in Geneva. Is she throwing in the towel and saying all that is salvageable are 250 of the line maintenance jobs because of the nature of these jobs and the maintenance of aircraft on the ground in the vicinity of Dublin Airport which is the home of the Aer Lingus fleet? The stripping of critical equipment is like the action of someone in a colony who when the country gains independence ups sticks and takes equipment with the result that the highly qualified, crème de la crème of industrial employees left behind are prevented from exercising their skills.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Far from throwing in the towel, we have re-engaged with the unsuccessful bidders and any other potential and interested parties, one of whom I will meet this evening when the House rises. We will work with these bidders to see if they continue to have an interest in starting an APU and-or landing gear maintenance shop over and above the existing line maintenance operation that is part of the negotiations between Aer Lingus and SR Technics. I have indicated that it may be less attractive for these companies without the key assets and equipment but it is not for us to suppose until we ascertain from the unsuccessful bidders whether they are continuing to pursue the setting up of an APU and-or landing gear maintenance shop. We will continue with the bidders and other interested parties to discuss the possibility of a start-up operation and-or including the two other tenders that I mentioned.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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I thank the Minister for Enterprise, Trade and Employment for at long last coming into the House to reply to this question. I must have asked her and the Taoiseach at least a dozen times over the past four or five weeks for an update on SR Technics. The major information at the airport relates to the extraordinary rumour that the APU and landing gear units are effectively being transferred to a branch of Mubadala, Abu Dhabi Aircraft Technologies, ADAT, I think it is called, in the United Arab Emirates. If that is the case, SR Technics has taken the Minister and the Taoiseach for a pair of total fools. It is treating them like the Laurel and Hardy of European politics, with utter disdain because this means that the company always intended to strip SR Technics in Dublin, leaving us with empty hangars, no jobs and people trying desperately to survive, and without facilitating young apprentices to finish their training. Can the Minister give us any further information on to whom SR Technics has sold these vital assets? What legal advice has the Minister taken on the sale? Mr. O'Leary of IDA Ireland met Bernd Kessler a couple of weeks ago. The Minister was in the Middle East. Was there any outcome from these discussions and negotiations? Can the Minister give any hope to the 1,200 employees' families and the families of the apprentices based around north and west Dublin, County Meath and in Portlaoise, as I discover from a recent e-mail?

What is the position on the two deadlines, 22 May for bids in respect of base maintenance and 27 May for bid in respect of the maintenance and garage operations? The Minister has mentioned there have been several expressions of interest but she seems to be taking a passive role. That is the fundamental criticism the workforce and their families, the people we represent, make of the Minister and the Taoiseach, that they have behaved so passively with a crucial Irish industry which will cease to exist in a few weeks' time unless the Minister takes action. Is she prepared, with IDA Ireland or in any other way, to offer financial support to any other bids which have a major Irish component? They have been waiting for the Minister to take a strong leading role. It looks as if Sheik Mohammed and Sheik Khalifa and the owners of SR Technics in the Middle East have treated her as a total fool.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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It is now opportune to tell the House what has been happening for some time, contrary to the remarks made by the Opposition. I met SR Technics local management in Zurich on 11 November. It indicated to me that it had a business proposal for which it sought support. I met the Irish management over Christmas. We worked through a business plan with the company and IDA Ireland. We put together a support programme and mechanism for it in training and research and development. That was ongoing work, as requested by local management, in which I participated personally and which IDA Ireland supported on my behalf. I met Mr. Kessler on 11 February. In the interim the board in Zurich rejected that business plan. The chief executive, the chief operations officer and the chief financial officer came to me on 11 February and made their announcement on 12 February. It is important to indicate that throughout that period, the IDA and I had been working with local management, supporting it and appreciating the work being done by it and the unions to reconfigure and deal with the cost base, research and development and training needs of the company. This was done on the basis of serious concerns brought to my attention, with which I dealt immediately.

The second issue is that SR Technics is a foreign, private company. When I met the chief executive officer and chief financial officer, whom I met three times and to whom I spoke on several occasions by telephone, I indicated that one of the concerns brought to my attention by Members of this House of all parties and by employees was that the equipment would be removed prior to the bids being completed. I received an undertaking from the company that, during the period when the bids were being prepared, the assets would not be removed. Unfortunately, the bid has been accepted and, although the Deputy has alluded to what was rumoured in Dublin Airport, one of the clauses of the bid is actually a confidentiality clause. That said, it was on that basis that I indicated quite categorically that I was very disappointed at the outcome on the basis of all the interaction that had taken place between me, the agencies and the specialist team set up on our behalf to support the bids and those who were interested.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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Why not nationalise it now?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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It is very important to say that all the bids were to be based on the long-term commercial viability and sustainability of the company. If we cobbled together something that would sort out Dublin Airport and it fell on its face in six months, it would be a retrograde step for the businesspeople, workers and taxpayer. All the bidders were aware of the process. The process was being supported by the team but the process and the bids were with the company. As I indicated, the company indicated it would not and did not receive the commercial expectations that should be raised. It is equally important to say there are new options in play regarding the re-engagement with these companies to ascertain whether they are continuing to proceed on the basis of the APU bid they submitted previously or other options available within the short timeframe which we have spoken about this month.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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The Minister said she set up the new group on 12 February; she seems to be slow out of the traps. She now tells us she was involved personally from November in regard to this matter. This is all the more worrying given that nothing happened and that she did not see what was coming down the tracks. She surely knew when the Aer Lingus contract slipped that there would be problems. Surely it has been clear that it was extremely naïve to allow all the offers of interest to go straight to SR Technics, which has now shown very clearly that it has no interest in allowing Dublin Airport to act as a competitor to its Zurich operation.

Two serious questions arise regarding what is now not only a tragedy for north County Dublin but also the greater Dublin area, bearing in mind the asset stripping and, as the Minister stated today, the fact that the company has sold assets to parties other than the original 30 bidders. Is this correct?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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No.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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Did the Minister not indicate that this-----

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I referred to the Irish bids.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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As part of the original bids.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Within the package of the overall 30.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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It is very clear that the bona fides of this company have been questionable from day one in terms of staying in this country. Given that it costs the Exchequer €20 million per year to support 1,000 workers who will be on the dole and given that we will be paying SR Technics €15 million in the first year for the redundancy packages, what value has been placed on the company's assets by the company? More important, what amount of money did the Minister offer by way of support in respect of the management buy-out?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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It is important to clear up a number of misapprehensions and misnomers. All of us, including the Deputies opposite, who are local to the area in question, knew that, in November 2007 when Aer Lingus lost the contract and it went to tender, there would be grave implications for SR Technics. It was on that basis that everybody here did their utmost to ensure the contracts became available as quickly as possible. I refer to the ten year contract that Aer Lingus has at present. Contrary to what Deputy Reilly is saying, everyone knew in 2007-----

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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Yes, we did, but the Minister is the one in government and in charge.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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We opposed privatising Aer Lingus.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Arising from that, everyone knew in 2007 that there would be challenges for the company. On that basis the local management-----

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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The Minister is a shareholder.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Neither I nor the State is a shareholder in SR Technics.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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The State has a 25% share in Aer Lingus.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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We all knew this-----

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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The Minister is making-----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Please allow the Minister to continue.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I am not making an allegation at all.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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The Minister is.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I am clarifying what has happened.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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The State kept 25% for the public good. Is maintaining jobs not for the public good?

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The Deputy should not shout down other Members.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I am just trying to set the record straight.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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That is the entire objective. Saying that we were not aware of matters or did not do what needed to be done is factually incorrect. Local management expressed grave concerns about the viability of SR Technics on the basis of costs and contracts. It was on that basis that we worked very closely with local management.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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It produced the recovery plan it gave to the Minister.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Yes. We worked with and supported it and indicated categorically that we would financially support research and development and training. It is therefore wrong to claim the State did not intervene and support SR Technics and its local management. The recovery proposal was sent to Zurich and not accepted by the company. The company indicated to me on 11 February what would happen and, as the Deputies know, it made its final decisions on 12 February.

It is also important to understand that those who made the bids were aware of the process. The process first involved the bid going to SR Technics and not to the team comprising IDA Ireland and Enterprise Ireland. The project details and expressions of interest were sent from the team to SR Technics directly or otherwise for the benefit of interested parties outside the State. The bids were being supported on that basis that, if a bid were to be successful-----

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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On a point of information-----

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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-----the financial wherewithal would be given.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Deputy Broughan knows there is no such thing as a point of information.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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On a point of information, SR Technics did not have any commercial space in which to do its business from the middle of November. How could it run anything? The reality is that the Minister has been hoodwinked by this company. It is thrashing one of our key industries and the Minister of State, Deputy Seán Haughey, knows what I am talking about.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Please allow the Tánaiste.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I am trying to offer advice and clarify the process. There are insinuations across the House that the Government was not prepared to give financial assistance to SR Technics. That is factually incorrect. We offered assistance in a package throughout the local management recovery project. We offered assistance to the successful bidders in the normal context in which we can offer support for training, re-employment and employment. I refer to the suite of offerings that are available to a company through our State agencies. Therefore, it is untrue we were not present to offer support. We will continue to engage with these companies in the normal format in which we all support companies-----

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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It is getting too late.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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-----when they put together a viable business plan.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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Will the Minister answer my question?

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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I have no control over the answers.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Will the Minister clarify whether, from the point of view of SR Technics, the preferred bidder is not part of the process and that the IDA has not been informed of that the bid and has no knowledge of the bidder preferred by the company?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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The Irish bidders were not successful.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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I refer to the preferred bidder.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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We are not aware of the preferred bidder.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Therefore, it is really like a three-card trick by the company regarding the 1,000-plus jobs that are to be lost if the company does not stay in Ireland. We have no knowledge of the process and it is beyond the Minister's influence.

Given the seriousness of the matter and that the Dublin Airport Authority is announcing 400 redundancies, as we believe, and that the high-tech infrastructure in Dublin Airport and SR Technics may be lost forever to the country, we want the Minister to use every possible means to indicate, through whatever third parties are required, her support for the other bidder and make that bidder an offer to enter into a public private partnership or another arrangement required to get the company to stay in Ireland, given that it will ultimately get the contract. It is key that every possible endeavour be made.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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There are a number of people who have carried out due diligence and done a considerable amount of work on their business plans whom we are meeting to ascertain whether they wish to start up an APU or landing gear maintenance shop. We need to know whether they are still interested.

The other issue raised is certainly one for consideration. As I indicated, there is a confidentiality clause because it is only acceptance of a bid and not a final decision. However, all such discussions are taking place. The issue raised by the Deputy is one that we will pursue.

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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I ask the Minister to relay the message that there is widespread support for saving SR Technics. To follow up on Deputy O'Dowd's point, it is aviation vandalism if we let such a valuable industry go. With regard to removal of the assets, how did this happen, particularly when we were all warned weeks ago by staff who contacted Members of the Oireachtas? SR Technics is a highly specialised industry which would have had a significant future in the Irish economy. Is the Minister satisfied that IDA Ireland is pulling out all the stops to save this company?

With regard to the new options on the table, how confident is the Minister that she can deliver? If we lose this great industry, costs will go up when it moves to Zurich. That is an economic reality. Is the Minister aware of the major hardship that will ensue for many families on the north side of Dublin if we lose this industry?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I am aware of the strategic importance of the aviation industry in this country. There are a number of companies based in Dublin, Shannon and Cork which provide support to the aviation sector. The aviation sector is going through a considerably difficult period and every effort is being made to address the issues of new business and costs. We have recently had to deal with these issues, as Deputies know.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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By introducing a tourism tax.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I am concerned here with support of the aviation sector.

Strategically, aviation is very important to Ireland. I assure Deputy McGrath we all appreciate the difficulties involved, as many of those in SR Technics have been there for a considerable period, through many changes, and have given a considerable amount of personal support to the aviation sector. This is not just a Dublin issue; it is a regional issue for the surrounding counties.

A bid has been accepted, although we are not au fait with the nature of that bid. Given that none of the bids are Irish, we are going back to the Irish bidders to ascertain what can be done to support them if they wish to establish a new start-up or proceed with the other two tenders that are presently forthcoming.

IDA Ireland and Enterprise Ireland have set up a special task force on specialist aviation support, given the importance of this sector and the numbers of people involved. It is on that basis that we provided additional resources to support it, and we have provided resources all over the world, in all of the offices, to ensure we can retain as many jobs as possible within that sector.

This has been a major disappointment to all of us, but it is important that we continue in resilient fashion to support the existing companies which have put forward their views. I will be meeting with one of those unsuccessful bidders this evening to ascertain the direction it wishes to take and the support we can give them. That will be equally available to others.