Timmy Dooley (Clare, Fianna Fail)
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To ask the Minister for Transport, Tourism and Sport his assessment of the strategic value of the State's holding in Aer Lingus; and if he will make a statement on the matter. [8967/13]

Leo Varadkar (Dublin West, Fine Gael)
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This question relates to the Government's shareholding in Aer Lingus and its strategic value. The Government retained a minority stake of 25.1% in Aer Lingus in the initial public offering of shares in the group in 2006 primarily to protect what were perceived to be the State's strategic aviation interests at that time. However, the importance of the Government's minority stake, particularly in the context of the Heathrow slots, has changed over time. Developments such as the dissolution of the employee share ownership trust, ESOT, have had an impact. Also, the Government shareholding is not sufficient on its own to block the sale or lease of Heathrow slots by Aer Lingus. In terms of connectivity, while Heathrow remains very important for Ireland, there are now a wider range of connectivity options available through other hubs, including Schiphol, Frankfurt, Paris, Dubai and Abu Dhabi.

However, there are still strategic issues to be considered in the context of Aer Lingus and the services it provides. For example, following detailed consideration, the Government decided that it would not be prepared to support the most recent Ryanair offer for Aer Lingus on the basis that it would have a significant negative impact on competition, connectivity and employment in the Irish market. The offer is currently being examined by the European Commissioner under the EU merger control rules and, notwithstanding recent media reports, the Government awaits the Commission's formal decision which we expect in the coming weeks.

The Government has made it clear that it plans to sell its shareholding in Aer Lingus at the right time, for the right price and under the right conditions. This position remains with respect to the above matter and is unchanged, and it is subject to ongoing consideration within Government.

Timmy Dooley (Clare, Fianna Fail)
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I thank the Minister for his reply. It is the first time I have heard a representative of this Government accept that there are strategic issues in regard to the ownership of Aer Lingus and, in particular, the Minister has identified competition connectivity and employment in the State. He seems to have cast aside, to some extent, the issue of the Heathrow slots and he believes that the Government is not in a position to prevent a sale or lease, and perhaps that is right, although I would argue that by retaining Aer Lingus in its current format the chances are much better that the slots will be deployed for the use of the Irish people, will provide access and the appropriate level of connectivity following from that.

I ask the Minister to reflect to some extent on what the Irish Exporters Association said last year. It said, "The strategic importance of the Aer Lingus cargo facility for high-tech and life science exporters has not been given enough consideration by the Government". The Minister will be aware that Aer Lingus flights carry about 52% of the value of our exports and about 43% of all imports from the United States. Any changed ownership that might see a level of diminution of the current connectivity that Aer Lingus provides to the United States-----

Michael Kitt (Galway East, Fianna Fail)
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A question please, Deputy.

Timmy Dooley (Clare, Fianna Fail)
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could put at risk the €18 billion of pharmaceutical and medical technology that are exported by air freight to the US and around €4.5 billion of high tech imports required for a wide range of manufacturing companies in this country. Taking that into account and the fact that so much of our future potential growth is based around our exports sector and around direct access to key markets from a tourism development point of view, would the Minister not consider that the Government should review the entire strategic importance of Aer Lingus as the enabler for both of those sectors?

He should be in a position to change his policy so that he sends a very clear message to the market that he wishes Aer Lingus to exist as it currently is, as an independent operator. It is very clear from the airline consolidation that is taking place in Europe and the United States that we cannot guarantee what the future ownership will be if we divest the current level of shareholding. It is not beyond the bounds of possibility that Ryanair, though some other guise, could find a way to take the assets of Aer Lingus in some secondary deal. Does the Minister agree that now is the time to have a fundamental review that gives some standing and future prospect to the retention of Aer Lingus as an independent operator?

Leo Varadkar (Dublin West, Fine Gael)
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There are strategic issues involved and cargo is certainly one of them. I met the Irish Exporters Association on a number of occasions and discussed that very point. The association is also represented on the Tánaiste's export trade council, so I meet its members from time to time in that forum. Almost all airlines, other than Ryanair, provide cargo services and it was its intention and remains its intention, if it gains control of Aer Lingus, to continue to carry cargo because it is profitable.

On the issue of the Heathrow slots we cannot, on our own, block the sale or lease of those. There is nothing stopping Aer Lingus from turning around the slots itself and using them to fly London transatlantic. It could do that if it so wished. The other point to remember is that the slots can be forfeited. If Aer Lingus does not use them, it loses them. The airline does not own them as some may think; it just has rights over them. It is also worth pointing out that even if the Government stake is disposed of, the Government remains an interested party when it comes to any takeover attempt and can still be in a position to make its views known to the European Commission. Any merger or acquisition which has a European dimension remains notifiable to the European Commission under the 2004 mergers regulations. Therefore, even if the State was not a shareholder, the Commission would still examine any competition issues if a merger was proposed. In addition, we would be able to make our views known.

Timmy Dooley (Clare, Fianna Fail)
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I take at face value what the Minister has said but the Government must carry out a detailed analysis of the marketplace and examine the potential pitfalls of Aer Lingus being bought by some other suitor and ultimately ending up in the hands of Ryanair through some secondary or future deal, which is not beyond the bounds of possibility. A critical analysis of the marketplace must be conducted to determine the potential risks of Aer Lingus falling into the wrong hands and the very considerable impact that would have on this country. The Minister must determine how best he can use his current shareholding to continue to provide the benefits on which our tourism and export sectors are so dependent.

Leo Varadkar (Dublin West, Fine Gael)
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That analysis is under way and is being done by the NewERA unit on behalf of the Department and the Government. Aer Lingus is a very good company and is very profitable. In fairness to the management and staff, they have made a huge contribution in recent years to turning the company around. It is a company I want to see continue to grow and be successful. To date, the Government's shareholding has largely been passive and Aer Lingus has shrunk its business to become more profitable. A lot of the expansion in which the company is currently engaged is actually outside of Ireland. It is expanding within the United Kingdom and, more recently, between Spain and the United States. If the Government was to take a more active shareholding role, it would want to know what Aer Lingus would do in return for that, in terms of developing its business and reopening connections that existed in the past.