Joe Costello (Dublin Central, Labour)
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The CEO of the International Airlines Group, IAG, came before the Oireachtas Joint Committee on Transport and Communications last week. At the committee meeting and in public utterances he gave a cast iron guarantee that he would commit to certain undertakings for five years, particularly in respect of the Heathrow slots. He indicated that in the event of a takeover of Aer Lingus it would continue as a separate entity in its entirety.

What would be the situation of the board of directors of Aer Lingus in such an event? It has certain responsibilities in respect of commercial strategy, the operating budget and the present role of Aer Lingus. To what extent will that all remain in place if it is a separate entity? There are 12 members on the board, which could have 13 members. The former CEO, Christoph Mueller, was recently replaced by Stephen Kavanagh and I wish him well. The chief financial officer is Andrew McFarlane.

They are the new executive directors, whereas I understand all of the others are non-executive directors. Did the Minister appoint any member of the existing board and, if so, whom? Will he tell me why, although three appointments can be made by the relevant Minister for Transport, Tourism and Sport, only two of them have been filled? Does he have plans to make the third appointment within his remit? Will he further tell me what is the term of office of each of the members of the board of directors? On examining the available information, it appears as though most of the appointments were made in 2009 or 2010 and that, therefore, most of the appointees are in their second term of office. The Minister should confirm whether that will be the end of their tenure and indicate what his intentions might be at the end of that period.

If a takeover takes place, what will happen to the existing board? Will it continue as before, with all of the powers it has at present as laid out in statute? Will there be a change to the board's current powers? How long will the existing board be allowed to stay in place and how will this operate? Will it stay in place for a period of three or five years or until its current term expires? Thereafter, will board members be obliged to seek renewal or otherwise? Who will appoint the new board if the takeover takes place? What will be the board's duties and functions? Will they be as comprehensive as the current set of functions? How will the new Aer Lingus and its board be integrated into the proposed new entity if a statement has been made to the effect that Aer Lingus will remain a separate entity in its entirety? My main concern is what will happen after the five years have passed. What say will the board then have on the future of the company?

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy for raising these important matters to which I will respond. As he has pointed out, some additional details have emerged of the proposal by International Consolidated Airlines Group, IAG, to make an offer for Aer Lingus since it was first announced in December 2014. Some of them emerged during the meetings of the Oireachtas Joint Committee on Transport and Communications to which the Deputy has referred. However, it is important to note that this remains a proposal to make an offer and that no formal offer has yet been made. There is still only a limited amount of detail of the terms of the potential offer. While a formal offer has not been made, Aer Lingus is in a takeover period and the strict Irish Takeover Panel rules on public communications still apply. Clearly, the future of Aer Lingus is an important matter in which there is a great deal of public interest. I have outlined the Government's policy on the proposed bid many times. I also addressed a Topical Issue tabled by the Deputy on a related matter on 4 February. The Joint Committee on Transport and Communications heard the views of a wide range of stakeholders on the matter, most recently from the chairman and chief executive officer-designate of Aer Lingus, as well as from IAG. The Government has made clear the various issues that will be examined before decisions are made on the future of Aer Lingus.

As for the board of the company, about which the Deputy has asked me specific questions, I can only outline the position as it stands. The State's combined shareholding of 25.1% of the issued share capital in Aer Lingus entitles the Minister, acting through the Minister for Finance in his capacity as shareholder, to nominate up to three persons as Minister's nominees on the board of the company. The State has two such nominees on the board. Mr. William Slattery was appointed on 12 July 2013 and Mr. Frank O'Connor on 14 March 2014, both for three-year terms. The board has ten other executive and non-executive directors. The mechanism for the appointment of the Minister's nominees on the board of Aer Lingus is set out in Article 93 of the memorandum and articles of association of the company. The Minister for Transport, Tourism and Sport, acting through the Minister for Finance in his capacity as shareholder, writes to the chairman to nominate formally the person concerned. The board then ratifies the appointment of the Minister's nominee as a director of the company. Under Article 93, should the State's shareholding fall to between 5% and 25.1%, the number of Minister's nominees on the board would fall to two. Were the shareholding to fall to between 1% and 5%, the number would be one, which relates to some of the questions put to me by the Deputy. Were the State's shareholding to fall below 1%, it would not have an automatic right to nominate any director under the current arrangements. Like all company directors, the duties of the Minister's nominees as directors derive from the Companies Acts and all such directors are obliged to pursue the best interests of the company, not those of individual shareholders.

Article 93(g) of the company's articles provides for the Minister to enter into an agreement and arrangements with the Minister's nominees. This letter of mandate requests the Minister's nominees to seek to ensure those decisions of the company which have significant implications for wider Government policies are considered at board level. As I indicated, the State's right to nominate up to three directors is based on its current shareholding. Should the State dispose of its shareholding in its entirety to IAG or any other entity, it would no longer have such rights. It is simply not possible for me to state what arrangements would apply for the appointment, role and tenure of any future Aer Lingus board in a scenario in which the State no longer had a shareholding in the company. I reiterate that no decision has yet been taken on the Government's position on the proposal made by IAG. As I have reiterated previously, in the event of a decision being taken to dispose of the State's shareholding, it would be necessary for the House to approve the principles of any such disposal in accordance with the provisions of the Aer Lingus Act 2004.

Joe Costello (Dublin Central, Labour)
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I thank the Minister for the clarification. He has observed that this is only in the form of a proposal as yet and that no firm formal offer is on the table. Nevertheless, if a deal was done with IAG, it appears that this would mean that it would no longer be possible for the Minister to make appointments, that the three nominees the State is entitled to appoint simply would fall as members. This raises questions about the guarantees. If cast-iron guarantees have been given with regard to a number of undertakings up to five years, who would be able to oversee this on the part of the State? This raises a serious question as to what legal commitments can be made. If there is nobody on the board of directors to put the State's view of the matter, it will have moved entirely out of the hands of the State, which will have no recourse in ensuring the guarantees given are fulfilled. A question is raised as to whether there is anybody on the board of directors who has the State's interests at heart. This is not to say there is no one on the board of directors who does not have the best interests of the company at heart. My understanding is that six of the current board members are perceived to be independent, but it would mean that there would be no one with a foot under the table to speak for the State. The State would have conditionally delivered its 25.1% stake on so-called cast-iron guarantees. There is a serious matter to be addressed by IAG in this respect if it intends to take away the three directors the State has the opportunity and entitlement to appoint at present.

Second, it is my understanding that at present there are only two State directors, whereas there is an entitlement to appoint three.

Does the Minister have any proposals to appoint a third director? Mr. David Begg was in the past a director. Will someone of that stature be appointed to the Aer Lingus board in these interesting times?

Paschal Donohoe (Dublin Central, Fine Gael)
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No decision has been made on the bid for Aer Lingus. It is a proposed bid that the Government is considering. The matters raised by Deputy Costello are the issues the Government has to consider. The Deputy asked how any guarantee would be overseen and implemented. IAG has indicated it would need to have legal standing, be objective, and could be verified. It has put forward a case for this. The Government will have to consider all these matters. The core issue for me in any decision will be more than just the price of a share. We have to look at the impact on access and the ability of our country to grow in the medium to long term. As for the future of the Aer Lingus board, I cannot forecast what IAG might do were it to acquire the company. The ability to appoint a director to a board is directly related to how much one owns of the company. Accordingly, the number of directors the State can appoint to the Aer Lingus board is directly related to the size of the shareholding the State has in the company. That is why we can appoint up to three directors. We currently have two appointees on the board of directors. Mr David Begg resigned from the board several weeks ago. That is a matter to which I am giving consideration.