Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

4. To ask the Minister for Transport, Tourism and Sport his position regarding the sale of the Government’s shareholding in Aer Lingus to the International Airlines Group; the nature and character of any assurances sought from the group on connectivity, jobs and the management structure at Aer Lingus; and if he will make a statement on the matter. [16719/15]

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Some time ago the Minister indicated that he would bring to a conclusion relatively quickly the Government's deliberation on whether to sell to IAG the Irish people's shareholding in Aer Lingus. Can he update the House on where that process is at?

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

At this stage, I do not have any significant developments to report on the proposed offer by IAG for Aer Lingus. However, I expect that the Government will be in a position to make a decision on the matter in the coming weeks.

The Government's interdepartmental steering group and its advisers have continued their engagement with IAG. This engagement has centred on the considerations set out in my statement of 24 February. These include legally-binding permanent commitments on the Heathrow slots and term-based commitments on routes; clarity on the overall employment prospects, with particular reference to the timeframe within which net additional employment could be created; further details and clarity on transatlantic growth and opportunities for growth at Cork, Shannon and Knock airports; confirmation of the nature and acceptability of any oversight measures on the Heathrow slots and routes, subject to any EU considerations; and evaluation by the steering group and its advisers of the financial terms offered.

There has been useful engagement on the issues by both sides. IAG has provided further details on the issues of concern to Government that were highlighted in my statement and discussions are progressing. I expect that the steering group will report back to me shortly. I indicated previously I do not want this process to be drawn out unnecessarily and I expect that it can be brought to a conclusion in the coming weeks.

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Minister states, in response and on a number of occasions, that the Government is seeking legally-binding guarantees on the slot access to Heathrow from the three State airports. Can he tell us what the nature of such legal guarantees might be? Can he indicate what kind of recourse would exist and, in default of such agreements, what kind of remedies might be put in place? In the minds of most, the kind of legal guarantees that are mentioned are fairly worthless. The views of many would be that a legally-binding guarantee to retain slot access to Heathrow for five, seven or ten years could easily be breached by one contracting party and, in the case of default, the only recourse would be some kind of financial compensation which would be worthless to the people, to the foreign direct investment and to the companies that have already located in the southern region of this country. The Minister would be wrong to think that somehow, seven or eight years of a legally-binding guarantee to retain slot access to Heathrow from Shannon and Cork is appropriate without some kind of concrete guarantee in dealing with a default on the contract and the recompense that would be in place. Anything other than a reversal to a State entity of the slot access would not be considered appropriate.

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As I stated, this is a matter that I have not drawn to conclusion. The Government, through the Taoiseach and Tánaiste, has made clear that the main elements any guarantees would need to deliver, were such guarantees to be agreed by the Cabinet, would be that they would be robust, certain and have clear oversight mechanisms in place.

10 o’clock

The strength of those oversight mechanisms, put in place in the public interest, should mean the very issues to which the Deputy is referring would not arise.

However, I shall conclude by reminding the Deputy of something of which he is already aware. The prevailing conditions are such that the only legal protection the State has is in regard to the disposal of slots. That protection can be triggered only by the State using its shareholding in addition to prevailing upon other shareholders to vote with us to trigger the mechanism.

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Minister is correct that I am fully aware of the current position. However, to paraphrase an advertisement, when it is gone, it is gone. If the State decides to sell its stake in Aer Lingus, it will have no capacity whatsoever to influence the direction of the company. A shareholding of 25% is significant. I accept there are limitations to what a minority shareholder can do but believe it is clear that IAG considers the State shareholding to be of strategic interest and clearly does not want the Minister or State on its state register. It could buy up the rest of the company at present without bothering with the State. It clearly regards having the State on its state register as an impediment. Therefore, the legally binding guarantees will have to be far more progressive and clever than what the Government is attempting to achieve, which is to push out this debate. I refer to an arrangement whereby ten years are sought, five are offered and seven are settled upon, and to the desire to move on to the next business on having secured such a supposedly great deal. I am not interested in the duration but in the nature of the deal and the potential to reverse any decision that might have a negative impact on the regions and the employment that is so dependent on direct access to Heathrow.

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What strikes me is that the Deputy and Fianna Fáil did not make these points when his Government sold 75% of the company. Let me quote what the Deputy said about the legislation in March 2004. He stated:

The purpose of this legislation is to provide for a viable future for the airline. It needs to change the focus which was initially targeted at the national interest. That need is no longer as prevalent, but there is a need to develop the airline and ensure the future viability of not only existing jobs, but to build and grow a company that will develop into an international success.

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is why we held on to the 25%.

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy did not seek in 2004 the very kinds of mechanisms he now seeks.

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We did. Why did we hold 25%?

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have outlined the circumstances that would obtain were the Government to find itself having to seek to dispose of its share. That decision has not been made; it is something we are considering. I have outlined all the criteria against which we would evaluate this decision, on which I am required to come back to the Oireachtas. However, the point I am making very clearly is that the very issues the Deputy is raising now did not appear to be in his mind when 75% of the company was sold in 2004.

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

With respect, that is why we retained 25% of the company. The Government is now trying to sell off the piece we believed it was important to retain.