Clare Daly (Dublin North, Socialist Party)
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3. To ask the Minister for Transport, Tourism and Sport the contact he has had with Aer Lingus management regarding the future of the airline; and his views on the State's 25% ownership. [54578/13]

Clare Daly (Dublin North, Socialist Party)
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I apologise for my absence earlier; I was mistakenly advised that I had the fifth question.

I wish to know the dealings the Minister has had with Aer Lingus in recent months with regard to the future ownership of the company and also with regard to a number of quite substantial changes that have taken place on some operational matters on the pension etc. I would be quite glad to get any such information because obviously these issues are overhanging the staff as we speak.

Leo Varadkar (Dublin West, Fine Gael)
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My Department and I are in regular contact with Aer Lingus from both a shareholder and aviation policy perspective. The airline continues to compete well as an independent airline and is due to start a number of important new direct services in 2014, including to San Francisco and Toronto.

In 2012 the Government included its shareholding in Aer Lingus among the possible assets to be sold under the State asset-disposal programme, but agreed that the stake would only be sold when market conditions were favourable and if acceptable terms and an acceptable price could be secured. However, circumstances favourable to a sale did not arise during the period of the EU-IMF support programme. The Government remains willing to sell its stake, but I consider it unlikely that a buyer willing to offer the right price and accept appropriate conditions will emerge in the near term. The ongoing pension deficit issue and legal challenges to the EU and UK regulatory authority decisions on Ryanair's stake create uncertainties for any potential buyer.

The Government will continue to manage its shareholding actively, with the aim of maximising the value of the shareholding, securing dividends and encouraging new routes and additional capacity where commercially viable. The shareholding gives the Government an important say in any proposal to dispose of Aer Lingus's valuable slot portfolio at Heathrow Airport and gives the Government the right to nominate up to three directors on the board.

Clare Daly (Dublin North, Socialist Party)
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I ask the Minister to expand further on this. In essence he is saying he would love to deal with it and is actively looking, but circumstances are not right at the moment to dispose of the final shareholding in this valuable State asset. Obviously ideologically I do not agree with that in any case and not just from the point of view of the market conditions. This was and is a key employer for thousands of people, providing a good and viable service. Over its lifetime it has served the taxpayer well and severing any links would be incredibly shortsighted.

The Minister referred to a number of key issues and I ask him to enlighten us, particularly on the pension issue. The Minister will be aware that Aer Lingus management even threatened taking legal action against SIPTU for having the cheek even to organise a ballot when the union had assured management there was no question of any strike before Christmas or anything like that because of the stalemate that has been reached in the critical pension negotiations. Has the Minister been in touch with the company on that? Has he expressed his dissatisfaction that the management of a company in which the Government has a sizeable shareholding would behave like that towards its workforce? Has he encouraged it to engage somewhat more given the importance of that issue to the workers and also to the future of the company?

Leo Varadkar (Dublin West, Fine Gael)
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The Government remains willing to sell its shareholding at the right time, at the right price and under the right conditions, but they do not appear to be emerging at this point. When Aer Lingus was fully State-owned it was heavily loss making. Now under majority private ownership, with 75% owned privately, it is a success story. It is one of a few airlines in Europe that makes money. It is profitable, efficient and pays a dividend to the State. In my view that is proof positive that the privatisation of Aer Lingus was a success story for passengers and taxpayers.

The pension fund is a multi-employer pension fund involving DAA, SRT and Aer Lingus, which makes the whole thing very complicated. As with many pension funds, the problem is actually quite simple. Over a long period of time neither the members nor the company paid enough money into the pension fund to deliver the benefits that were promised or expected. The only solution that can ever arise to a problem such as this is for the members to accept fewer benefits than they had anticipated and for both companies to put more money into the pension fund. That is the finding of the Labour Court and one I have endorsed.

Clare Daly (Dublin North, Socialist Party)
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The Minister is incredibly ill informed on both counts. First, the problem with the pension situation was not, as he identified, one of simply not paying enough. In fact it was demonstrably poor management decisions facilitating early retirements and voluntary severance schemes over a long period of time putting strain on the scheme as well as outsourcing direct labour resulting in fewer members joining the scheme that caused the problem. The bottom line is that the company is inadequately standing up to its responsibilities in that regard. Instead of telling pensioners, deferred pensioners and active members of that scheme that they have to take a hit on that, the Minister might be better off telling Aer Lingus management to rein it in a bit and stop threatening and bullying its staff through use of the courts and other means.

With regard to the history of Aer Lingus, the airline experienced losses but it was entirely profitable pre-privatisation. Many changes had already been made and it was an incredibly viable company with substantial cash assets on its books at the time of privatisation. The Minister's assertion that it was privatisation that turned this company around is ill informed. Over its lifetime the company has been an incredibly successful Irish venture with a great service and an overwhelming net contributor to the Exchequer over its lifetime, and providing relatively decent, secure and up to now pensionable employment.

Leo Varadkar (Dublin West, Fine Gael)
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From my knowledge Aer Lingus only became profitable again in recent years and has only paid a dividend in the past two years. I am sure the Deputy will correct me if I am wrong.

Clare Daly (Dublin North, Socialist Party)
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It was never set up to pay a dividend but it did not cost the State any money.

Leo Varadkar (Dublin West, Fine Gael)
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It did. The Deputy will be aware that at the time of privatisation rather than the money from the sale going to the taxpayer, as it should have, some of it went into the pension fund at that time. When somebody sells an asset, the money should go to them and not to others. That is all history at this stage.