Michael Kitt (Galway East, Fianna Fail)
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The next item, on the need to retain the Aer Lingus Heathrow slots to ensure balanced development, has been raised by Deputies McNamara, Dooley, Carey and O'Donnell, who have two minutes each.

Michael McNamara (Clare, Labour)
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I will try to be brief, as I have just two minutes rather than the usual four. The last four years have been difficult for all regions of the country, including the mid-west and the county I have the honour to represent, namely, County Clare. Nevertheless, there have been significant achievements, particularly given the point from which the Government started. Unemployment remains a lot higher in County Clare then I would wish it to be, as more than 8,000 people remain on the live register, but this is a decrease from the figure of almost 12,000 when the Government took power. Only yesterday there was a significant jobs announcement in Shannon, whereby 40 jobs are to be created immediately, with the intention of increasing this to 100. AMAX, the company that announced the jobs, stated that one reason it chose Shannon was its accessibility - that it was linked to other important airports. The Minister of State, Deputy Nash, who was present for the announcement, also made that point. While Shannon is linked to North America, it also has links to Heathrow and from Heathrow to many routes across Europe. The Heathrow connections are of crucial importance in this regard, because Shannon Airport is not connected to any other European hubs, unlike Dublin, which is connected to the great majority of hubs. I acknowledge that this debate could easily be portrayed as parochialism or being about one's own backyard, but it is about a lot more than that. It is not simply about Shannon; it also is about Cork and about regional development, because both Cork and Shannon rely on connectivity to Heathrow in a way Dublin does not. Second, there is a greater risk to the slots from Cork and Shannon to Heathrow than there is to the slots from Dublin, purely because the volume of business. The route between Dublin and Heathrow is one of the busiest in Europe and consequently, even on a purely commercial basis, one would expect this connectivity to be maintained even though it is not even strategically important to Dublin, while it is of vital importance to Shannon. My fear is that, should Aer Lingus be taken over, with the Government retaining a minority shareholding, a new company could decide on a purely commercial basis that instead of flying three times a day from Heathrow to Shannon, it could use those slots for much bigger aeroplanes and could fly to more lucrative markets.

That would be a huge strategic loss for the mid-west and the county of Clare, which I represent.

Timmy Dooley (Clare, Fianna Fail)
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I welcome the opportunity to contribute with my colleagues to the debate on this issue of major importance not only to the region I represent but to the wider country. I will try to explain this under two headings. From the point of view of the capacity for the slots to be reallocated to other destinations in the event of Aer Lingus being sold, Shannon and Cork Airports depend hugely on connectivity into Heathrow for access not only to that part of London but to the wider world. In terms of the businesses located in the region, there is a real demand for the retention of those slots. The sale of Aer Lingus to IAG or any other organisation places a questionmark over the future viability of many of the jobs in that region. While in recent months there has been some positive developments in the area I represent, any questionmark over the continued connectivity between Shannon and London-Heathrow will impact on the State agency's ability to attract further foreign investment and on the companies already there, because as they argue within their own organisations for future investment it will hamper and hinder their efforts.

There is a wider issue involved. We are an island nation. The State, in retaining a strategic interest in Aer Lingus, did so to protect access to Heathrow through this slot allocation. To the best of my knowledge there is no way this could continue if the State were to sell its shareholding in Aer Lingus. Also, the sale of Aer Lingus could potentially have an impact on the north Dublin region. The purpose, generally, of any take-over is to reduce the cost base. As such, an amalgamation of the activities of Aer Lingus and IAG will result in cost reductions. Jobs will go and I do not think they will go in London. I believe the smaller airline will lose out. There are approximately 1,000 people in payroll and back office systems in Dublin whose jobs are in jeopardy if the State sells its interest in Aer Lingus.

I am asking that the Minister give a clear commitment that the Government will not sell its stake in Aer Lingus in a manner that could impact so drastically on Shannon and Cork and, also, North County Dublin.

Joe Carey (Clare, Fine Gael)
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I welcome the opportunity this evening to raise this matter along with my colleagues. It is widely anticipated that IAG will make a third offer for Aer Lingus later this week. Aer Lingus holds 23 landing slots at Heathrow, providing connectivity to our State through Shannon, Cork and Dublin Airports.

I am asking this evening that access to these vital slots be the Minister's key consideration in developing a Government approach to the potential sale of the State's shareholding in Aer Lingus. These slots provide access to central London and, more important, connectivity to the wider world through the global hub of Heathrow. Therefore, they are of strategic importance to our State and must be maintained and secured in any potential sale of Aer Lingus.

I was delighted to attend yesterday at the announcement of the creation of 100 new jobs in Shannon by AMAX, a US ICT company. One of the major attractions of AMAX to the mid-west region was ease of access from America to Europe and the remainder of the world through Shannon Airport. It is clear that any change in our access through Heathrow slots will cause serious damage to our attractiveness and will have serious implications for foreign direct investment, regional economic development, business tourism and tourism generally. Shannon Airport experienced 17% growth in 2014. Since being granted its independence by this Government and following changes to its managerial structure, it has gone from strength to strength. Shannon is the driver of economic activity in the mid-west region and it has a direct positive impact on the whole of the western seaboard. Therefore, it is vital that the Government ensure retention of the landing slots into Heathrow.

I ask the Minister to ensure that any deal reached in relation to the sale of Aer Lingus be accompanied by legal guarantees, ensuring that the slots at Heathrow are maintained for use by Shannon, Cork and Dublin Airports in the interests of the economic and social future of our State.

Kieran O'Donnell (Limerick City, Fine Gael)
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I thank the Minister, Deputy Donohoe, for being present in the House for this matter. As we speak, discussions are ongoing between IAG and the Aer Lingus board in regard to a possible third bid. In that context, it is vital the Heathrow slots, particularly in terms of regional development at Shannon and Cork, are protected. The stakes are extremely high for Limerick and the mid-west, where connectivity is vital. We have an enormous amount of foreign direct investment companies along the mid-west and western seaboard. Shannon Airport is the only airport along the western seaboard with Heathrow slots.

In terms of the critical importance of the Heathrow slots, in 2007 Aer Lingus had its Shannon slots relocated to Belfast. This heralded a period of downturn for Shannon. Since the restoration of those slots to Shannon the airport has recovered. Following the independence of Shannon, provided for by this Government, it has been a success. It is important that success is not jeopardised.

In regard to NewERA, which is part of the National Treasury Management Agency, and is designated with providing advice to Government on its shareholding in Aer Lingus, what direction has the Minister and Government given to NewERA in terms of its assessment of any proposal, particularly in the context of protecting the strategic interests of the Heathrow slots for Ireland Inc.? We are an island nation. We must have connectivity. The key focus in Article 10 of the Articles of Association is protection of the Heathrow slots. As a representative for Limerick and the region concerned I believe it is vital that the Heathrow slots be preserved. They are vital for the future of the region and, I would contend, the future of Ireland Inc..

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputies for raising this issue. I am keenly aware of the importance of this matter not only to the constituencies they represent but also to the wider economy.

I must preface my statement this evening by saying that following the announcements of recent approaches to Aer Lingus by IAG, the Irish Takeover Panel has deemed that Aer Lingus is now in an offer period. The Takeover Panel Rules in regard to communications apply to all parties during such an offer period and all parties, including the Government as shareholder, must apply the highest standards of care to any statements made on the matter. Specifically, shareholders must take care in any of their communications to avoid revealing any information that could potentially impact, either positively or negatively, on the Aer Lingus share price. Currently, no formal offer has been made to Aer Lingus shareholders. That said, I wish to make clear that should such an offer be made, we will take great care and exercise great caution in examining the pros and cons to Ireland of such an offer. We will bear in mind the same issues we considered when faced with previous takeover bids. We will consider the impact any change in ownership of Aer Lingus would have on the connectivity of Ireland, which connectivity is vital to our economy and our society. We will consider the impact it would have on competition for passengers to and from Irish airports and we will consider the impact on the bases from which Aer Lingus currently operates, namely, our State and regional airports. We will also, of course, consider the value put on the State's shareholding in Aer Lingus by any offer.

Airport slots are a right granted to an airline which allows it to schedule a landing and departure during a specific time. Airport slots are not owned as such by the airlines and certainly are not owned by governments or states. However, at congested airports such as Heathrow, a secondary market has developed that has allowed airlines trade slots with each other to meet their changing business needs. A specific mechanism was built into the company's memorandum and articles of association whereby any proposal for the disposal of slots over which the airline had rights at the time of listing on the Stock Exchange may be subject to a requirement for a resolution approved by shareholders voting at an extraordinary general meeting, EGM. Where a resolution by shareholders is called for, the voting threshold to prevent a disposal of slots proposed by the company is such that the percentage vote against disposal at the EGM must be greater than the percentage of the company's shares held by the Minister for Finance plus 5%, or 25% if greater. The ability of the State's shareholding to block a disposal of slots is not guaranteed under this mechanism, as the support of at least another 5% of shareholders is required. This mechanism also relates only to a proposed disposal of slots. Aer Lingus does not require any shareholder approval to change the routes for which it uses the slots.

Connectivity remains critically important for Ireland as an island nation. Heathrow remains a very important hub for connectivity purposes. As it becomes more congested, however, other hub options are becoming available including other European hubs. In addition, the number of destinations that can be reached directly from many of Ireland's airports has also increased over the years.

The State retains a significant but, nonetheless, a minority shareholding in Aer Lingus with just over 25% of the shares. The Government does not control the company nor does it appoint the chairman or a majority of the board members. In 2012, the Government included this shareholding among the assets to be sold under the State asset disposal programme but agreed the stake would only be sold when market conditions were favourable and if acceptable terms and an acceptable price could be secured. In late 2012, following a third hostile takeover bid for Aer Lingus by Ryanair, the Government indicated it would not be prepared to sell the shareholding in circumstances which could significantly impact on competition and connectivity in the Irish market. Such considerations would also be foremost in the Government’s mind if a further offer is made for the company.

Michael McNamara (Clare, Labour)
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I appreciate the difficulty the Minister is in by virtue of the Irish Takeover Panel having deemed Aer Lingus to be in an offer period. I wrote to the Minister immediately following the publication of the news of the first takeover bid on 19 December 2014. I do not know if that was considered an offer period then, so perhaps a more detailed reply may have been possible. In any event, I did not receive one but I welcome the fact the Minister has come to the Chamber this evening to discuss the matter and appreciate the importance he has attached to connectivity and the Heathrow slots.

When I wrote to the Minister in December, I requested an assurance that any sale by the Government would be contingent on maintaining Heathrow slots for Shannon flights and that this would be legally binding in the event of a sale. That really is the crux of the matter and what I hope for from the Government. It is not enough that it offers to retain the Heathrow slots. There needs to be some legally binding mechanism to ensure they cannot be sold on if the company is sold and they can be used for another destination.

Timmy Dooley (Clare, Fianna Fail)
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I thank the Minister for his clear outline of the situation as to how slots are owned and traded, as well as acquired as a grandfather right. Will he clear up the myth, if he can, and explain clearly that there is no mechanism by which the slots can be retained by the airports in the event of an outright sale of the company? It is my understanding there is no legal mechanism whatsoever that can be made to any attachment to the usage of slots if the company is sold, whatever protection the State has by virtue of its 25% shareholding. The articles of association prescribe that the Government must have an additional 5% support in such an event, support I believe in the current climate will be available from the shareholdings of other groupings including the pilots. Notwithstanding that, will the Minister confirm there is no capacity to retain any control over the slots if the entity is sold?

Joe Carey (Clare, Fine Gael)
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I appreciate this is an offer period but I also welcome the fact that the Minister has given top priority to connectivity. Will he clarify if a proviso or legal guarantees will be put into any deal for the potential sale of Aer Lingus to ensure we hold on to the Heathrow slots because of the negative impact their sale could have on Shannon and Cork Airports in particular?

Kieran O'Donnell (Limerick City, Fine Gael)
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I thank the Minister for his response. He referred to preserving connectivity and the Heathrow slots. The 25.1% stake was retained in Aer Lingus by the State for that very purpose. He also stated, “Following a third hostile takeover bid for Aer Lingus by Ryanair, the Government indicated it would not be prepared to sell the shareholding in circumstances which could significantly impact on competition and connectivity in the Irish market.” At the time, it was reported that Ryanair would divest its Heathrow slots to British Airways, BA, which is involved in IAG, International Airlines Group. The State must use its 25.1% stake to ensure connectivity is retained for the region. It is not just about the sale proceeds. It is about Ireland Inc. We are an island nation that needs connectivity. Thousands of jobs along the western seaboard and Limerick are reliant on foreign direct investment and connectivity to Heathrow airport. Will the Minister give a commitment that the 25.1% stake will be used to ensure the Heathrow slots are retained for Shannon and Cork Airports?

Paschal Donohoe (Dublin Central, Fine Gael)
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I acknowledge the importance of what the Deputies have raised. I understand the reasons they are making these points and the need to do so. Again, I must emphasise that because Aer Lingus is deemed to be in an offer period, I must take great care with what I say.

No formal offer has been made for Aer Lingus. I have been very clear on the point made by all Deputies regarding the importance of connectivity in all of its different dimensions to all different parts of the country. This is an issue that stretches well beyond tourism and regional economic development. The point raised by Members is a national one for Ireland Inc. Our travelling public and our economy have benefited greatly from the good competition and connectivity provided in the market for air services in and out of Ireland. I am in the process of finalising a new national aviation policy which I will publish shortly. As I emphasised earlier, maintaining competition and connectivity will be key elements of that policy document. If an offer for Aer Lingus is made by IAG or any other party, these policy matters will be very carefully considered before any decision is made on the future of the State's shareholding in Aer Lingus.