Wednesday, 27 May 2015
Aer Lingus Share Disposal: Motion (Resumed)
The following motion was moved by the Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe, on Wednesday, 27 May 2015:That Dáil Éireann, pursuant to section 3(5) of the Aer Lingus Act 2004, approves the general principles of the disposal of shares in Aer Lingus Group Plc by the Minister for Finance in accordance with section 3(2) of the Aer Lingus Act 2004, which were laid before Dáil Éireann on 27th May, 2015.
Under this deal, Ireland will, in time, become like Scotland, utterly ignored by IAG through British Airways, which is purely interested in growing out of Heathrow.
As stated by Senator Sean D. Barrett last night, "We are trying to develop this country, yet we are handing over the national airline to an airline whose track record is not to provide services from Belfast, Edinburgh, Glasgow, Manchester, Birmingham or any other region of the UK to North America". What hope has Cork, Shannon or other regional airports in that environment? We have been able to utilise Aer Lingus to support regional airports and the economies surrounding them. This will no longer be the case under IAG and these communities will suffer for it. The chambers of commerce and other bodies from these areas voiced grave concerns over the IAG bid at the Oireachtas committee.
I want now to deal with the plan by this Government to maintain a 1% share in Aer Lingus, which would provide it with certain rights over decisions. While this appears to be a good way of maintaining the voice of the Irish state at Aer Lingus it is faulty for two reasons. This proposal is known as a "golden share", which has been shown to be illegal under international and European laws governing business. In Britain, the Government retained a "golden share" in BAA, the UK airports authority which operates Heathrow. This was ruled illegal by European courts in 2003. It was deemed contradictory to the principle of free circulation of capital within the EU. The European Court of Justice also ruled Portugal's golden shares in Energias de Portugal as contrary to EU law as it presented an unjustified restriction on free movement of capital. Spain’s golden shares in Telefónica, Repsol YPF, Endesa, Argentaria and Tabacalera were also ruled illegal, as were many others. IAG operating out of Heathrow and controlling former Spanish airline, Iberia, would know all too well the problems associated with golden shares but would see this as the Government’s problem. In a poll by The Irish Timesthe majority of respondents, 54%, stated they were opposed to the sell-off of Aer Lingus. This 54% was twice that of those who supported the sale. The people know that the future of Aer Lingus is best placed in Ireland, with the State maintaining its interest and arguing for Ireland's needs. This deal is also faulty as the real decisions for Aer Lingus will no longer be made at the company but at the IAG board.
Turning to the issue of the deferred members of the IASS who worked for Aer Lingus, these workers are going to be forced to take a 40% cut to their pension entitlements, facilitated by Government legislation. During an interview on radio this morning Deputy Costello mentioned this issue and said that he would be seeking money in this regard from the sale even though he well knows that the Minister has ruled this out. When I put a similar question to Mr. Walsh at the transport committee his response was that the matter was outside of his remit. The deferred pensioners were left out of the expert panel and out of the conclusion and are now to be left out in the cold by this deal. The Government also opposed amendments to the Social Welfare and Pensions Bill which would have helped these workers, who have been so unfairly treated.
This is a cheap sell-off of a vital State asset as an election looms. Let there be no mistake about it, this is a bad deal for Ireland, Aer Lingus and its workers. It will usher in seven years of uncertainty and struggle for the State to maintain connectivity. It will mean seven years of industrial strife and hardship for workers who will be left on the scrap heap, leaving us in seven years time with an island dependent on the crumbs of a major multinational to provide the much-needed connectivity we have come to depend on.
The Labour Party will see the cost of its cowardice when it is too late, just as Fianna Fáil may today see the cost of its agenda in selling off Aer Lingus in the first instance. It is clear that Aer Lingus had plans to expand its services, create additional jobs and open up new routes. The so-called guarantees have been welcomed by Deputies John Lyons, Seán Kenny and Joe Costello and Ministers of State, Deputy Jed Nash and Deputy Aodhán Ó Ríordáin. They have capitulated.
I ask all north side Labour Party Deputies, never mind those in Cork and Shannon or Fine Gael Deputies, with large numbers of Aer Lingus employees in their constituencies, if this deal will do any more than the previous one? The same principle applies - Aer Lingus is a going concern and profitable, with plans for expansion, leading to the creation of more than the predicted 150 jobs by the end of 2016. It would rival the so-called 635 net new jobs to be created by 2020, without the loss of the jobs mentioned by the Minister. At the press conference the other day he said that in the region of 50 jobs would be lost, but he was a little vague and unsure about who would be affected. This makes it obvious that the Government did not negotiate hard on that issue.
Job guarantees and promises of no compulsory redundancies are of little consolation to the workforce. What about the future? Is it all right that future employees will have less favourable employment conditions and wages? Will outsourcing take place? With profits of almost €80 million, excluding some one-off loans that will be repaid, and passenger numbers at an all-time high of almost 12 million, why should we sell a going concern that is delivering? The Government has admitted that tourism has been one of the good news stories of recent years; why, therefore, would it jeopardise what is working and delivering in the past few hard years? The Heathrow Airport slots are vital to the maintenance and expansion of activity on this island and to overseas destinations.
Why was this deal not placed before the Joint Committee on Transport and Communications for scrutiny, as requested by Deputies in all parties? How have shareholders benefited from this? What will senior managers, directors and board members get? We have not seen details of the remuneration that will be paid to some individuals as a result of this sale. What will happen to the board of Aer Lingus? The Minister said it would continue to act independently, but for how long? Will it last into perpetuity? I doubt it. How will having a 1% share allow a Minister to have a veto into perpetuity? Will the Minister stand up at a board or shareholder meeting seven years down the road and say, "I am the Minister for Finance; you cannot sell off these slots or cannot do this"? Anybody put in that position would end up a laughing stock.
Fine Gael's ideology is behind this sale. Fine Gael supports the idea of monopolies and big business. Anything the State owns or part owns is bad in its mind. Aer Lingus survived through the 1930s, 1940s and 1950s and then through some of the most difficult and worst times the country has ever seen. This is a rich country, although we may not be using our resources in the right way. Therefore, there is no reason this company should be sold.
The Minister mentioned three areas in terms of how he gauged this deal. He mentioned a cyclical airline industry with ups and downs. Any company must take into account the fact that business can go bad and engineer its finances in order that it can address a problem if or when business is bad. That is a function of any company. We can expect cycles in business and this is not the only time we will see issues in an industry that has ups and downs when times are hard.
The Minister also mentioned that the European airline industry was fragmented in comparison with that in the United States. Must we base our judgment on everything the United States does? There are some brilliant airlines in Europe, but they may not all be linked like those in the United States. However, that is no way to gauge whether an airline should be sold.
The Minister mentioned that Aer Lingus was no longer the national flag carrier because we only owned 25% of it. That is true; I wish we owned the other 75% and were not in our current position. However, this does not take from the people's vision that it is our airline. They have said they do not support the sale of Aer Lingus. The majority do not support its sale, but the Government has not taken this into account.
The Minister mentioned setting up a connectivity fund. He said the moneys would be put into the strategic investment fund and could be used for building or other works on harbours, roads or airports. Will the funds be put into bus services, the ones the Minister plans to privatise? Will we see any of this funding? Will the Minister elaborate on where the funds will go and what they will be used for?
What will happen if, for some reason, IAG ends up selling parts of the company or merges with other companies? We are all aware that takeovers can happen. In such cases, any deal done will go by the wayside. We have seen this happen in the case of the Government. We saw it happen in the case of commitments made on bin charges in the case of Dublin City Council, when Fine Gael and Labour Party councillors made a deal promising that waivers would be provided for old age pensioners and others. That commitment went by the wayside and the service was privatised under Fine Gael and Labour Party councillors.
Aer Lingus has survived many difficulties, but this deal is a nail in its coffin. The Minister should be defending the State's assets, not selling them. No Government should have the right to sell the State's assets. It should be up to the people to decide and it should be for them to make the decision. This company has been hard won by the people and the workers. Many years of hard work have gone into building the company, but it can all change at the whim of the Government. Every time the Government changes or each time we change from Tweedledum to Tweedledee political parties, power is taken and some company is privatised. Another Government takes power and privatises another. That is what has happened in this state in the past while. This has damaged society enormously. We have seen this happen in the cutbacks made to local services across the board. Services are being cut left, right and centre. The Government has stated it is addressing the housing crisis and social issues, yet we heard from Focus Ireland the other day that 70 new families a month were becoming homeless. Since the death of Jonathan Corrie and all the talk about what it was going to do, the Government has spun what it is going to do with its €3.8 billion so many times that I have lost count. Some of the sums announced were totally ridiculous.
The sale of Aer Lingus is one of the worst things that could happen, as is the selling of State assets that people have worked hard to build. Aer Lingus belongs to the State, not the Minister or the Government, Fine Gael or the Labour Party, yet the Government has taken the decision to do this and can push the sale through. However, I am sure it will come back to haunt us because IAG, Mr. Willie Walsh and people like him have no interest in the connectivity of this country. They have at heart their own interests and those of shareholders, but the people who matter in this country are the ordinary people. They are the ones who care, but the Government is going against their wishes. That is how I see it.
I am grateful for the opportunity to speak in this important debate on the future of Aer Lingus. The way this issue has been handled so far, and particularly last night, is a disgrace. I was attending a residents' meeting in Clongriffin, in my constituency, at about 9 o'clock last night when I heard the news. I then heard about the plan to have the rushed debate at 10.45 this morning. That shows a complete lack of respect for this House and its procedures but, more importantly, the Irish people. Rushing this debate is not good enough for anyone, and the Government should know that from past experiences.
People have genuine concerns about this issue, and those concerns must be dealt with. My concerns arise from having listened to those on all sides of the debate and representing the best interests of the staff, the former pensioners and the people. When we raise concerns we have to be listened to, and those concerns must be teased out.
My first concern is job losses. That is a reasonable concern, and we must focus on it. There are people who work in the aviation sector who said they could see the possibility of 1,200 job losses in the coming years yet the Minister is telling us their will be job gains. That is a question to be answered. In terms of history, Iberia Airlines has shed 4,500 jobs since it was taken over by IAG.
The other concern, and I am sick and tired raising it here and sick and tired of the Government not listening, is that we still do not have a resolution to the unjust situation faced by the deferred members of the Aer Lingus pension scheme who are now facing huge cuts to their entitlements, aided by this Government motion. Those are my three immediate concerns.
We need good inside information on Aer Lingus. I have got many letters on this issue but I received one this morning from a woman who is a current Aer Lingus worker. I will read a small section of the letter. It states:
I am an aer lingus worker and am very worried about the security of my job with the sale of our fabulous airline. Have our government learned nothing after the sale of Irish ferries and eircom. To me this is a short term gain for long term pain to all employees of aer lingus. Aer lingus management are set to gain lotto figures with this sale so they are of course pushing this sale.That woman is a credible member of the staff and I ask the Minister that, when he is responding, he would address those genuine concerns from members of staff.
There is a lack of informed debate on the reason this proposal is being rushed through the House, with the vote being held tomorrow evening. There is a lack of respect for the Dáil and the people. As the Minister knows, Aer Lingus has adapted and proven itself in a competitive market.
I have other concerns regarding how consumers will fare. Will this prove to be anti-competitive? The coveted Heathrow slots will be gone. That is a reality. Competition has been a friend of Irish travellers for the past number of years. In 1985, an airline ticket from London to Dublin cost in the region of £569. Today, one can buy a ticket for €35. The competition issue has not been addressed in a proper and sensible way.
Aer Lingus has survived tougher times. Why is now the best time to sell it off? We must consider the broader picture, outside the economic issue. The staff issue is a concern also. We must also ask if this sale is in the national interest. Is this a hostile takeover by IAG which will bypass the public interest? How can the Minister say he will have more control when he no longer has any shares than when he owned 25% of shares? Those are the type of questions people are asking me.
Aer Lingus is a great brand, and we are all very proud of it. I have many family members and friends who worked in Aer Lingus. As the Minister knows, Aer Lingus is highly profitable. We also know that Aer Lingus is vital for tourism, foreign investment and job creation.
In terms of this lack of informed open discussion and the rushed decision, we are not looking at the valuable asset. There has also been a sneaky attempt by certain sections, both in government and outside Government, and those who will gain financially, to distort public opinion. I have seen that in the past 12 hours. We need to wake up, smell the coffee and examine the real issues.
There has been a grave injustice against the IASS pensioners. Another letter I received this morning was from one of those people in which he stated:
So much for the protection of Irish workers but in particular the people who have been robbed of their rightful pension. We now have uncertainty and hardships to look forward to in our old age. All politicians who go along with this sale without any reference to our group, the IASS deferred pensioners, should hold [their] head in shame. In particular the members of the Labour party. You all disgust me but at least myself along with my extended family and friends who are shocked and dismayed by your treatment of me and my pension are looking forward [to] casting their vote...Those are the type of situations we are dealing with. Those are real stories from pensioners and people who work in Aer Lingus.
Another issue on which all those on the opposite side of the House have ducked and dodged in the past 12 hours is customer service. Aer Lingus had a fantastic international record and a very valuable asset. It acted as an ambassador for Ireland. In 2011, it celebrated its 75th birthday. It has outlasted companies like Pan Am and TWA. What a record. What a group of people, but now the Minister is saying the company is not financially viable.
The Minister should always learn from history. He should recall the 1960s when it was decided that the famous Harcourt Street line, which went to Bray, was not economical or fashionable and that it should be closed down. Today, it is part of the Luas Green line. Economic arguments were presented at that time against retaining it but they have been exposed as being hollow.
We need to preserve a vital infrastructure. We should not discard a company like Aer Lingus. We cannot afford to lose the connectivity Aer Lingus provides, and we cannot afford to lose the potential to create thousands of jobs. Aer Lingus has served this country well. Aer Lingus is a profitable company. Aer Lingus has an excellent brand. It is time for people to look at the facts and hear the economic arguments I put forward today. We should put the national interest, the interests of the staff and the pensioners first. I ask the Minister to respond to the issues I have raised.
Before I begin I wish to echo the words of Deputy McGrath about the deferred pensioners because this is not a footnote. It is one of the tenets of those of us who support, on the whole, the idea of a free market that it creates more wealth, and some of that wealth must be spent to defend the weak. It is a very serious point. A large amount of money will come into the Government's coffers as a result of this sale; I believe the figure is between €333 million and €400 million. It is not unthinkable and is only justice that the Minister would say that some of that money should go to support those who are the weak now but who were strong in Aer Lingus not very long ago. It is unthinkable that in the midst of these riches being distributed to the Government we should just say, "No. Those who have been impoverished by what has happened to Aer Lingus in recent times, and the pension fund, should be neglected and thrown on the rubbish heap." The Minister has got the money. He says he will spend it wisely on infrastructure, broadband and items like that but some of it, and I understand it is €40 million or €50 million, could be spared. I ask the Minister in all sincerity to consider this and give those people who have been weakened by the procedures in Aer Lingus over such a long period their rights and a happy and secure old age. That is all we ask.
The Taoiseach answered in a derisory way. He did not answer the arguments but said the Minister had spent a lot of time on it and to let it go. His speech today was equally disappointing. What he really said was that the shamrock was being replaced by the fig leaf. His arguments were very weak and particularly feeble. He said that we should not worry, the headquarters would remain in Dublin. It is a meaningless, token gesture. One could have a headquarters with two men and a dog and we can be sure that is what we will have eventually. He said it would be registered in Dublin. That is laughable. One can have a brass plate and be registered in Dublin, as thousands of investment funds are. It is meaningless.
The Taoiseach also said we must have more routes to service the multinationals. If they come, the multinationals will be serviced by the market which will move in to service them as sure as night follows day. We are not going to create aircraft to bring in multinationals. The multinationals, when they declare their interest in coming, will immediately create a demand which will be filled by Aer Lingus, as now happens, or other airlines. We do not need IAG to service the multinationals. It will happen naturally by way of organic growth.
The arguments about the slots make me wonder. I take on board the Minister's point. He has won a concession, on which I congratulate him. However, in seven years time the neat distinction between the sale and usage will be made. While we will have a veto on the sale, if IAG or some other foreign multinational decides what they are used for, there will not be much point in having the rights that go with the sale. The slots will be used as IAG thinks fit, not as we think fit. The Minister received a concession on the sale but only for seven years.
One of the great selling points of the sale is Mr. Willie Walsh, a magnificent Irishman, of whom everybody is proud. The fact that he, an Irishman whose interests are perceived to lie with Aer Lingus and who was here before, is involved is meant to provide some assurance and seen as an underlying and unwritten little perk, but he will not be there forever. He may not be there in seven years time.
The promises of jobs are phantoms. Let the Minister not tell me that after the takeover has been completed, in four to six months time, if IAG decides the projects which will create the jobs are no longer relevant and profitable, it will go ahead and undertake them. IAG will not enter into a non-commercial venture to fulfil some clause in the agreement. It will break the agreement. That is what rich, capitalist multinationals do, rightly or wrongly. The Government will be powerless to do anything about it, except to take IAG to the European Court which will take 25 years, by which time it will be a forgotten cause. I do not believe the Minister has won a significant deal. I heard him this morning and he interviews very well. However, he could not answer the question on what would happens if IAG was sold. I do not know the answer. However, anybody coming from further afield or some larger group will seek and find a way to break the agreement or abolish and abandon the clauses the Minister anticipates today.
I do not understand what is happening. Some presumption is creeping into the lexicon of Fine Gael that biggest is best, that small companies cannot make money and that there are no niche markets. Aer Lingus is doing extraordinarily well and the heavy lifting has been done. It is an efficient and profitable company. It does not aim to fly aircraft from Caracas to Rio de Janeiro or to be a multinational, even on the scale of Ryanair. Its job is to be profitable and ensure people and cargo can be flown into and out of Ireland. Since its great downfall approximately a decade ago, it has managed to succeed in doing this magnificently successfully as a small company, with cash in its coffers, profits and people still gainfully employed. To suggest this is the time to hand it over to a multinational is extraordinary.
Multinationals get a good deal. Has the Minister investigated whether this multinational will get up to the same tricks as all of the others and transfer money out in bogus, strange administration charges to get all of the profits out of Ireland and avoid paying tax here? Has the Minister received an assurance in this regard?
The manner in which the debate has been organised is disgraceful. A few hours ago we were handed a speech. This is an attempt to steam-roll the motion through and push it to a vote tomorrow before workers, their families and the communities which depend on Aer Lingus have a chance to find out about it or, more importantly, object and lobby their Deputies, particularly Labour Party Deputies. It is an act of treachery by Fine Gael and the Labour Party in selling the last remaining shares in Aer Lingus. It is yet another broken promise by the Labour Party, the tactics of which seem to be to boycott debates in which it might be held to account in any way, shape or form. In April 2006, when Fianna Fáil sold 75% of Aer Lingus, Deputy Pat Rabbitte jumped up and down during Leaders' Questions and said: "The Progressive Democrats has pushed Fianna Fáil so far to the right - it would have been unthinkable even a decade ago that Fianna Fáil would have sold off the national airline in a country that has the strategic requirements of an island nation." Now, the Labour Party has been pushed so far to the right that it is going along with this proposal.
Although we are hearing many fake assurances about jobs and conditions, according to IMPACT, one in four people in Aer Lingus could lose his or her job under the deal if IAG follows the traditional path it has followed so far. There has not been one word from the Minister about pensions. Did he receive any assurance about the matter or does he have anything to say about it? The same assurances were given in 1997 when TEAM Aer Lingus, the maintenance company Aer Lingus used to own, was sold to another multinational giant, SR Technics. By February 2009, the company had been closed completely, with the loss of 1,300 jobs, and the business moved to Zurich and the Middle East. The company had been profitable with highly skilled workers, many of whom lived and worked in my constituency. Why would Aer Lingus be any different in a few years time? The Taoiseach and the Minister have come away from the CEO of Aer Lingus, not from IAG, with a letter about employment rights and the CEO does not foresee a likelihood of either compulsory redundancies or non-direct employment. Is the Minister for real? Is this as good as he gets? Does he expect people to buy this? Aer Lingus is already moving to subcontract out and employ non-direct labour on Atlantic routes. I sent the Minister a letter about the matter and tabled a question on it and he told me to toddle along to Aer Lingus, although the Government had a 25% share in Aer Lingus.
The Minister mentioned and the Taoiseach repeated that the Government had better assurances and control over the slots and Aer Lingus than ever before. It does not. The Government chose not to exert any control over Aer Lingus. Its 25% share, combined with the pilots and others, was a very decisive influence, if we had a Government that cared about a national airline, public enterprise and workers' rights. Selling the last vestiges of control by the public over a strategic asset to a multinational shark is what is going on today.
What else would it do other than cut costs and operate in its own interests? It will not be acting in the strategic interests of the people of this country. That is what multinationals do. The Minister indicated that its preference will be to utilise direct labour, but only where it is efficient and effective to do so, and that it will avoid compulsory redundancies. It did not rule out compulsory redundancies, however. There will be redundancies at Aer Lingus, and while they may be voluntary at first they will be compulsory if necessary. The Minister expects us to think that he has managed to find a way of persuading multinationals to behave differently. That is amazing given that the record of IAG's previous takeovers suggests the opposite.
The Minister also outlined the important contribution that Aer Lingus has made to this country. He should be seeking to buy more shares in the company in order to renationalise it and to right the wrong Fianna Fáil committed in 2006. It is the 19th largest indigenous company in this country. It employs 4,000 people directly and many more indirectly. Its slots were valued by Deloitte at €925 million and it has net cash reserves of €445 million. If the Minister could ditch his ideological aversion to public ownership, the taxpayer spends billions of euro attracting this type of company to Ireland and supporting them through IDA and Enterprise Ireland. This is an indigenous company with a respected brand which contributes to the Exchequer and turns a profit but apparently it must be sold. The pilots in Aer Lingus have made it clear that IAG needs Aer Lingus rather than it being the other way around. Aer Lingus has something that other airlines want, namely, the slots in Heathrow Airport. These slots are invaluable to regional development in Ireland. Some 25% of business in Shannon and 20% of business in Cork depend on Heathrow. Control over those slots will be completely lost in seven years time. This is a small, open economy in a globalised world. We need a strategic aviation bridge with the rest of the world. The Government can invest billions of euro of taxpayers' money to prop up failed private banks and developers or to bail out the Quinn Group, Eircom and even a lottery company that is unable to run a successful lottery but it cannot invest in a profitable company like Aer Lingus. The Minister pretends that the company cannot survive without the deal but he has not outlined the threats that require it to be sold to a shark. It has survived Ryanair, which it is conveniently forgotten was established with considerable help from Aer Lingus. It also survived 9/11 and it has gone on to spawn other companies.
The Labour Party thinks it can rush this through the Dáil and present it as a fait accomplito the workers and communities of north Dublin, Limerick and Cork in the expectation that people will have forgiven and forgotten by next year's election. I assure Labour Party Deputies this is just another nail in their coffin. It will hasten their demise in those aforementioned areas and any attempt to save face will be futile. Their silence today is deafening.
There is no doubt in my mind that the process under way over the past several months is nothing more than a charade designed to give the illusion that the Government was debating issues and wrestling concessions from IAG, when it had in fact already decided the outcome. That is not surprising from a Fine Gael point of view. After all, it was the Minister for Finance, Deputy Noonan, who hand-picked Willie Walsh as chair of the NTMA advisory board, which has responsibility for advising NewEra on the divestment of State assets. This day is not a surprise, therefore. It is a vindication of the policies of neoliberalism and privatisation pursued by Fine Gael. It is an entirely different matter when we examine the record of the Labour Party and what it pretended to stand for when it went to the electorate.
In this regard, people all over the country are shocked at what is now happening. I see myself first and foremost as an Aer Lingus worker. I am thinking today of the people who built the company. They got themselves and their children out of bed in the morning to arrive in time for early shifts and to keep the airline afloat. I am thinking of the pensioners whose retirement income is decimated by the rushed legislation this Government introduced. Over the last several months, Labour Party Deputies took to the airwaves to say they will make sure the pensioners are protected if the airline is sold. They promised they would get the money to shore up the living standards of deferred and existing pensioners, some of whom worked and contributed to their pension schemes for 40 years. They have come up with absolutely nothing, however.
Pride in Aer Lingus is not confined to the workers in the company. It is an iconic company which is held dear by the travelling public and generations of Irish people. Not many companies can claim a history of almost 80 years of providing secure, permanent and pensionable employment. Tens of thousands of people had good jobs in the company at its bases in Dublin, Cork and Shannon. In the 1980s, Aer Lingus workers paid more taxes than all the farmers in the country. The company was always a net contributor to the Exchequer. It supported connectivity and regional development. It was an important signifier of Ireland as an independent nation, and people valued it as such.
We have been treated to a yarn by the Government that the betrayal put before us today is necessary to secure the airline's future. That narrative makes me sick because it bears no relationship to reality. If it was true that Aer Lingus needed somebody to take it over or partner with, surely to God the board and management in which the Minister for Transport, Tourism and Sport expressed such confidence would have actively sought a partner. The only reason this deal is on the table is because IAG is acting in the interest of its shareholders, who are resident in Britain, Europe and Qatar. It is revenue for shareholders that motivates the deal. The idea that it is in the best interest of Ireland as a small country that cannot survive in the global aviation industry is a joke. We have been hearing that claim in Aer Lingus for many years. We heard it after nine-11 and every time a national carrier went to the wall. We are hearing again today that we should consider the fate of Finnair, Malév and the others. We are not other airlines, however. Fine Gael Deputies were speaking about Aer Lingus becoming part of the One World Alliance. Aer Lingus has a proud tradition of linking up with other airlines but we are also different to other countries because we are the only island nation on the periphery of Europe that does not have a terrestrial link with mainland Europe.
The benefits outlined by the Minister and the Taoiseach in respect of growing the airline and tourism already exist. The Wild Atlantic Way was supposedly responsible for this previously. It is ludicrous. Who owns Aer Lingus is irrelevant from that point of view. The question is who will benefit from the enormously positive contributions that Aer Lingus makes. This company has been consistently profitable.
It is a company that is growing with nine long-haul aircraft booked, and it already has €1 billion in cash reserves. Therefore, the driver of this sale is not the future of the airline or the public's benefit, but what is in the commercial interests of AIG.
The guarantees the Minister talked about are somewhat pathetic. I would like the Minister to address this B share and the so-called veto he has because it is laughable. It is unprecedented in terms of world economics and global capitalism. Given that the Minister will be a captive subsidiary in IAG, how can he guarantee that Aer Lingus will not lease that to IAG, or that IAG would not use it for its own purposes? I am particularly concerned about the workers, including ground staff. Allusions to growing staff are just part of an unsubstantiated wish list for future development. Some of the growth in cabin crew and pilots was there anyway, but the Minister is effectively silent on the decimation of ground crew that will take place.
The Minister should address the fact that previous so-called legal guarantees and letters of comfort were given to people as assurances that could not be broken, yet they were broken. The Supreme Court adjudicated that they were broken and the CEO of Aer Lingus at the time, Mr. Willie Walsh, ignored those Supreme Court directives. Where has the Minister got these magic guarantees that nobody else in the history of humanity has ever got?
I am delighted that the Minister for Public Expenditure and Reform, Deputy Howlin, has joined us because the appalling lack of Labour Deputies has been quite striking. I can only ascertain that the reason this is being rammed through is that they want to protect themselves from workers in the communities involved. I am sorry to disappoint them, but that is not going to happen.
I am happy to have the opportunity to address the Dáil regarding what is a positive transaction for Aer Lingus and for Ireland. I commend the Minister, Deputy Donohoe, on his concerted efforts over the last number of months.
Today’s motion to dispose of the State’s minority shareholding in Aer Lingus and the commitments contained within it delivers the best possible outcome for the Irish economy, Aer Lingus, connectivity and jobs. It is a good outcome for the country. I also thank the Government steering group which has supported the Minister in his efforts and has also worked to secure the commitments we are discussing today.
I also understand the concerns of employees of Aer Lingus and, in this regard, I note and welcome the commitments from Aer Lingus management to secure high quality jobs today and into the future.
We have come a long way in the last number of years in taking the positive incremental steps necessary to build a strong investment case to recover our financial stability, create jobs and secure economic growth for Ireland. This has not happened by accident, but through a concerted and deliberate effort led by this Government and supported by the people of Ireland to move our country forward.
In the last number of years we have created an environment of certainty conducive to growth and investment. We have established certainty around the stability of our financial system; established certainty around our public finances; reaffirmed certainty around our corporate tax position; and reaffirmed certainty that Ireland is a growth-friendly environment for foreign direct investment and local business investment.
Through this transaction we are now establishing certainty around connectivity to and from the island of Ireland for the foreseeable future, including valuable certainty for areas crucial for economic growth across the country and not just in Dublin.
The long-term commitment to connectivity provided by this transaction will de-risk investment into the island of Ireland through guaranteed connectivity to Dublin, Cork, Shannon, Knock and beyond. Long-term investment decisions, such as foreign direct investment into Ireland, are much easier to make in an environment of certainty. The level of certainty provided by this transaction, as part of our broader efforts, is supportive of economic growth and will help encourage investment decisions into Ireland.
With this transaction, we are eliminating any potential concerns around long-term reliable air transport to and from Cork, Shannon, Knock and the rest of Ireland through Dublin, further enhancing Ireland’s attractiveness as a destination for investment. This transaction will give us, for the first time, the ability to provide businesses, consumers, tourists and investors with long-term certainty regarding connectivity for business development and tourism into Cork, Shannon, Knock and more broadly across the island of Ireland.
For the first time, the IDA and all of us can point to this certainty with regard to island-wide connectivity in attracting foreign direct investment to, and creating jobs in, the regions. This significantly enhances the investment case and the resulting potential for job creation. Securing the future of Aer Lingus and securing the commitments on jobs and connectivity will deliver growth and opportunities across the country. IAG also recognises the value of, and is committing to protect, the Aer Lingus brand as a visible positive symbol of Ireland. This growth and IAG’s commitments through this transaction will bring significant benefits to Ireland, including increased numbers of passengers, hub traffic, regional connectivity, stop-overs, city breaks, tourists, restaurant dinners served, and hotel beds filled.
I am encouraged that a number of representative groups around the country are seeing this opportunity for themselves in stating their support for this transaction and are demonstrating that confidence in Ireland’s potential. All of the Irish airports are supporting this transaction and see the significant potential benefits and positive opportunity this transaction offers for Ireland and their respective regions. The tourism industry, represented by Tourism Ireland, ITIC and Fáilte Ireland, is also supportive of the transaction. It cites the long-term sustainability this brings to Aer Lingus, as well as the major boost for tourism from North America, continued growth in visitor numbers and revenue for the Irish tourism industry.
The tourism sector is a key source of economic growth and job creation across the country. The Government has made a major investment in the tourism sector through the reduction of the VAT rate to 9% and the abolition of the air travel tax. The reaction of the tourism sector to these initiatives over the past four years has been outstanding and overall visitor numbers are up 26% since the low point of 2010. Thousands of new jobs have been created and I am confident that our dynamic tourism sector will be able to capitalise on today's announcement.
Business groups, including the Irish Exporters' Association and regional chambers of commerce, such as those in Cork and Shannon, have also welcomed the sale citing the improved connectivity it will bring to the region and improved access to export markets supporting Irish economic growth. It is clear to me that a combination with IAG will contribute to Ireland’s economic growth and job creation. It enhances our position as a natural gateway connecting Europe and North America through additional routes and additional aircraft leading to more direct Aer Lingus jobs; increased passenger numbers travelling through Irish airports and travelling to Irish cities; and, significant indirect job creation through increased airport support services, tourism spend and business investment. Aer Lingus joining the IAG group will give Irish travellers, tourists, exporters and importers greater access to major traffic flows, which will increase travel connectivity as part of a much larger network and also provide improved access for business interests and for cargo.
I want to spend some time explaining how the commitments which have been described by the Minister, Deputy Donohoe, are to be secured, as there has been some discussion and speculation on the strength of these commitments. These commitments will be secured by providing certain rights to the Minister for Finance through the retention of one share in Aer Lingus which will be re-designated as a B share. The benefit of these commitments will be conferred on the Minister for Finance as holder of the B share through changes that will be made to the Aer Lingus articles, which will also set out the rights attaching to the B share.
The rights attaching to this B share, as would be enshrined in the Aer Lingus articles, would allow the holder of the B share - that is, the Minister for Finance - to object to any proposed disposal of Aer Lingus’s Heathrow slots; any proposed cessation of operation of Aer Lingus’s Heathrow slots on certain Irish routes for the five and seven-year periods as previously described; any proposed change of Aer Lingus's company name; any proposed change to the Aer Lingus brand; any proposed change to the Aer Lingus head office location; and, any proposed change to Aer Lingus’ place of incorporation outside Ireland. Apart from these rights to object to certain matters, which are the subject of the proposed commitments, the B share would have limited other rights.
For example, the B shareholder will not have rights to receive dividends or to vote at general meetings.
The Government steering group and the Minister, Deputy Donohoe, have secured these commitments following an extended and intensive engagement with IAG. They have clarified their understanding of IAG’s proposal and future plans for Aer Lingus and the commitments offered by IAG on the future ownership and operation of Aer Lingus’s Heathrow slots and other matters. The Department of Transport, Tourism and Sport has also engaged with European authorities regarding these commitments and is confident that they are acceptable to the authorities in Europe.
A new connectivity fund from the potential sale proceeds will be established within and managed on a commercial basis by the Irish Strategic Investment Fund. The fund will allow for much-needed investment in a range of commercially viable connectivity projects. The projects should help generate economic impact and competitiveness benefits for Ireland through enhancing our regional connectivity, improving attractiveness and competitiveness in the tourism sector and promoting investment and enhanced opportunities for growth. For the purposes of the fund, connectivity will be broadly defined. Therefore, connectivity will be taken to include traditional transport-type projects, such as ports and airports, and access to such assets. However, it will also take a wider definition of connectivity to include, for example, data connectivity, including broadband and energy connectivity and other related projects. Under section 46 of the National Treasury Management Agency (Amendment) Act 2014, I am empowered to bring a resolution to the Houses of the Oireachtas setting out the proposed payment to the Irish Strategic Investment Fund. I propose to do this in due course.
The opportunity has presented itself and it is up to us as a nation, confident in our ability to perform at the highest level on the world stage, to take advantage of this opportunity, not through protectionist measures and fear of loss but through confidence in our abilities to attract the tourists, bring in the foreign direct investment, establish the small businesses and create the jobs. We have been doing this and it is now even more possible with the commitments we have secured.
That speaks volumes. I am glad to have this opportunity to contribute to the debate on the sale of the State's remaining shareholding in Aer Lingus. I echo the comments of the Minister for Finance in commending the efforts of the Minister for Transport, Tourism and Sport, Deputy Donohoe, and the Government's steering group in bringing the potential deal to the point where the Government is now prepared to seek the approval of the House for it.
The decision taken by the Government yesterday represents an opportunity, not a threat, for Ireland, its regions and particularly for the new people who will be employed at a reinvigorated Aer Lingus. It will provide security for the existing workforce and, ultimately, the best return for the taxpayer. There should be no crocodile tears on the other side of the House. Fianna Fáil privatised Aer Lingus and received terms for 75% of its shareholding that were far less substantive than those negotiated by this Government for the balance of shares now proposed to be sold. We should not pretend that the decision facing the Government was between the IAG offer or a rosy status quothat might endure forever. Everybody in Aer Lingus knows that jobs and profitability, which are connected, are ultimately determined by the sale of seats. That is the only constant in the airline business. The airline business is one of constant change and it was by adopting to the changing market that Aer Lingus evolved from a State airline at a time when only the most advantaged could afford anything but the occasional flight into a successful era of mass air transit in which we now live.
The Government's decision was arrived at following one of the most extensive debates about State assets that has ever taken place here. This is the fourth time the Irish State has had to consider proposals for the takeover of Aer Lingus since it was originally privatised by the Government of which Deputy Martin was member. The State's shareholding in Aer Lingus is one of the assets originally included in the State asset disposal programme agreed by the Government in 2012. However, at that time, the Government made it clear that the shareholding would only be sold when market conditions were right and on terms and at a price that were acceptable to the Government and in the best interests of the Irish people. Since that time, the Government has rejected a bid from Ryanair to take over Aer Lingus, and in February this year, the Minister for Transport, Tourism and Sport indicated that the information and commitment provided at that time by IAG did not provide the basis on which this Government would be prepared to commit to accept IAG's offer on its shareholding. This demonstrates that the Government is prepared to refuse to sell its shareholding in Aer Lingus in circumstances where the Government is not convinced this is the right thing to do.
This is now no longer the case. Since the Minister for Transport, Tourism and Sport outlined the Government's position on the IAG offer last February, the steering group appointed by the Government and its advisers has continued to engage with IAG on the details of the offer. The engagement included detailed discussions on future plans for Aer Lingus, its route network, attention and use of all its Heathrow slots and employment in the company. Crucially, it also took in commitments that IAG was prepared to offer on these matters. I am pleased to tell the House that these negotiations have been fruitful and the proposed terms of the deal now on offer have been considered and accepted by the Government. They are now recommended for approval by this House.
I will not repeat the detailed terms of the deal, which have already been outlined by my colleague, the Minister for Transport, Tourism and Sport who is present beside me. However, I am satisfied that the deal now on offer is in the best interests of Aer Lingus, its employees, the Irish travelling public, and also the Irish State. The addition of Aer Lingus to the IAG group will be as a separate and distinct airline, which is important. Brand Aer Lingus flying the flag will not only be retained but the shamrock will be seen in ever more places because of this deal. The airline will retain its logo and brand and this process will safeguard the future of Aer Lingus and its employees. The commitments secured from IAG and which will be enshrined in the articles of association of the company will ensure continued international connectivity for Ireland and ensure the continuation of existing Government aviation policy, which is based on competition between at least two airlines with significant home bases in the Irish market.
I welcome too the commitments offered to the existing workforce in Aer Lingus. As the chief executive officer has indicated to the Minister, he remains committed to an employer-employee engagement model that has unions and the State's industrial relations apparatus at its heart. I have no doubt in the capacity of our trade union movement to represent their members effectively in that environment.
Whereas the future plans for the operation of Aer Lingus and the commitments that IAG have offered in that regard were crucial factors in the Government's consideration of the deal on offer, the Government also had to consider the issue of the price being offered for its shares. We know that the board of Aer Lingus has publicly stated that the financial terms of the proposal are at a level which it is willing to recommend to Aer Lingus shareholders. The Government's steering group has also considered this issue of price, and it has received detailed valuation advice from its independent financial advisers, appointed specifically to do that job. The financial advisers have considered a range of different valuation methodologies and their conclusion is that the price on offer of €2.50 cash per share, which values the State's shareholding at €335 million, is a fair price. The steering group has therefore advised the Government that it considers the price on offer to be acceptable as a fair price for the State's shareholding, and the Government has accepted this view.
It should also be remembered that the original rationale for including Aer Lingus shareholding in the programme for sale of State assets was to realise proceeds that the Government could use to the greatest extent possible to support and sustain economic opportunities, employment and jobs. I am pleased to say that, in so far as that objective is concerned, the Government has agreed that the proceeds of a sale of the Government's Aer Lingus shareholding are to be made available exclusively for this purpose.
Unfortunately, the proceeds arising from the sale of the State's shares in Aer Lingus will be classified under EUROSTAT rules as proceeds from a financial transaction and, as such, the money received will not have any beneficial impact on Ireland's general government balance. As a result, from a budgetary perspective, the proceeds received will not provide the Government with any capacity for additional direct government expenditure, whether capital or current, without this impacting on our general government balance. Therefore, the proceeds cannot be used to fund additional direct Exchequer expenditure. However, the Government has always been determined that the proceeds should be utilised to assist in supporting and sustaining jobs and our recovery. The Government has therefore agreed that the proceeds received if a sale proceeds are to be used to establish a new fund to be called a "connectivity fund" which will be dedicated to enhancing connectivity both within and without the State. The fund will be structured as a sub-portfolio of the Irish Strategic Investment Fund, ISIF, and will be managed and controlled by ISIF in the same way as it manages its existing portfolio. The fund will operate on a commercial basis in order not to have any negative impact on Ireland's GGB. It will be able to support commercial projects with a connectivity theme. I refer to both domestic and international connectivity. For the purposes of the fund "connectivity" has been broadly defined. Therefore, in addition to being available to support traditional transport projects including the development of airports and ports and access to those, the fund will also be open to providing support for projects that involve a wider definition of "connectivity". This will include data connectivity, broadband, fibre optic cables, interconnectors and so on as well as energy connectivity including energy interconnectors. These wider connectivity requirements are becoming increasingly important as our country's core infrastructure meets the need to improve as the economy grows. It is particularly important as we are an island nation and ours is an open economy.
Accepting the deal on offer from IAG is in Ireland's best interests. The proceeds arising from the transaction if it proceeds will be made available by the Government to enhance connectivity and to support the ongoing main task of the Government of sustaining full employment. I commend the general principles of the sale to the House.
Let us face the fact that this proceeding is not a debate, but rather statements. We will arrive in here at approximately this time tomorrow and the Government will use its majority. If it were a debate, we would have a chance to tease through some of the issues that have been raised. The Minister, Deputy Howlin, cited his expert group giving one price while Pádraig Ó Céidigh of Aer Arran who knows something about flying a plane says we should be getting €3 per share. If this was a debate, we would be able to tease that out. It is extraordinary that the Taoiseach during Leaders' Questions spoke for the Minister, Deputy Howlin, saying neither of them had sight of the Nyras report. He is the Taoiseach and I presume he is correct as Taoisigh normally are. The Nyras report was commissioned by IAG and the board of Aer Lingus to look at potential cost savings including redundancies. On the one hand this process is about job creation, yet the big white elephant with the green shamrock on its tail is the Nyras report. IAG and Aer Lingus did not commission that report for fun. They commissioned it with the serious intent of looking at the business model of Aer Lingus and ways the takeover would achieve what it needs to for them. What it needs to do for them is add to their bottom line in the most extensive way possible. Fair dues to them, IAG is a publicly quoted company and has a justification to make a return to shareholders. Aer Lingus will now be part of that culture. I hope the Minister, Deputy Howlin, is right and the Aer Lingus brand and the shamrock will be in more places across the world. I hope it will be there in ten years when the guarantees have run out and Willie Walsh has moved on to another job and there is someone in charge of IAG who does not really care about Aer Lingus except about the bottom line. In fairness to Willie Walsh, he has been very clear in saying this morning that he is in favour of what this brings to IAG. That is his job. Somewhere along the line, we are not getting the chance or the opportunity, notwithstanding that a commitment was given that this would come back to the transport committee, for a line by line analysis of any deal. The committee was to go through everything that was committed to and tease it out. If the Dáil, which the Taoiseach called "this premier Chamber" this morning, meant anything, we would be having that discussion rather than a series of statements. I say one thing, the Minister says another, it goes around the Chamber and the questions are not actually answered. Nevertheless, there will be a vote here tomorrow and it will be phenomenally successful for the Government. Meanwhile, the questions will still be there.
Why is Aer Lingus as close to the Irish people as it is? It is for many reasons. It is our national airline, but most importantly, the flying experience for those of us who are lucky enough to have flown with the carrier is always positive. It is positive on the back of the staff who do not do what other airlines do. They take an interest in people and are concerned about them. Aer Lingus has always been there for the country in good times and, especially, in bad. The Minister of State, Deputy Ring, and I both know that on occasion that involves bringing people home to funerals. Aer Lingus has always stood in and done it when other airlines would not.
They will rob them even more now. The staff who took that interest and are now pensioners have been forgotten about completely in this deal. Aer Lingus pensioners are not going to see anything from this deal. They will receive no comfort or recognition or reward from the deal. There is an irony in one of the commitments in the deal. I feel genuinely sorry for Deputies Michael McNamara and Michael Conaghy and the other six amigos.
It is rather like that rhyme we learned in school, "The Grand Old Duke of York" who led his troops up and down the hill. In this case, the Duchess of Cabra led her Labour Party troops up the Aer Lingus mountain and is leading them back down again. She is not even leading them as she has not appeared in the Chamber since yesterday to speak about the matter. You are in the vanguard and you have done nothing to assist the pensioners.
We are not hiding the fact that we sold it, but we kept 25% because we did not want this day to happen where it would be gone and all of the commitments given in that deal would become worthless. Deputy Martin spoke this morning about the papers that are there for the Taoiseach to see if he took an interest in the agreements. While we sold it, Labour in particular made commitments around the country on the northside of Dublin and down in Clare and Cork to protect Aer Lingus and would not let this happen. The Labour Party made a big scene in Killarney in February when it sat on a Sunday and said "No deal, no deal". Suddenly and out of nowhere comes this and it is rammed through before the Government goes home for the weekend. The ultimate irony of this is that one of the commitments the Labour Party apparently secured is a registered employment agreement as part of the Aer Lingus deal, but the legislation to underpin REAs, which was due to be discussed tomorrow, has been taken off the Dáil schedule to allow this charade of a debate to continue. The underpinning for an REA which is part of a deal we are supposed to vote on tomorrow is not in place because of the manner in which the Government has introduced this discussion.
I have no doubt about the Minister's good intentions in this. I acknowledge the work he has put in. However, that counts for nothing. The Minister knows that as he is used to big business. In ten years' time, they will be exposed as counting for nothing because IAG is a publicly quoted company with an eye on the bottom line. The Minister, Deputy Howlin, was right in one thing he said which was that the airline business is massively floating. It comes up and it comes down and is the first sector to respond in a negative way to a fall in the economy. That will happen. There will be a decline in the economic growth that is currently taking place and the first thing to suffer will be Aer Lingus. The brand may not suffer, but the services will. While the Minister has the elephant in the room that is the Nyras report, he cannot expect the Dáil, in particular if he believes in the primacy of the Chamber and its ability to ask questions, to approve the deal without responding to it and its recommendations.
There are so many issues we are not getting a chance to look at and tie down. Various Ministers have spoken about the employment potential while ignoring Nyras and the redundancies that will now happen at Dublin Airport.
They are ignoring the fact that seven planes are on order for Aer Lingus at the moment, which will result in about 500 jobs for crew, regardless of whether this deal goes ahead. They are ignoring the fact that Aer Lingus has built up a very good business in the transit of regional passengers from across the UK through Dublin on transatlantic flights, because of the ability to get pre-clearance and so forth. They are ignoring the fact that could grow, if work was put into it, and that in itself would produce additional employment, without any IAG takeover. They are ignoring the fact that Aer Lingus has record cash reserves and has out-performed many of the components of IAG by being an independent stand-alone airline. In an analysis of independent airlines, many of the airlines that come within the IAG portfolio have underperformed.
There has been a lot of talk about regional connectivity. I will let Deputy Niall Collins speak for the people of Shannon, although they are well able to speak for themselves. We have one connection out of Ireland West Airport Knock to Gatwick. I know that connection will continue, because the airport is a commercial airport. It has to survive commercial realities, but it is a good commercial service and will continue. We do not have the fear of the State-run airports, which are running out to welcome this deal with huge haste. I know the airport will continue due to demand for its service and, perhaps, price reductions, as the Minister of State, Deputy Ring, has already outlined.
The Minister is ten months in office. I respectfully point out to him that he still has to visit personally Ireland West Airport Knock. I know the Minister of State, Deputy Ring, keeps a good eye on it for him-----
-----and employs 130 people. They would love to have the Minister visit and hear from him on his plans for the airport. If the Minister of State, Deputy Ring, does not want to bring the Minister there, I will.
I am glad of the opportunity to speak in this debate, which is very important for every region of the country, and not alone Dublin or Cork but also the Shannon and mid-west region, which I represent in Limerick. There has been a lot of dishonesty on the Government's part in its presentation of the case to dispose of the 25.1% shareholding. It keeps getting thrown at this side of the House that we disposed of 75% of the company, which is true. Quite rightly, we keep pointing out that, as a result of disposing of 75% of the shareholding of the company, we now have a successful company, which is in a strong position and which has grown and gone from strength to strength following that privatisation. The privatisation allowed the company to decouple from absolute political interference in its day-to-day running. It allowed the company to restructure, sell and market itself and to grow its market share, which it has done exponentially over the past number of years. That decision, which Fine Gael and the Labour Party in opposition rejected roundly and called us out on, has now been shown to be a success. It is now okay to dispose of 100% of the company although it was not okay to dispose of 75% of the company. There lies the hypocrisy in the Government's position, which it has been offering by way of justification, over the past number of days.
It is ironic that the trade union movement is almost unanimous, to a man and to a woman, right across it, in its opposition to this proposed deal with IAG. It was also ironic yesterday that the airport companies were cited as being in support of this proposal. The Government's announcement was made without any reference to this Chamber. We have only these sham statements today, rather than a proper Dáil debate. The documentation has not been furnished to us, as Members of the Oireachtas, so that we could have the detail and read ourselves into the minutiae of the deal. This debate is based on what we are hearing on the news, on the airwaves and in the newspapers. Airport companies were cited as being in support of this proposal. These are State-owned. These are people who work for the Government. The boards of these airports were appointed by the Government. All these people have vested interests in the Government because they are an extension of the Government. Therefore why would they not? They are compromised in their ability to be critical in this debate. They cannot come to it from an objective point of view.
The management of the news cycle and the media has been cynical and the public will see through it. I do not believe a sale of the shareholding in Aer Lingus to IAG and the subsuming of Aer Lingus into the IAG group is the only show in town. It has been shown that Aer Lingus has been successful in its restructuring. We can look to other airlines such as EasyJet and Ryanair and how they have grown. They are similar in size. Ryanair has grown from a passenger base of 11 million in 2000 to more than 100 million today. EasyJet carries 60 million passengers. They have demonstrated how they can do it on their own and by not having to opt in to being part of a larger group.
On the valuation of the company, critical questions need to be answered and this issue needs to be highlighted. The 24 Heathrow landing slots have been valued at approximately €400 million. Pádraig Ó Céidigh, the former Aer Arann CEO, to whom Deputy Calleary referred, has stated that, with a share price of approximately €3, the company would be valued at €1.7 billion. We are getting in or around €340 million. There is a discount built into that but no one has addressed why that discount is being factored into the offer this Government will potentially accept.
The takeover deal is anti-competitive. If there is a trend or a drift towards consolidation and the centralisation to a small number of carriers of service provision to passengers in the airline industry, like in North America where up to four carriers are carrying nearly 80% of the traffic, a monopoly-type situation arises and that is not good.
On connectivity and regional connectivity, a two-tier recovery is afoot in this country. We have Dublin and the east coast and then we have the regions. There is no doubt that this will impact ultimately on the regions' competitiveness and connectivity. I will tell the House why. We had a situation in Limerick in 2007. Many of those present will remember it. The Shannon-Heathrow slot was moved temporarily from Shannon to Belfast. This was a huge local campaign. It is ironic that people in this Chamber and beyond who campaigned and called out the Government at the time, and rightly so, to have that slot reinstated and to have the connectivity reinstated, are mute now. I wonder why. Why are we not hearing from those people who took a position of strength in opposition?
Connectivity to the Limerick and mid-west regions is essential. We do not have guarantees. The Minister will tell us that he has guarantees. How will those guarantees be called into effect after the term expires? That is a big known unknown in the future and it is a worry for the region. What if, for example, the guarantees are reneged upon and there is recourse to the courts? We will have restoration, but the restoration or the penalty could be financial. In most instances, it will be financial and not restorative. The connectivity might not be restored. Limerick and the mid west region will be left at a disadvantage. I am sorry to say this, but I do not accept the guarantees are cast iron, despite the Minister's assurances. The narrative throughout the debate has been that these guarantees on connectivity will be cast iron and legally enforceable. What if Qatar Airways comes in, as has been widely reported, and commences a takeover of IAG or if IAG decides to sell out to it?
We have seen the situation regarding the M20 motorway from Limerick to Cork which has been shelved under the Minister's stewardship. I have taken the Minister to task on this issue before and I will take him to task on it again. We are at a disadvantage in Limerick in terms of it being a region. This deal with Aer Lingus will ultimately enhance the anti-regional agenda which inhibits balanced regional development by the Government.
We have seen it in terms of the road network - I have already referred to the M20 as well as Shannon Airport. Now, ultimately, we are looking at a situation where the Government will not have representation at board level whereby, in concert with another small shareholding group, for example, the pilots or other shareholders, they could direct the situation in respect of the use of the slots. This is putting us at a major disadvantage.
I put it to the Minister that, ultimately, this is a bad deal. The situation as demonstrated by Ryanair and EasyJet goes to the heart of it. Aer Lingus can survive on its own. It is surviving and flourishing. It has been a success for this country. It has demonstrated that much and it can go from strength to strength. It can go further.
What we heard this morning in respect of the Nyras report is concerning. The report, which was commissioned jointly by the boards of Aer Lingus and IAG, was only to be seen by the respective board members. Thankfully, someone leaked it and we now have the benefit of it. It is particularly disturbing when we hear that those on the Aer Lingus board - this was offered as part of the debate - are recommending this deal. Of course they are recommending the deal. The board members stand to benefit financially by a great deal of money. That is a fact. I do not know the exact figure but it is several million euro. The individual board members stand to gain a great deal out of this and naturally they will recommend it.
Costs will be 40% higher. The report identifies job cuts in the following areas: ground handling by 20%, catering by 40%, maintenance by 15%, and cuts in the area of heavy maintenance to eastern Europe. There will be job cuts and job losses. IAG has said nothing to us about the creation of new jobs. A total of 500 jobs has been mentioned, but they are on the way because of increases in the transatlantic routes in any event. There will be job losses, unfortunately, and nothing in the presentation by the Minister has dealt with that.
My last point relates to the pensioners. The fact that there is nothing in the deal for Aer Lingus pensioners is a sad indictment of the situation. We all know the situation they have endured in terms of the deficit in their pension fund. The Minister has referred to creating a connectivity fund, but there is nothing going into the pension fund of the men and women who built up Aer Lingus to what it is today, and that is something the Minister needs to revisit.
It is like the races. Is the clock on? It is.
I take this opportunity to thank and congratulate my colleague, the Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe. I have seen how hard he has worked in the Department in recent months on this issue. I also compliment and thank the officials within the Department for the work, effort and commitment they have put in with the Minister.
This is a different deal to the deal offered several months ago. The Minister, Deputy Donohoe, has been a skilful negotiator. He has done a great job for the country. I wish to compliment him publicly in the Dáil today.
I believe this is good deal for Ireland, Aer Lingus and the workers. In the next year we will have 150 new jobs. In the coming years we will have 635 new jobs. I listened to Deputy Calleary and he is correct in what he says. I am a supporter of Aer Lingus and I have always been but I want to go back a little because he reminded me of something. As a Minister of State I went around this country as well as Britain and America. I talked to our diaspora there and asked them to come back to Ireland again. The one common denominator among our diaspora was the sense of how they were ripped off by Aer Lingus, particularly at the most sensitive time, for example, if a mother, father, brother or sister had died in this country. If they wanted to get a flight out of New York, then, by God, did they pay for the flight out of New York.
I speak as Minister of State with responsibility for tourism. I assure the House that capacity has increased in recent years. We have 40% new capacity into this country. That is why we have more and more visitors coming in. I offer some figures for today. Overall trips to Ireland for the first three months of this year have been up by 13.5% on the same three months last year. A total of 1,778,000 people came into this country to visit us. The figures from North America were up by 20%. Visitor figures from mainland Europe were up by 14.7% and visitor figures from the rest of the world increased by 23.6%. The reason this happened is because we have more carriers, more airlines and more competition in this country.
I remember two years ago when the Shannon Airport debt was taken over by the Government and the Shannon authority handed over the independent running of the airport. Deputy Calleary will remember that Deputy Dooley and Fianna Fáil sent out a press release to the effect that Knock Airport was the big winner, that Shannon was finished and that we would never see another flight into Shannon. What has happened?
Shannon Airport has never done better. Representatives of Knock Airport have welcomed this news. I am hopeful. We will certainly be supporting Knock Airport. I hope that as a result of this new deal to be completed in the coming months Knock Airport will gain. We want more carriers, services and flights into Knock. In particular, we want more flights into rural Ireland. I want to see Knock, Shannon and Cork get their fair share of the cake. I want to see this new company bringing extra flights into Cork, Shannon and Knock airports so that we will have plenty of visitors coming into the regions as well. We do not want everything coming into Dublin. As a Minister of State acting in the national interest, I like Dublin and I like to see people coming into Dublin, but we want to bring them into the regions as well. That is why we have the Wild Atlantic Way and the Ireland's Ancient East and the Lakelands. I was there yesterday. Everyone is out working and trying to get people into their area and their country. That is what we want to see happening.
The Minister, Deputy Donohoe, has worked hard at this deal and it is a good deal for the country. Secretly, Fianna Fáil and some of the Independents are disappointed that we got such a good deal. They were hoping there would be no deal but there is one. This will secure the future of Aer Lingus. The company will have its own brand. We will still have the carriers carrying the slogan of Aer Lingus. There is no doubt that we will have more capacity and more flights with this company.
Willie Walsh has a connection with the country, he is an Irishman. I am sure he will wear the green jersey. I am sure that, at times, if there is a little business that can be put the Irish way he will do that. He will not say that because he is the boss of a major company but I am sure he will do what is right for Ireland. He will come back to retire here and live here. He will want to see people employed. He will want to see a stronger and better Aer Lingus and that is what we are going to have. It will be stronger and better with more workers and more connecting flights into the country. Is that not what we have been seeking for the past 20 years?
I know this will work. We have a good deal. My ministerial colleague has worked hard with the officials in the Department. They have done a good deal for Ireland. That is what is upsetting those in Fianna Fáil and the Independents, because the deal is good for the country. There will be more employment. I have no doubt that in the years ahead they will be complimenting the man beside me and saying, when he is Taoiseach of this country, that he was a great Minister.
If it is the case that some of the proceeds from the sale of Aer Lingus are to be distributed throughout the regions to improve connectivity and key infrastructure, then that is a definite advantage to this sale. If that is the case, part of the €325 million needs to be invested directly into Waterford Airport to finally allow for the proposed runway extension to be funded. If Fianna Fáil, Sinn Féin and the Opposition generally oppose this sale they could, with a capital "C", be opposing the potential investment of this money into projects that are badly needed and that need to be completed throughout the country.
When it comes to the south east, the economic development or environment remains bad. It is in bad shape, but improving. For the first time in years we are seeing an appreciable pick-up in investment from abroad. The placement of an IDA Ireland regional director in the south east is making a significant difference when it comes to co-ordinating the various components of inward investment. That is not conjecture, it is reality.
I regard Waterford Regional Airport remaining open as one of the most important factors in any recovery in my constituency. The airport is operating commercial flights, including a direct flight to London Luton Airport. All of this has not been easy; in fact, it has been extremely difficult. In this regard, let me refer to the last Administration. In the case of the airport, it was a case of spectacular announcements on runway extensions costing tens of millions of euro, but it all came to nothing. Apart from the motorway, it is fair to say the last Administration left key infrastructure in my constituency, including the airport, in very bad shape. For me in the past four years, it has been a question of making argument upon argument for OPEX and CAPEX funding to remain at the airport in Waterford, even when there were no commercial flights in operation. Where does Fianna Fáil stand on Waterford Regional Airport and the money from the sale of Aer Lingus potentially being used to fund infrastructure around the country? For that matter, where do Sinn Féin and the rest of the Opposition stand? Last month, not only did commercial flights begin again but an arbitration case concerning land adjacent to the airport was finally dealt with. All planning permission and arbitration matters have been resolved. Everything is ready. All we need is the money we have been starved of for years.
One aspect of the so-called regional windfall announced last night and this morning sets off tiny alarm bells. It now seems as if the distribution of the proceeds from the sale of Aer Lingus will be dealt with in a similar manner to distribution under the strategic investment fund, which fund has not worked very well to date. Of its €5 billion to €6 billion, just over €100 million has actually been invested. It has not worked well, which is why the Department of Public Expenditure and Reform is reworking its parameters in respect of how it can be better used for investment regionally. I know about this because I amended the Bill to actually have a reporting requirement for the regional aspects in the annual report. If the Minister is planning on selling the concept of the sale to the regions, he should come up with something better than the strategic investment fund as a model. If this means testing state aid rules and the European Commission’s stance on ports and airports, so be it. If the sale advances through the various hurdles ahead and the proceeds in part are dedicated to ensuring regional connectivity, including ports and airports, nobody can ignore it in this House. Thus far, there has been a rush to condemn and oppose the arrangement for the sake of it. There have been plenty of anti-capitalist speeches and the like.
I warn the Government that when it comes to funding key infrastructure in my constituency, we are wary of aspirational policy statements. We have reason to be wary. I want to know definitively whether the projects in my constituency will be financed because of the sale, particularly as it pertains to the airport. It begs the question as to whether the Minister knew that the operation of the strategic investment fund was being completely redrawn. If he did know this, how will he ensure the proceeds of the sale will definitely go where they are needed? What is the difference between a €5 billion strategic investment fund that is not working well and a €5.35 billion strategic investment fund that is not working so well? The Minister needs to explain the difference between the positions two days ago and today and leave the aspirational stuff out of it.
I welcome the opportunity to contribute to this debate, both as a Deputy representing County Mayo in the west and as Chairman of the Joint Committee on Transport and Communications which facilitated a series of meetings of all stakeholders, including Aer Lingus, its CEO, Mr. Stephen Kavanagh, IAG chief executive, Mr. Willie Walsh, Stobart Air, the unions, the pilots, the chambers of commerce and the representatives of the airport. I pay tribute to the Minister, Deputy Paschal Donohoe, for the way he has intensively thrown himself into this proposal that was put before him and also the Minister of State, Deputy Michael Ring, and all others involved in the Department. At the beginning I believed there were many risks involved and that considerable clarity and certainty were required. I am glad that all of the hearings of the transport committee gave the public a sense of what was on offer. In parallel and in order to reach the current phase of the process, considerable analysis was required in the Department under the Minister's direction. I have come from a place where I may have been a doubting Thomas to one where I am very strongly in support of what we have seen before us in the past 24 hours. Many of the arguments were teased out and many of the questions answered straightforwardly. The guarantees, clarity and certainty sought were forthcoming.
Let us consider the issues regarded by everybody in Ireland with emotion. They include the retention of the Aer Lingus brand, the retention of the headquarters in Dublin and the number of jobs to be created. There is to be net job growth of 150 by next year and 625 by 2020. There are to be no forced redundancies or job losses, as such. There may be a need for some reallocation of roles. If Aer Lingus, as a very strong, well organised company in recent years, was able to look after this area in a downturn, how much more will it be able to do so in times of growth?
Let us consider the idea of connectivity. As the regional Member or Member from the west, I note that Dublin, as a hub, will gain a lot from the deal. That is to be welcomed, but it should not happen at the expense of either Shannon or Cork Airport or Ireland West Airport Knock which is obviously close to my heart and those of the Minister of State, Deputy Michael Ring, and Deputy Michelle Mulherin. It became very clear at meetings that both Aer Lingus and IAG referred specifically to the existing Aer Lingus connectivity between Gatwick Airport and Shannon Airport. Over 500,000 passengers have used that route in recent years and 70,000 used it in 2014. The added strength and selling power of IAG and British Airways will only improve these figures.
Another significant aspect is the potential for tourism. This has been exploited by the Government. Both the Minister and the Minister of State, through their capacity for marketing, and the agencies of which they are in charge, including Bord Fáilte and Tourism Ireland, have been responsible for initiatives such as The Gathering, the Wild Atlantic Way, Ireland's Ancient East and the abolition of the travel tax. These are all part of the foundations. The Aer Lingus deal will build on them and create further growth.
I note Ireland West Airport Knock’s welcoming of the proposal announced last night. It looks forward to working with the new company when this becomes possible. Historically, there was a transatlantic flight into Knock airport, which is to resume later this summer on a once-off basis. I understand it is to be an Aer Lingus flight. The CEO, Mr. Stephen Kavanagh, was directly involved in the matter himself and I hope it will lead to future growth.
Aer Lingus has a strong balance sheet and has done well over the past number of years. It is a top player as an individual company but when a top player that has been fine tuned and restructured over a number of years enters a bigger team with other top players, if I can use sporting parlance here, it will be in a position to win some trophies as a result of the strength of the team it is joining by way of more market share, more passengers and more routes. This has also been articulated in the deal. Under the deal, there will be a veto on selling the slots and a guarantee that the slots will remain where they are for seven years. I commend the Government on this. I know that when Willie Walsh appeared before the committee when the matter was being teased out and was asked whether he would increase the guarantee from five to seven, eight or ten years, he said that his second offer was never as good as his first. I am glad to see that the Minister has convinced him otherwise.
I very much welcome what we have seen in the past 24 hours. We will have far more in addition to what we now have. I was glad to hear that the value of this deal was tested by the Minister independently of Aer Lingus or anyone else to see whether it was the best possible deal now or better than any deal that might be possible in the future and would future-proof the Aer Lingus brand and protect it from all the volatility that has been seen in the aviation market over the years. Perhaps I am wrong but the previous Government sold 75% of Aer Lingus for something like €269 million. I think this is €1 billion plus for 25% of it. I very much welcome this and the journey on which it has brought the public and people who had concerns. I am glad to see this finally going ahead and I commend this motion to the House.
It is important that as many Deputies as possible speak on this debate because it is very important. Not only that, it is important that as many Deputies as possible then vote on this. It will be remembered in a negative way because we are an island nation and are looking to ensure that we will have no control over connectivity with other countries. Some people might be too young to remember some changes that took place in respect of Ireland's connectivity with Great Britain and Europe. We had ferry links in the past which served the country very well. In the 1960s, one of those companies was nationalised. In 1992, the State sold off B&I Ferries. I was quite young at the time and felt that it was a bad decision. I still believe it was a bad decision to sell off a company that allowed us to control ferries to Great Britain in particular. I remember some of the arguments at the time which were that most people were using aeroplanes, that this was the future transport mode and that we controlled Aer Lingus. At the time, we did control it and the Heathrow slots. In 1992, we were guaranteed that Aer Lingus would serve the nation, that it would continue to do so in perpetuity and that it was a highly profitable company that provided dividends to its primary shareholder, namely, the Government, since it was first set up.
We now see the hypocrites who are not in the Chamber and who condemn the selling off of shares in Aer Lingus proposed by the Minister, namely, Fianna Fáil. It did the damage and set up Aer Lingus for sale. Aer Lingus is no longer a State company and will definitely not be a State company if the Minister has his way on the vote on the motion tomorrow. The Minister has set up Aer Lingus to be totally controlled by the market for profit. Profit is king. Profitable capitalist companies could not care less about the national interest so the 1% share is meaningless and will be meaningless in the future. Five, seven or ten years down the line, those slots will be up for sale when and if IAG decides to sell them. If it decides to move heaven and earth in the future away from Aer Lingus headquarters here, it will be able to do so because it will have directorships and the directorships of IAG, like those of any company, mean that the profit of the company is king. The onus is on the shareholders. At least, the Government now has a shareholding that is large enough to have some kind of influence on the board of Aer Lingus. It will have no influence in the future other than the national legislation under which we in this Chamber try to impose some controls. That is about it. There might be controls if the UK decides to stay in the EU rather than extract itself from it if it holds the referendum next year and if IAG continues to headquarter in Great Britain. Again, we have no control over that. We had some say in terms of Aer Lingus and its operations in the future.
We have already seen what happens when an airline is taken over by IAG in terms of job losses. I know that commitments have been given. Those commitments are not worth the paper they are written on. I might be proved wrong in time but I am not willing to take that chance. I believe we should refuse to allow this airline to be sold off. I heard the Minister for Public Expenditure and Reform who was absolutely comical. He was cribbing that this was the fourth time he had to deal with a bid to sell Aer Lingus. The only reason he had to deal with a bid four times is because he said from day one that it was for sale. If he said from day one that it is a State asset and that it is in our national interest to retain it in public ownership as a public utility, nobody would have been making a bid for it but no, this Government came into power and set out a list of State assets that were to be sold off, some of which have been sold off and some of which have not.
Some assets were not sold because the Government did not believe it was profitable enough to do so at that stage. It was not that it was against a sale or that it believed control of these assets should stay in public ownership. Some public assets or some of the family silver have been sold.
The Minister of State at the Department of Transport, Tourism and Sport who spoke earlier on this issue started bellowing about the west. As I have spent a lot of time and went to school there, I understand a lot of what has happened there in the past 40 or 50 years. This Government's policy on the west is a continuation of a previous policy, namely, bánú na tíre or emigration. It only wants airlines to serve the west in order that people can return as tourists rather than live here. Shouting and bellowing that something is good does not make it so. It is either good or bad and, in this case, it is bad. Once Aer Lingus is gone, it will be gone forever more and unless the Minister starts to buy back shares, he will not have control of it.
This is all about short-sighted gains. The valuable slots to which the Minister referred are not and will not be protected in perpetuity, never mind the fact that the money the Government will receive for its shareholding is peanuts in comparison to what it should be. This is not even a good deal from a commercial perspective. There are real concerns about the future for workers at Aer Lingus, as well as for current and deferred pensioners. There is a case still to be answered by the Government regarding Aer Lingus pensioners which will now be passed on to a private company.
Mr. Ciarán Hancock points out in an article in The Irish Timestoday that Mr. Willie Walsh will not be with IAG forever. The Minister of State at the Department of Transport, Tourism and Sport and many Government backbenchers have referred to the fact that he is Irish. The Minister of State has suggested he will come back to Ireland one day, but we do not know that for definite. Even if he does come back, that does not make him the greatest Irish man alive. There are many Irish men who are at the head of companies who could not care less about Ireland. Equally, there are many people who are well known in Ireland who have located their moneys and interests abroad. That is true in the case of some of the most high profile Irish people.
To return to Mr. Hancock's article and the point that Mr. Walsh will not be with IAG forever, as Mr. Hancock points out, "who's to say that his successor will be as enthusiastic about its investment in Aer Lingus? Especially if IAG hits some turbulence." We have all seen in the past 30 years the level of turbulence in the airline industry generally. Mr. Hancock goes on to say UK airline BMI "withered on the vine under Lufthansa's ownership and Air France off-loaded its Swords-based subsidiary CityJet when it no longer fit its investment criteria." We do not know what the future holds and cannot predict it. All I can predict is that if the Government passes the motion, it will have very little say in Aer Lingus and the future of that airline. At least for the moment we have some say in what happens in it. We can protect jobs, look to Aer Lingus to increase its routes and use the slots at Heathrow Airport to our own advantage instead of to that of the Middle East. This is a bad deal which should be rejected.
As outlined previously during my party colleagues' contributions, the Government's decision to sell its share in Aer Lingus is a short-sighted move which will create years of uncertainty and economic difficulties for the State. It will create uncertainty for the thousands of workers who work for Aer Lingus or who work peripherally to it in Ireland. A major question mark hangs over the assurances the Government has stated will be given and whether they can be enforced or fulfilled. Is it realistic to assume that the State, in selling 25% of a company, will be able to hold a major multinational grouping to agreements that are in our interests for seven years thereafter? I think not. Rational thinking will tell us where interests lie. IAG is a private, for-profit operation, the commitment of which is to bottom line profits and its shareholders. lts track record shows that providing jobs or supporting the countries from which its airlines operate features nowhere in its priorities. Therefore, it is up to the Government to protect the State's interests. The money raised from the sale will supposedly be used in a so-called "connectivity fund". The Government is short-selling actual connectivity today to fund notional connectivity in the future. This is precarious at best. Regional airports such as Cork Airport have been promised investment, but this does not seem likely to happen. We do not trust the commitments made by IAG, given its track record; nor do we trust the Government's spin.
The manner in which the motion is being rushed through the House has instilled no faith in Opposition Members in this process. Fine Gael Deputies and, more particularly, Labour Party Deputies know that this deal is not wanted by the public or Aer Lingus workers. Any fair observer can vouch for the importance of Aer Lingus to the economy but particularly to regional airports such as that in Cork city. IAG does not have a track record of supporting smaller airports. It is very much focused on a number of major hubs, particularly Heathrow Airport. We know this to be the case and the entire reason Mr. Willie Walsh is seeking to buy Aer Lingus is to gain control of its Heathrow Airport slots. He is acutely aware of the value of those slots. IAG, from its hub, in Heathrow Airport has failed to improve services through British Airways in any other British airport in Scotland, Wales or the north of England. Aer Lingus has developed nine north Atlantic routes, while British Airways has developed none from Glasgow, Edinburgh, Belfast, Manchester or Birmingham and we may as well add Cork Airport to that list. The Scottish National Party has argued that British Airways has actually hampered plans for development of new routes from Scotland. Aer Lingus has had great success in the smaller market served by regional airports. IAG, on the other hand, has only made a commitment to continue Cork Airport's Paris and Amsterdam routes through Aer Lingus which, without a sell-off, would still be the case. Cork Airport needs IAG like a hole in the head. In seven years time, will there be any slot for services from Cork Airport to Heathrow Airport? Mr. Walsh has made it clear that he wants slots for services to Asia and South America. That is where the profit is and that is what drives IAG, not Ireland's interests and certainly not the interests of regional airports such as Cork Airport.
I congratulate the Minister for holding out for the very best deal in the sale of the State's shareholding in Aer Lingus. There has been a lot of talk about uncertainty, guarantees into the future and so forth, but the reality is that there were no such guarantees. The Minister has put us in a much stronger position. I have no doubt that the deal involving a sum of €355 million and numerous other terms, conditions and restrictions to protect the interests about which everybody was concerned was achieved through the Minister's thorough and tenacious approach. Furthermore, I have no doubt that Aer Lingus would have been sold a couple of months ago had the decision been left to the Department of Transport, Tourism and Sport. The Minister deserves great credit for this. My own experience with the Department stems specifically from its dealings with Knock Airport over the years. When I consider its attitude to the airport, I can only describe the airport as a miracle operating on a shoestring. During the years the Department displayed a bias against it; it favoured the status quoand the State airports. Knock Airport is not a State airport because it was not lucky enough to receive Government support and was spawned in great part with moneys raised by the people. Therefore, it never fitted the bill as far as the Department was concerned. Any concession given to it was given begrudgingly.
Everytime there has been a suggestion made regarding Knock Airport, the Department has found a reason not to do, rather than to do. As well as welcoming the reference to Knock in the commitments under this deal, I also want to focus on the benefits that can flow from the €335 million with the investment of this money into the strategic investment fund which includes a connectivity fund to fund transport projects. We have a golden opportunity and I am asking the Minister to take the same approach as he did to getting this optimum deal on Aer Lingus and to give a commitment, a statement of intent, that moneys will be ring-fenced towards Ireland West Airport, Knock. I am saying this because I know there have already been conversations, reports and studies. There is a case before the European Commission about state funding.
The Minister's commitment to capital expenditure and operational expenditure is €12 million per year over the next five years. However, when that €12 million is broken down, €7.5 million is already going to the PSOs to Kerry and Donegal airports, which leaves very little to be divided between Kerry, Donegal, Waterford and Knock. The whole objective is that Knock would become self-sustaining and not need money from the Government indefinitely. Why am I singling it out as opposed to other regional airports? I believe there is a special case as I have mentioned to the Minister previously. No area is more disadvantaged. Sometimes when we talk about making a case for the west or wherever, we are accused of being parochial. When we talk about Dublin or some good-news story, it is all in the national interest. I would like to talk about where I come from and the significance of Knock Airport and the need to ring-fence money now that we will have money. I accept that in the past we did not have money. The Government has been so concerned and consumed with bailing out the country that this could not happen previously.
We are in a peripheral area. North west of a line between Louth and Galway, with the exception of Galway, there is no major interurban route. There are no dual carriageways or motorways north of Galway. The area has suffered very badly from emigration. Much of the success from a passenger point of view in Knock is down to many of our emigrants using Knock to come home. We try to use it for business and all the other add-ons. However, it needs support and help. The region can be likened to the Scottish Highlands and islands which receive substantial subsidies from the Scottish Government because of their circumstances, including emigration. With the exception of Donegal, all the other regional airports I have mentioned are close to the hub of another State airport in Dublin, Cork or Shannon. So we are talking about a huge region that does not have an international airport other than Knock.
As I have said, we are not serviced by a motorway. We have problems because of that lack of connectivity. We also do not have a high-speed railway connection into the area. Examining the economic and social markers and indicators for the region shows significant economic and growth disadvantage, which is nothing new. However, we want to be empowered to be the best we can in the area and Knock is crucial in this. A package has been put together for Knock but there are many contingencies, as the Minister might agree. The reality is that this a great-news story from the point of view of growth for Dublin - growth in passengers and the growth of Dublin Airport as a hub. We have already seen substantial investment in the mid-west, in Shannon. All of these can be welcomed and be seen to be done in the national interest. It is time we had a substantial investment in Knock.
The Dublin Chamber of Commerce rightly welcomed the additional 2.5 million passengers that will come into the Dublin region. However, when comparing the ratepayers in Dublin with the ratepayers in the west, where I come from, while I have no doubt the Dublin ratepayers are paying substantial rates, they do not have to subsidise their local airport, which is what is happening under the deal with Knock. The debt of Knock has had to be taken over by the local authorities, which are relying on the commercial rates. So ratepayers are not only paying their rates, but are also supporting their local airport.
Knock Airport very much needs a break. This represents a golden opportunity. It is not about being parochial. It is about saying that doing this is empowering a region in very many respects. It is crucial and pivotal. Those concerned are seeking only a few years of that support that will put them at a tipping point where it can be self-sustaining. The Department's traditional approach should be cast aside so we can have a marked change. Now is the chance to do it. I am asking for a commitment on Knock Airport. The Minister's commitment on capital and operational expenditure is in place but there are too many airports vying for that money. I have made a special case. I am not taking from any of the regional airports. None of them has the history of Knock or its strategic importance. I know they are important to their areas and I would not wish to undermine that in any way. Where there is a will there is a way and I am asking for that will to be shown today.
I acknowledge the role of the Minister for Transport, Tourism and Sport, Deputy Donohoe, on this issue. He has proven one very important attribute from which some officeholders could learn - it was the engagement and listening process with the Oireachtas Joint Committee on Transport and Communications of which I am a member. Fears and concerns as well as some mistruths that were being spread on the sale or otherwise of Aer Lingus were dealt with in a very constructive way.
We had a couple of days of amateur theatrics by people who arrived at our committee meetings claiming that the world was going to collapse in a heap, which, of course, will not happen. We even had a visit from representatives of Virgin Atlantic. I was delighted to see them in Dublin. I presume they flew in by Aer Lingus or Ryanair because Virgin Atlantic does not service Ireland. My parting shot to them when they were leaving was that they would be very welcome to meet with the Dublin Airport Authority given that they were so concerned about Ireland's connectivity to the wider world and the damage that was going to be done, and that they were very welcome to try servicing the Irish population from Dublin, Cork, Shannon, Knock, Farranfore or wherever. To date, as expected, I have not heard anything from Virgin Atlantic to suggest that it will do that. I do not envisage it launching a flight from here to the Bahamas any time soon.
The sale of Aer Lingus represents a good deal. I had concerns over my region in the mid-west relating to the five years originally suggested. I welcome one thing the IAG CEO, Mr. Willie Walsh, said. He was wrong in something he told the committee. He said that in his commercial activities up to now, the second deal he offered was never as good as or better than the first. He was wrong in that because the second deal is better than the first. I suppose there is a first time for everything and there is a first time for Mr. Willie Walsh to trump his own initial offer.
For the Limerick, north Tipperary and Clare region I represent this is of huge significance. Unlike what happened when the first 75% of Aer Lingus was sold by the last Administration, there is now certainty about Shannon Airport's connectivity to Heathrow for the next seven years. If one wanted assurance or otherwise from any non-political source that this is the right thing for the mid-west region from Loop Head down to Mountcollins, all one has to do is read the Shannon Airport statement and the comments of people associated with the airport, who do business with the airport and fly people into and out of it. They believe this is a good deal.
It does not surprise me that the Opposition would be so opposed to it because every initiative the Government has taken to rebuild the tourism industry has been opposed by Fianna Fáil in particular. It opposed the jobs initiative, which reduced the VAT rate in the hospitality sector. Twelve months after opposing it, Fianna Fáil Members were in Buswell's Hotel telling us that we should retain and extend it. They scoffed at the Wild Atlantic Way and yet some of them now want it extended to cover Mullingar and Longford. They also scoffed at every other initiative that has been taken. For instance they had an opportunity to deal with the independence of Shannon Airport but did not take it. They also had an opportunity to deal with the travel tax issue and instead they hiked it up.
Every initiative taken by the Government to rebuild the tourism sector has been opposed by Fianna Fáil. Is it any wonder the Fianna Fáil Party lost a Senator this week? She crystalised what it was to be in Fianna Fáil, namely, opposition for opposition's sake. When it comes to the party's stance on Aer Lingus, nobody does hypocrisy like Fianna Fáil. It has a brass neck, given that it was responsible for the sale of 75% of Aer Lingus, in respect of which we received no guarantees with reference to the slots. When the slots were moved to Belfast, the then MP for West Belfast said it was a great day for Belfast that slots were being moved from Shannon Airport to facilitate the people of Belfast. Now that he is a Member of this House he is bemoaning the fact that we are receiving a guarantee. Perhaps he is bemoaning the fact that we are receiving a guarantee that slots will be retained at Shannon Airport and not moved to his home place in Belfast. Perhaps that is where he would like them to be. Whatever he does or does not want, I am concerned only about the people who elected me to this House. Those who did so want me to ensure that, as somebody once said in this House, the rabbits will not be running around the runway at Shannon Airport and they are not.
The decision by the Government to give Shannon Airport its independence was opposed by the leader of Fianna Fáil. I have asked his colleagues from the mid-west to dissociate themselves from the scurrilous attacks he has launched time and again on Shannon Airport, but they will not do so. There are Deputies from counties Clare and Tipperary and my own county of Limerick who are hiding behind mealy-mouthed statements in terms of Deputy Micheál Martin's constant attacks on Shannon Airport and its independence. Since the Government took the initiative to separate Shannon Airport from Dublin Airport, Shannon Airport has literally taken off. There is now connectivity to Philadelphia and Chicago, while Ryanair's passenger numbers at the airport have increased, as has the number of flights to New York and Boston. The airport is literally about to take-off, yet the leader of the Fianna Fáil Party, week after week, comes into the House to attack it; for what reason, I do not know. He has something against the mid-west. Perhaps it is because Clare or Tipperary beat Cork in hurling or because Limerick have the odd win over it from time to time. He has a major issue with Shannon Airport being given its independence having been under the cosh of Dublin Airport for 17 years. It is not too late for some of his back benchers and colleagues in the Seanad to sound him out on this issue and ask him to stop attacking the airport. It does not behove the Leader of the Opposition party to do so.
On the future of Aer Lingus, much bigger airlines such as Lufthansa, Austrian Airlines, KLM, Air France, British Airways, Iberia and so on have formed alliances for one reason and one reason only, namely, to ensure they can survive. The corollary of this is Sabena, the former Belgian national carrier. Small carriers are swallowed up. When it comes to fleet replacement which Aer Lingus will need to do in the not too distant future, there are no cash reserves. The Opposition continues to state there is loads of money in Aer Lingus and that we should potter along until it runs out, at which point the State might intervene. The State cannot intervene under EU state aid rules. The Belgian national carrier, Sabena, a once proud airline and one of the longest serving airlines in the world, evaporated in a puff of smoke. The same could happen to other airlines in peripheral countries such as Ireland unless there is a realisation that the future of the airline industry across the world lies in consolidation, as I have heard said many times at the transport committee. It is not globalisation or, to use the catch phrase usually thrown around by Members on the opposite side, "a neoliberal agenda" but the commercial reality. The commercial reality for airlines does not differ from that for other business, be they small or large. We are in a changing environment and Aer Lingus has changed. It has changed and become a leaner, more efficient machine. It is now a proud carrier that can stand on its own two feet and hold its own among the best. It is also looking to the future and a world in which there will be a lot fewer airlines carrying more passengers into bigger hubs.
I take issue with the point made earlier by a Member of the House about the recovery of and the regional imbalance in my region. The Deputy concerned obviously does not realise 16% of the population of the State reside in my region or that 30% of IDA Ireland jobs are located in it. Despite the fact that his party was in government for 14 years, it did nothing about the Cork to Limerick road. Not only has the Government decided that Limerick and Galway need to be connected via a motorway by way of completion of the Gort to Tuam road, it also proposes to prioritise a link with the Port of Foynes, a proposal which Fianna Fáil also opposed in its ports policy. Fianna Fáil opposed the designation of the Port of Foynes in my constituency as a tier 1 port. Again, it was opposition for opposition's sake. That is how Fianna Fáil under Deputy Micheál Martin does it. That is the reason the motion before us is being opposed. Leaving aside the fact that Fianna Fáil was responsible for the sale of 75% of Aer Lingus, in respect of which it obtained no guarantees, that slots were relocated from Shannon Airport to Belfast Airport and have only been returned to Shannon Airport because it is profitable, has good management and an excellent team and Fianna Fáil's lack of an aviation policy for the 17 years it was in government, the motion is being opposed by Fianna Fáil because it is a good idea from the Government. If that is the way the principal Opposition party is going to behave in this Dáil, is it any wonder some of its members are departing the party faster than one can get a aeroplane off the tarmac at Dublin Airport?
From my point of view, this is a good deal, for which I commend the Minister for Transport. In the past couple of months he engaged positively with and listened to the transport committee. He also spoke and listened to individual Members and sectoral interests, including representatives of the tourism and transport industries, the hotels federation, restaurateurs and so on. He managed to do something that Mr. Willie Walsh said would not be done, namely, obtain a second deal that was better than the first. This is a good deal for Ireland, Aer Lingus, the mid-west and my own county of Limerick.
The only issue on which I agree with Deputy Patrick O'Donovan and the Government is the stunning and staggering hypocrisy of Fianna Fáil when it comes to this matter. For Fianna Fáil belatedly to be concerned about the sell-off of Aer Lingus, when it commenced the process when it sold three quarters of it, beggars belief and confirms the verdict of its own departing member in the past week on its political cynicism and opportunism. On that point, I agree with the Deputy. Leaving that aside, however, the decision to sell the State's remaining stake in Aer Lingus is an outrageous betrayal and an act of national economic sabotage. The Government is selling the remaining stake in what is an absolutely vital and irreplaceable national strategic asset and sacrificing it to a multinational company on the altar of neoliberal dogma, which will be deeply regretted. There is no argument that can be made that would justify the sell-off of Aer Lingus. If Fianna Fáil is good at opposition for opposition's sake, Fine Gael specialises in privatisation for privatisation's sake. That is what makes the sale so outrageous, disgraceful and unjustifiable.
The so-called assurances given by the Minister for Transport, Tourism and Sport on the slots, connectivity, jobs and conditions are utterly bogus. Either he is deliberately deceiving the House and the people on these matters or Mr. Willie Walsh has hoodwinked him. I am not sure which is the case. As I said, the assurances are bogus. The big question for me is why sell Aer Lingus, a company with €1 billion in cash reserves and €1 billion in tangible assets, a company that is making profits and has a growth plan and that is a vital strategic interest for an island nation with no land connections to the European mainland.
Does the Minister understand the notion of strategic asset, that something is important from the national point of view, as against the narrow considerations of a multinational company or commercial entity that thinks only about the bottom line? A multinational company of any description, managed by anybody, does not give a damn about connectivity, workers' rights or pensioners' rights. It does not give a damn about the strategic importance of the Heathrow slots to this country. That is not its business. Therefore, the idea that these concerns will be protected by a multinational company interested in making money is ridiculous.
Another issue that has not been pointed out in this debate is the fact that IAG is not even making a profit. We are selling a profitable Aer Lingus to a company that made a loss last year. Therefore, the promises of a better and securer future, of more jobs, of growth and so on are entirely speculative and based on nothing but blind hope, particularly when we consider the precarious nature of the international airline industry. What will happen if AIG goes bang, as is quite possible? What then and what about our strategic interests? We have no way to protect and maintain them or to influence the outcome if that happens, as could well happen.
On the question of the assurances, the golden share is a bogus assurance. The British Government had a golden share in BAA, but the European courts deemed it illegal and contrary to European law on competition and state aid. Similarly, the golden shares of the Portuguese Government in Portugal Telecom and Energias de Portugal were both struck down by the European Court of Justice. The golden share will not stand up. Therefore, the assurances about the protection of slots and the disposal or use of those slots will not stand up in the face of the law and commercial reality of the international airline industry.
The situation is similar in regard to the protection of people's jobs, pay and conditions. As has already been pointed out, when IAG took over Iberia Airlines, some 4,500 jobs were lost and salaries were cut by between 11% and 18%. Willie Walsh has a similar history in British Airways in regard to his attitude towards workers rights. During the strike in 2010, he threatened to bring unqualified scab labour in to scab on cabin crews who were on strike. While he was in charge of Aer Lingus, thousands of jobs were cut and he introduced and expanded outsourcing in a number of areas. I do not know if the Minister has responded yet to the revelation about the Nyras report. Did he know about it or has Willie Walsh hoodwinked him about the real agenda he and IAG have for Aer Lingus? Either way, the assurances are completely bogus and we are looking at redundancies, more outsourcing and profiteering at the expense of the workers and the pensioners and at the sacrificing of a vital strategic asset of crucial importance to this country. This sale is a betrayal and even at this stage, the Minister should back away from it. For the Labour Party to support it is beyond shameful.
The debacle regarding the scheduling of this debate and the way the media appears to have more information than the Dáil brings me back to the infamous "Prom Night", when Members were left to rely on information from Twitter about what was going on. The only difference is that this debate is taking place in daylight.
Look where the rush and lack of information on that debate has led us now, with all the current controversies surrounding IBRC and the issues pre- and post liquidation. We know now, only through persistent questioning and FOI requests, that there has been a war going on between the Department and the IBRC, yet the Minister came in here that night and specifically went out of his way to imply that the management team in IBRC was outstanding, a statement we now know does not stack up against the evidence. The rushed way in which this debate is proceeding leads me to worry that in the months or years to come, we will be relying on FOI requests to the Department of Transport in much the same way as I am currently pursuing information from the Department of Finance in an effort to unearth the truth. I do not believe that is any way to do business.
In another worrying nod to the current IBRC controversy, we now have concerns being raised regarding conflicts of interest of some key advisers on this sale. I read with interest a report in the business section of the Irish Independent on 14 May this year, entitled "Government says no conflict of interest over advice". The article reports that one of the key advisers has links to an investment index that placed a bet on the planned sale. However, again we are being assured there are Chinese walls. The article stated:
The agency confirmed that checks are in place after it emerged that an investment index connected to one of the Government's key advisers on whether to sell Aer Lingus has placed a 'bet' on the planned €1.36 bn takeover of the airline by IAG.Therefore, the advisers are beneficiaries.
The investment banking arm of global financial giant Credit Suisse is one of three firms appointed by Government agency NewERA to advise on whether or not it is in the interests of the State to sell its 25.1pc stake in Aer Lingus.
The Irish Independent has learned that an investment index operated by Credit Suisse's separate asset management arm has a position in Aer Lingus shares, hoping to turn a profit on a possible sale of the airline going ahead.
Currently, this House is being forced to proceed with a costly review into IBRC deals, a review that is not only costly but inherently conflicted, particularly given the most recent incidence of the special liquidator who has been assigned to conduct the review actually joining Denis O'Brien in his High Court action to injunct into IBRC's business dealings and the unorthodox verbal agreements between senior debtors and the CEO, a very worrying trend. How can we expect citizens to trust in the Government's handling of this process when time after time, this kind of deal happens. Then, months or even years later, the truth emerges and the facts emerge about who has benefitted and who has lost out. Just consider the history of tribunals in this country and the lack of follow-through on them.
In 2006, when discussing the proposed sale by Fianna Fáil of Aer Lingus, Fine Gael's Olivia Mitchell had this to say during the debate:
The Dáil has had no input into the nature of the sale. It's an insult to the Dáil and to the taxpayers who own this company ... it makes it impossible for us to play our role as a watchdog for the public. There is simply no information on which the Opposition or Government backbenchers can make an informed decision. We are acting on behalf of the real owners of Aer Lingus, the citizens of Ireland.Does this not seem eerily familiar to today's proceedings? These were the words of a Fine Gael Deputy. All that has changed is that Fine Gael has moved from this side to the other side of the House.
The State stands to get €330 million for selling off our vital stake in Aer Lingus. It seems a very cheap price. The Heathrow slots alone are worth more than €900 million. We are also aware there is at least €540 million cash on the balance sheet of Aer Lingus. There are also assets in the form of aircraft and fixed assets, not to mention the iconic brand. These are all significant in regard to the value of the company. IAG must be delighted with the €330 million sales tag. What we are witnessing here is the creation of an election slush fund. I listened to some of this debate in my office and heard people already making pitches for how this money will be spent.
Essentially, we are going to walk away from our national airline. Meanwhile, we have invested upwards of €1 billion in a quango like Irish Water. I cannot see the sense in this. The family treasure trove is being pillaged and will shortly be left empty. The pension reserve fund has been decimated, CIE looks set to be sold and we had to fight to maintain our forests, which were on the list of assets to be sold off.
The Minister has not made a compelling case. We do not have the details to evaluate this sale. Essentially, what we are hearing is more spin rather than us being informed.
What about the Aer Lingus deferred pensioners? We know there is a big hole in the pension fund and that pensioners in a particular category were excluded from the process when decisions were being made about how the remaining funds would be used. Those people had an expectation that their concerns would be addressed and the Minister knows that. They have made contact with him. I believe they were even outside his house. Those hopes are now being dashed. The assurances about regional airports do not stack up against what the same outfit is doing in more populated regions in the United Kingdom.
The key question is whether this is a prudent sale for the citizens or is it, for the purchaser, the sale of the century? I have no way of knowing, and somebody should not have to make a contribution to a debate in this House when they do not know the answer to that question.
The Minister said this morning that, as a small carrier competing against larger companies in a changing European environment, Aer Lingus faces difficult challenges and risks. Its board and senior management recognise that and see the IAG proposal as a means to address those and enhance the company's opportunities to grow and develop. He will be hardly shocked to hear me say that this is a very good deal for IAG, its shareholders and anyone who chooses to invest in it, but it is not such a good deal for the Irish people. Aer Lingus, and it is something most of us are proud of, has served the people well. It is financially viable and it makes a great deal of sense that we would keep it rather than give it to someone else to make money from it.
A few days ago I read an article by Paul Sweeney of TASC in which he stated: "the current push to sell Aer Lingus shares is a result of lobbying by IAG and those who would benefit from the sale, and is not motivated by what is in Ireland's or Aer Lingus' best interest". He went on to state: "Aer Lingus has many strengths and that consolidation into a major airline group is not [remotely] necessary to ensure its survival". Sadly, it does not appear that this is a good business deal for the people. This is a good deal for IAG. It is a neoliberal, ideological move, which is not based on good business practice.
There seems to be a notion that state is bad and private is good, and that is after the worst economic crisis this country has ever seen where so much of the private sector collapsed. However, as happened when the banks were not worth dust and we bailed them out, the Irish people paid for their problems and now that they are worth something again it appears we will sell them again. When something is profitable and other people can make money from it we do not keep it for the State. We sell it, but when something is no good, the State takes it on. It does not stack up.
The sale of so much property to foreign investors will create a huge problem in the future. The example I have given in the House on several occasions is the houses, apartments and sites being bought by American investment funds. They are not even selling them on. Many of the developments were brought into NAMA at fire sale prices. It has sold them on and made a fortune in the process but, very often, it is one investor selling to another, and the taxpayer has been the loser on each occasion. Those investors have come here and bought huge developments of apartments and houses, which they are renting. They have now developed a cartel in the rental market that has seen the price of a two bedroom apartment on Dominic Street increase from €1,000 a month to €1,400 a month in two and a half years. It is little wonder there is a housing crisis.
We boast that this is an even better country in which to do business, but we are eroding workers' rights. It is a dumbing down process - a race to the bottom. Why are we becoming the best little country in the world in which to do business? Alain Supiot explained it very well in the project called Doing Business, a programme of the World Bank that we are so proud to score high in. This is the programme about which we boast that we are high up the ladder in terms of it. He states:
...[It] is the official guide to countries for corporations and businesses who want to face no censure for ignoring workers rights and pay little or no taxes. In the Doing Business report, the comparative table of all the labour regulation in the world includes the following indicators: difficulties in hiring; difficulties in extending or reducing working time; difficulties in making a worker redundant; employment rigidity; and the costs of hiring and firing.One could not make that up.
A few weeks ago, 6,000 Dunnes Stores workers went on strike because 80% of them are on temporary work or zero hour contract arrangements. Why is that the case? Julien Mercille pointed out lately that when Margaret Heffernan took over the company in 1993, 80% of Dunnes Stores workers were full-time. Today, 80% of them are part-time or are guaranteed only 15 hours a week.
Only last week, Dunnes Stores in Gorey closed its doors. It had opened a door onto the car park, thereby breaking their lease arrangements. It created a situation where the customers were coming straight from the car park into its shop, bypassing the 17 other shops in the unit which were losing out dramatically. Dunnes Stores broke the legal arrangement. Why? Because it can, and it put the jobs of 100 workers at risk and put the workers in an insecure position. Dunnes Stores told the workers that their jobs were secure. One of the workers asked them if they could have that in writing, and they would not give it to her. That was interesting.
How long more are we going to bring issues to this level? It is getting worse. Workers' conditions are disimproving under this Government. Things are much different from what they were in the past. Inequality is rising. Why is the Government not able to protect workers in that situation? Why can the likes of Dunnes Stores terrorise the living daylights out of their workers? Why has it not been pulled up in that regard? How can it get away with breaking a leasing arrangement, locking its doors and saying it will reopen them when it gets its way? Why do we not have a mechanism at Government level for dealing with large businesses which treat Irish people like that? Will the Minister not agree with me? I would like him to answer that question. There is something seriously wrong in that regard.
Listening to the contributions of Members on the other side of the House I have to say there is a huge difference in their interpretation or understanding of what is happening here and what the Government is doing. The most important point is the question of jobs. Approximately 3,700 people are employed by Aer Lingus. That is a huge number of employees in any organisation. The change that is coming in that organisation, if and when this deal is approved by the Oireachtas and goes through, will be profound. It is a challenge for everybody concerned, but it is a change that guarantees the future of the company and the future of the employees.
We are living in a constantly changing world and aviation, as everybody here knows, can change almost overnight. The fact that a company like IAG, which is a very significant player in the world and not just in the European market, is the only bidder for Aer Lingus at this stage shows there is a thought out plan in place and that commitments about jobs have been given. The Minister, Deputy Donohoe, spelt that out last night and today but I will spell it out again.
It will grow the transatlantic route from an existing nine aircraft with an additional eight, bringing it to 17 in total. These aircraft will have to be manned by approximately 650 other skilled people, including pilots, cabin crew and service personnel. A major investment is coming to Aer Lingus, and it will guarantee new jobs on the transatlantic route. It will be the lifeblood of Dublin. The companies are committed to increasing the number of passengers by 2.5 million. This means 2.5 million more people will come into our airports and move on into our country or travel on to the US or further abroad.
It is a very positive story and it is very impressive to people who are looking at it from my constituency, Louth and Meath East. Many people in my area work in Aer Lingus or at the airport and are delighted with the fact that new investment is coming in and that there is a new vision for Aer Lingus. The new vision is being led by an old hand in terms of Aer Lingus. Willie Walsh was a very dynamic person when he worked in Aer Lingus and, while he may have fallen foul of the political establishment of the day, he was a dynamic leader and has shown true and dynamic leadership in this proposal. I have every confidence that Aer Lingus will go from strength to strength.
The connectivity is guaranteed for a minimum of seven years. The physical schedules of aeroplanes that land and take off in Heathrow with a destination or origin of Ireland will continue. The summer and winter schedule is guaranteed, which is a major plus. There is great security in the modern world in terms of the company and the investment it will make. The aircraft cargo business will grow by 50%. It is a major opportunity for Ireland, Aer Lingus and the workers. I do not see it in any negative light whatsoever. A person who lives in Eurasia, on the far side of the world, and who wants to come to Ireland will be able to fly all the way with one company. This is a major advantage in connectivity. People abroad say one of the problems is that there are no direct flights to Ireland and they do not know about Ireland because nobody is pushing it. When we are a part of that larger company, it will make a major difference.
When we were here this morning very early to change the Order of Business of the Dáil, the Leader of the Opposition, Deputy Martin, bemoaned the fact that this was being rushed through, according to himself. I examined the record of the Dáil from 2006, when the privatisation of Aer Lingus was approved. The then Fianna Fáil-led Government, of which Deputy Martin was a member, allocated two hours of time to debate the disposal of 75% of Aer Lingus. Deputy Martin also mentioned in his contribution this morning that it is very important that the issue be debated by the Oireachtas transport committee, of which I am a member. It was very comprehensively debated and discussed by the committee. A large number of witnesses came before the committee to discuss the proposal, the vast majority of whom were very supportive of it.
When Willie Walsh came before the committee, I asked him a question about his opening offer. I said he had not become the pre-eminent airline executive in the world without being able to negotiate, and I asked him about how he could enhance his opening offer. He was direct and frank in his response, and said if he made a second offer it tended to be much weaker and that his opening offer was always his best offer. He said if he had to make a second offer, it was usually much weaker than the original one. Obviously, he has never had to negotiate with somebody of the calibre of the Minister, Deputy Donohoe, given that the second offer he has come back with is greatly enhanced. It is a much stronger and better offer for Aer Lingus and Ireland Inc.
All along, there has been broad consensus for some time that, in principle at least, the sale of the company had the potential to be good for Ireland and for Aer Lingus. However, the initial offer was unacceptable and there were legitimate and very considerable concerns relating to, for example, connectivity and job losses. This weighed very heavily on the debate. The offer has been strengthened considerably and I am pleased that all the concerns raised have been addressed in the most recent proposal. The Minister has used the time since the original bid well to secure a better deal for all concerned. The commitments secured on the Heathrow slots were vital, and the potential for route expansion to North America in particular is vast and could have substantial implications for economic growth and development. The deal protects 2.5 million additional passengers, more than 600 new jobs and four new North American routes. We are looking at new dawn for the company in a very competitive environment. It will be strengthened by the takeover and the sky is the limit for Aer Lingus. This is happening at the right time for Aer Lingus, which, in its current state, faced a very uncertain future as a stand-alone operation. It is happening at the right time for the State as the injection of capital and further job creation that will arise from the deal will fuel the momentum we have as the fastest-growing economy in Europe.
Tourism, one of the pillars on which we have built our economic recovery, stands to benefit greatly from the development of Aer Lingus under the auspices of IAG. I represent the west of Ireland and Galway, where the growth in tourism numbers has contributed greatly to the recovery we are seeing on the ground. It has been a very important factor in the domestic economy and its recovery. The commitments that the Ministry has secured for Shannon and Knock airports will have a very positive impact on Galway city, Connemara and the surrounding areas. One very important aspect of it is the marketing expertise the IAG group has across the globe and Ireland will benefit greatly from that. Ireland will be promoted in new markets in which we have not had a presence heretofore. It is a cause for great optimism for the future of the tourism industry.
Last weekend, people across the globe decided that they would like to visit this little country of ours which captured their attention as it asserted its regard for equality and inclusion by popular vote. Through this deal, they will find more numerous and varied ways of visiting Ireland as the airline expands. Willie Walsh gave a commitment that he would invest in more long-haul aircraft, which is very positive for the North American market. I welcome this from a local point of view, given the measures that are there to support the two local airports in the west of Ireland. It is good for Aer Lingus, which could have faced difficult times. If there were another downturn in the aviation sector in the future, there was no guarantee that Aer Lingus would have survived. Its future is secure under this deal. I commend the Government and the Minister, Deputy Donohoe, in particular on the work he has done in negotiating this new deal.
I welcome the opportunity to contribute to this important debate.
I commend the Minister for Transport, Tourism and Sport and the steering group for the work they have done on this issue for several months. For seven decades Aer Lingus has made a huge contribution to the well-being of the State. I pay tribute to the management and staff of the company during those years. The proposed deal with IAG will allow Aer Lingus to open a new chapter of growth and development in the next seven decades. As an island nation, air access is critical in providing connections to international markets for business and tourism. The routes served by Aer Lingus are particularly important to the mid-west region. The access to Heathrow Airport provided through Shannon Airport is a key component of our attractiveness as a region. The mid-west suffered immensely as a result of the decision by Aer Lingus in 2007 to move the Heathrow Airports slots from Shannon Airport to Belfast airport. Our loss of connectivity triggered a spiral of decline as companies incurred additional costs in travelling through Cork Airport or Dublin Airport to reach the global hub of Heathrow Airport. Investment decisions by companies were put on hold and, in many cases, shelved for good. The long-term commitment to connectivity provided in this deal will give certainty to the business community and potential investors and will remove the uncertainty since the decision was made over an August bank holiday weekend in 2007 to take the slots from Shannon Airport. Much of the debate that took place in the lead-up to the decision was based on the incorrect assumption that the Government's 25% shareholding gave it control over the airline. Our experience of the overnight removal of these invaluable slots is living proof that the Government does not have a controlling share. The deal will provide a seven year guarantee on the continued use of the Shannon Airport-Heathrow Airport slots and a veto on their sale. I welcome the commitment to maintain and strengthen the Shannon-New York and Shannon-Boston routes, with the option of enhancing the existing British Airways twice daily service via Shannon Airport. There will also be growth opportunities with IAG's US partner, American Airlines.
In the context of Shannon Airport, I am encouraged by the supportive reaction of groups and organisations such as IBEC, Chambers of Commerce Ireland, tourism interests, aviation experts and Shannon Group. I have every confidence in Shannon Group and its chairperson, board and CEO, all of whom have welcomed the deal. Fianna Fáil and Sinn Féin were badly mistaken when they voted against the establishment of Shannon Airport as an independent entity. Their scaremongering about jobs being lost and terms and conditions of employment changing has not come to pass. Shannon Airport has, in fact, returned a profit since the Government decided to establish it as an independent group. In a similar manner, this landmark deal is being opposed by people such as Deputy Micheál Martin who has stated he has an issue with Shannon Airport growing by 17% in 2014.
This is a good deal for Ireland which will boost connectivity, employment and growth, while also underpinning the future of Aer Lingus. It offers the airline an opportunity to develop and expand its operations to a different level. The major issue of international connectivity has been addressed, the brand will be maintained and new routes will be developed. I support the deal and thank the Minister for his efforts in securing it in the best interests of the country.
The Government's handling of the IAG takeover of Aer Lingus is a shambles which will have negative implications for the country. It is particularly disappointing that the Minister for Transport, Tourism and Sport who is sponsoring this proposal is a northside Minister who should know better. The matter has been characterised by spin and a complete disregard for accountability, truthfulness and due political process.
Aer Lingus has become a very successful Irish budget airline. It has served the country well by adapting to changing markets and circumstances and surviving the worst effects of recession in recent years. It is worth reminding the House of the company's strengths. It generated revenues of €1.6 billion last year, with an operating profit of €72 million. It has total assets of €1.8 billion and cash reserves of €545 million, more than any other European airline. Last year it carried 11 million passengers on its 51 aircraft. A further nine aircraft are on order and all of the indications are that it could have a bright future as an independent airline. Its record and flexibility mean that it is ideally suited to serve our air transport needs and its valuable Heathrow Airport slots have ensured easy connections between this country and most parts of the world. We have been fortunate to enjoy ease of travel thanks to Aer Lingus and these slots. The airline has also been critical for trade and tourism.
It is difficult to understand how, as a country heavily dependent on air links, it could possibly be in the national interest to dispose of critical State involvement in the ownership of Aer Lingus and agree to a takeover by IAG, the shareholder interests of which have nothing in common with Ireland's. The behaviour of the Government, its cheerleaders in elements of the media and insider interests in talking up the deal has created a fog which is reminiscent of the empty promises made at the time of the privatisation of Aer Lingus in 2006 and the flotation of eircom in 1999. I clearly recall the talk in 2006 about a golden share and the assurance that we would have blocking rights by retaining a 25% shareholding. The then Government and some commentators conveniently overlooked the fact that the concept of a golden share had already been found to be illegal by the European Court of Justice. However, when combined with another 5% shareholding or, for example, the pilots' 7% shareholding, the State's 25% shareholding gave us a veto on the disposal of the Heathrow Airport slots.
Today we were told about a B share. What exactly is a B share?
There is a glaring absence of scrutiny of this notion. Where is the explanation of this construct about which nobody heard until now? What is the legal advice on its standing and where is the analysis to support the claim that it will protect our interests in the Heathrow Airport slots? We do not have any of this information and the Government is not giving us the opportunity to raise questions about it because the debate will be closed down with a vote tomorrow evening. The reason for the rush is a political imperative to wrap up the deal before Government backbenchers return to their constituencies and hear the views of their constituents and the anger of Aer Lingus staff. The most recent opinion polls show that a clear majority of the people oppose the takeover. The Government will ignore their views at its peril.
The truth is that there is no cogent argument in favour of IAG taking over Aer Lingus. There is nothing to gain and so much to lose. It is important that Members, especially Government backbenchers, realise that when they cast their vote tomorrow evening, they are only voting on a two-page document, entitled, The General Principles of the Disposal. That is what they are voting on and that is all that is at stake. That document was only laid before the House this morning. They are not voting on the spin or on assurances given by Mr. Willie Walsh or anyone else. They are not voting on the Minister's speech or on assurances from party handlers. They are merely voting on this document.
Let us look at what is in this document. Apart from the B share notion, which was never heard of before, the references to employment are extremely vague. For example, the document refers to the "strong, expressed preference for Aer Lingus to utilise direct labour wherever efficient and effective", but what does that mean?
Here is another one: "It is noted that Aer Lingus' current collective agreements provide flexibility and mobility across its workforce, without unduly restricting other possible approaches". That is reassuring. The document also states "the company does not foresee a likelihood of compulsory redundancy or non-direct employment". Again, that is very reassuring.
It is quite clear that this is very far from any guarantee on jobs. What is much clearer is what we have heard today, by accident, that major potential cost savings at Aer Lingus have been identified in an analysis commissioned by Aer Lingus. This was carried out by the international aviation consultancy company Nyras. The study concludes that the airline should set aggressive but achievable targets for short-haul cost efficiency at a minimum of €60 million or €5 to €6 per seat. It also recommends what it terms the next steps which identify potential savings. The breakdown of these possible savings includes ground handling at 20%, catering 25% and maintenance 15%. The total that could be achieved from these savings was estimated at more than €58 million in the analysis.
There are many unanswered questions. Why is it that in spite of the protracted negotiations, the Government did not achieve an improved share price? Why is it that when the official asset position of Aer Lingus is put at €1.8 billion, the offer price is less than €1.4 billion? That is a critical question to which we all deserve an answer. Why, for example, is the Government afraid to allow scrutiny of the deal by the Committee on Transport and Communications, as promised? Why did some backbenchers hold out hope to deferred IASS pensioners who were disgracefully treated? Why did some backbenchers hold out the hope that the pensioners' shocking treatment would be addressed by the proceeds from this sale, when it is clear that nothing of the sort will happen?
What exactly is the connectivity fund that the Minister talks about and how do we know that it will not become an election slush fund? I understand that Government backbenchers will be briefed again tonight by Mr. Willie Walsh. The decision is being taken by Members of this House and it is not acceptable that private briefings are going on. It is important that Government backbenchers are not again enthralled by Mr. Walsh or by the fact that simply because he is from Dublin he has some kind of loyalty to Irish interests. Mr. Walsh did a good job in Aer Lingus, but he did so while answering to the shareholders of Aer Lingus. He is now answering to the shareholders of IAG and their interests are very different to our national interests.
Government backbenchers should not be taken in tonight and tomorrow by the spin they are getting from everybody or the group-think that is going on. They should get a copy of the Nyras report and have a full briefing on it. They should find out what is really in store for Aer Lingus staff. They should also find out about the B share and whether there is any basis in reality for such a construct. They should not vote blindly, but should listen instead to their constituents and to what staff in Aer Lingus are saying. They should not act like lemmings. They have a duty as Members of this House to inform themselves properly and independently, while listening to the views of their voters. If they do not do so, there will be a heavy price to pay.
I am grateful for the opportunity to contribute briefly to this discussion and to reiterate my stance from January that the sale of the 25.1% Government stake in Aer Lingus is clearly not in Ireland's national interest. The sale poses an immediate threat to air connectivity from Dublin, Cork, Shannon and Knock airports, despite reassurances that vital slots at Heathrow Airport will remain in place for seven years. It also threatens the future of 3,900 Aer Lingus workers, especially the 2,100 back office and ground staff, and abandons the 15,000 IASS pensioners who gave their lifetime's work to our national airline and State airports.
The €1.3 billion IAG bid will signal the end of Ireland's historic, independent aviation company dating from the era of Seán Lemass who was a great Minister for Industry and Commerce in the 1930s. We knew this day was coming when this conservative Fine Gael-Labour Party Government agreed with the troika back in 2012 to sell €3 billion of State assets, two thirds of which would go towards paying off the unfair debts that were imposed on this country. The Labour Party and Fine Gael have since shamefully flogged off our family silver, including Bord Gáis Energy, the national lottery for 20 years and now Aer Lingus. Bord Gáis was also sold for a song to a British legacy company, Centrica, which is the old British Gas. Attempts to sell Coillte were narrowly averted by the outrage of our constituents across the country.
It is laughable listening to the brazen, brass-neck hypocrisy of the Fianna Fáil Party pretending to mourn the demise of our national airline. Fianna Fáil sold 75% our iconic national airline back in 2006 and ensured the company would be privatised. They then pretended to be fools when Michael O'Leary immediately moved to take over the airline. Fianna Fáil and Fine Gael have acted hand-in-hand on this matter.
The first question which occurs to everybody at this stage is why this sale is going ahead now. Aer Lingus has been enjoying considerable success, particularly during the latter part of the Mueller era, as an independently owned national airline. The 2014 annual report highlights a 9.2% increase in revenue, a 17.8% increase in operating profit and increases of 9.4% and 7.9% in average fare revenue per seat and per passenger respectively.
The number of passengers also increased between 2013 and 2014 up to almost 10 million, while revenue passenger kilometres also increased 8.7% in just one year. The 2015 first quarter report's interim management statement continues with these positive numbers from the Aer Lingus management and workforce. Aer Lingus has a net cash amount of over €650 million, which is nearly 30% higher than the 2013 net cash balance. Why are we selling now when this airline, our airline, is clearly thriving? The key to the recent success of Aer Lingus has been its short-haul business model and its niche positioning in the middle of the market. Aer Lingus holds approximately 41% of market share of the Irish short-haul market. An integral reason for this is the connectivity and importance of the strategic slots at Heathrow Airport.
Had the Government agreed to the International Consolidated Airlines Group, IAG's, original takeover bid back in January, we would not even have the miserly concessions that the Minister outlined. I listened carefully to the statement of the Minister, Deputy Paschal Donohoe. He placed great importance on the seven year guarantee on the Heathrow Airport slots and the ability of the Minister for Finance and the Minister for Transport, Tourism and Sport to use this new B share to prevent the disposal of slots and any proposed change in the Aer Lingus board and head office.
There is also reference to ambitious plans to grow passenger numbers by 2.5 million by 2020.
How do these supported guarantees tie in with the cost-saving initiatives being planned by Aer Lingus? Does the Minister know which areas of business or the workforce will be hit? Almost six months ago, Captain Evan Cullen of the Irish Airline Pilots Association, IALPA, pointed out the dangers especially to back office and maintenance staff numbers from this proposed takeover. Any duplication of functions already in London and Madrid, for example, will be ruthlessly eliminated by the IAG management and in executive leadership terms, Dublin will become a branch office of this British airline. What guarantees are there for quieter routes in Cork, Shannon and Knock airports, particularly during the months with lower numbers of tourists visiting? We are familiar with the takeovers and what happens even to iconic brands. We have witnessed job losses and closures just recently with the takeover of O2by 3 and in Dublin Bay North we are wrestling with the consequences of the takeover of Cadbury by 3G-Heinz-Kraft-Mondelez, which could have devastating consequences for the Coolock workforce.
I strongly agree with Senator Sean D. Barrett in his opposition to this sale to a European legacy flag carrier airline like BA-IAG. British Airways was the largest airline in Britain from 1974 until 2008 and it is a founding member of the oneworld airline alliance but it has a chequered history with acquisitions, profitability and industrial relations disputes. British Airways merged with Iberia to form IAG in 2011 and promptly cut 4,500 jobs, mainly in Iberia. The redundancies were part of a so-called restructuring process that led to a return to a profit last year. With Aer Lingus already posting healthy profits, what will a restructuring programme look like for that company?
The British Airways main hub is London Heathrow, where it currently owns 40% of available slots, ahead of Aer Lingus and Lufthansa. It also operates out of London City Airport and it previously had significant operations in Manchester but these were shut down after BA halted the Manchester to New York route. All BA international flights are now out of London, meaning that passengers from regional UK airports must transfer there. As Impact recently noted, people must get a double ticket. BA-IAG has a shocking record in connectivity to the nations and regions of Great Britain, as Senator Sean D. Barrett pointed out in a fine recent article in Phoenix. There are no transatlantic routes from great cities such as Birmingham, Leeds, Manchester, Belfast, Glasgow and Edinburgh, for example. BA has also had a very poor record in connecting both parts of Ireland to the United Kingdom in the past.
Mr. Stephen Kavanagh, the new chief executive at Aer Lingus, has reportedly confirmed by way of letter the company's commitment to working within registered employment agreements, REAs, and will include staff groups which are not covered by current agreements. However, the Minister has said that whenrestructuring is required, he does not think there will be compulsory redundancies. Therefore, the Minister clearly accepts there will be significant job losses on foot of this takeover. IALPA has consistently pointed out that in the long term, the best use of the slots at London Heathrow from Aer Lingus would be to service the London to US market rather than Dublin to London.
Mentioned in the Aer Lingus 2014 annual report is the cost optimisation and revenue excellence, CORE, programme that was launched in 2014 and aims to strengthen price competitiveness. The report states "staff-related efficiency measures were largely deferred in the context of efforts to resolve Irish Airlines Superannuation Scheme, IASS, pension funding difficulties". The report also states, "In 2015, Aer Lingus will seek annual cost reductions totalling €40 million under CORE, an increase of €10 million compared with the original target announced in early 2014".Has the Minister requested any information on how these cost-saving measures will be implemented? By selling the Government's 25.1% stake in Aer Lingus, he is selling any input we have into protecting the jobs. According to the Minister's statement, the Government intends to use the proceeds of the sale for a new "connectivity fund" within the Ireland strategic investment fund. Does the very purpose for these funds not show that connectivity at Cork, Shannon and Knock airports will be damaged by IAG in this takeover? Surely it would have been fairer to address the deficits in the IASS and ensure that deferred IASS pensioners receive the money that is rightly due to them.
Very sadly, I note that Deputy Joe Costello and other Labour Party backbenchers - we must call them the IAG eight - promised at the Labour Party conference that any sale of the 25% stock would be used to resolve the appalling cuts of 60% and more for deferred pensioners.
We are hearing from the IAG 8 but tomorrow night they will have a chance to walk the walk by voting beside Deputy Róisín Shortall and me. There is no question that any guarantees by IAG chief executive, Mr. Willie Walsh, to the Irish Government may be worthless as the years roll on after an IAG takeover. For example, we will not always have a Marino man - Mr. Walsh - in charge of the BA-Iberia combine. The ongoing threat posed to IAG, Air France, KLM, Lufthansa and other traditional aviation operators from low-cost operators like Ryanair and easyJet also suggests that Aer Lingus will be swallowed up and disappear when it enters IAG. It is hard to see too how calls by unions like SIPTU to protect jobs at Aer Lingus will be implemented by an organisation that ruthlessly cut 4,500 jobs when it took over Iberia.
Tomorrow evening it will be time for people to make the careful decision on this, as Deputy Róisín Shortall mentioned. I ask the IAG 8 to walk the walk. They will always be very welcome to walk beside me and Deputy Róisín Shortall in voting "No" to this short-sighted and very damaging sell-out of a key national asset. I urge them to do so.
The most important point to remember is that Aer Lingus is a private company. It was privatised in 2006 in a scheme that Fianna Fáil, in government, had been working on since before the end of the last century. Both the parties now in government opposed that process at every stage. Back then, a minority stake was held onto by the State, with the sole purpose of blocking the sale or transfer of Heathrow Airport slots. This was the only reason given for holding on to any shares at all but the arrangement cobbled together by the last Government was badly flawed. Its deal did not give the Government any influence whatever on the actual use of the Heathrow Airport slots and it made no provision for the future of our airports. There was no protection against the State's shareholding simply being diluted below the magic percentage by new share issues. On this, as on so many other issues, we inherited a very weak hand when Fianna Fáil retired from the fray.
We can compare then with now. We have a very good deal that will protect the State's long-term transport interests, guard and grow jobs and boost infrastructural and regional investment. The State will receive approximately €335 million, which we will ring-fence for investment in transport and other "connectivity" projects. The State's veto is enormously strengthened so that we can, in future, acting unilaterally block any proposed disposal of the Heathrow Airport slots. The Aer Lingus name, brand and head office are protected, again indefinitely. The schedules to Heathrow Airport from Dublin, Cork and Shannon airports are protected for seven years. IAG has a significant growth plan for Dublin, Cork and Shannon airports in the long term.
I will speak briefly about the employment aspects. When the Government got the IAG offer, we asked for specific information on future employment prospects in Aer Lingus. The company told us it anticipates that by the end of 2016, approximately 150 net new jobs will be created in Ireland; this takes account of approximately 50 voluntary redundancies, primarily in back-office functions, which would happen on a phased basis through 2016. The company also told us that by 2020, Aer Lingus could create up to 635 highly skilled jobs, comprising pilots, cabin crew, engineers and other ground staff. IAG has confirmed that Aer Lingus will remain responsible for employee and industrial relations matters. In particular, any decision about a registered employment agreement in Aer Lingus will remain the responsibility of Aer Lingus management. That is the significance of the letter secured by my colleague, the Minister for Transport, from the Aer Lingus chief executive officer yesterday. The company has confirmed a very strong preference for direct labour and confirmed the preference and practice of avoiding compulsory redundancies.
They agree that registered employment agreements are mutually beneficial and safeguard the interests of employers and workers and they are committed to expansion of the scope of their REAs to include staff groups not covered by the current agreements. I expect and anticipate further communication from the company directly to me in this regard.
If there is time in tomorrow's schedule, I hope to move Second Stage of the Industrial Relations Amendment Bill 2015. The Bill reintroduces a mechanism for the registration of employment agreements at individual enterprise level. As the House is aware, there has been a gap in our law since May 2013 when the Supreme Court held that the old REA system was invalid. Of course, there can be no REA unless and until this legislation is passed. An REA is negotiated between a union and an employer. It can include provisions on both pay and conditions of employment generally. Once it is registered, the terms of an REA then become part of the contract of every worker which the agreement covers. As the effect of an REA is to adapt individual employment contracts, the benefit of an REA will survive any change of ownership. Under the Transfer of Undertakings Regulations 2003, where a company is transferred to new ownership, the transferor's rights and obligations under employment contracts are automatically transferred to the new owners. I hope, with the co-operation of the two Houses, that the Bill will pass into law by the summer.
The important point is that there is of course nothing to prevent employers and workers from starting their negotiations on an employment agreement right now with a view to having it registered as soon as the Bill becomes law. I encourage and expect them to do so. With a fair wind behind those talks, they could be concluded and an agreement could be registered before the proposed IAG sale is concluded. The reintroduction of REAs in a constitutionally robust manner will provide certainty around pay and conditions into the future and promote industrial peace. The Government is responsible for the legislation that will govern this negotiation process. We have secured a commitment that the company will engage in talks. Some people believe we should go further. They seem to think we could and should actually dictate what is in the final agreement. I want to be clear about this. As Minister of State with responsibility for labour affairs and as a Labour Party member, I am more than happy to walk the extra mile on behalf of our colleagues in the trade union movement. Neither I nor any Minister, however, can do the job for them. We cannot set out what is to be in the REA between Aer Lingus and its unions. That would not be good for the Government and it would certainly not be good for the unions. To be fair to the trade unions, I do not believe they want us to take their place at the negotiating table any more than they would want the Government to dictate what goes into the next REA coming down the line for Dublin Bus and Bus Éireann. An REA is a voluntary agreement negotiated between a business and its workforce through the relevant unions. Its content has to be settled between the parties themselves.
Aer Lingus has made its position clear to me and to colleagues in government. It is now time for the company to lift up the phone and engage directly with its workers. From what I have seen and heard, I am satisfied that there will be a new REA to protect employment and conditions of employment at Aer Lingus as a result of the work done by the Minister for Transport, Tourism and Sport and my other colleagues. I am also satisfied that Aer Lingus has fully taken on board our concerns over outsourcing of employment and compulsory redundancies and believe that these concerns will be addressed in full. This should be done through a meaningful industrial relations process, which I consider should commence immediately. Therefore, I have no hesitation in supporting the motion.
I will be supporting the motion. Let us be clear. This is not about the privatisation of Aer Lingus because the privatisation of Aer Lingus happened a decade ago. I see Deputy Billy Kelleher in the Chamber who will well remember the debates back in July 2006 when the Fianna Fáil Government introduced a motion in the Houses of the Oireachtas to privatise Aer Lingus. As such, 75% of the national airline was privatised by Fianna Fáil and this debate is not about a privatisation of the company. Privatisation happened. This motion is about how we ensure we get the best deal possible for the company, the workers, the taxpayer and the country as a whole. That is why when the announcement was made six months ago about the proposed buy-out of the Government's shareholding by IAG, a number of Labour Party Deputies got together to discuss how to get the best possible deal for those four key sectors. We sat down and came up with a motion that was put to the Labour Party's national conference in February 2015. I have the wording of the motion in front of me and nowhere does it refer to what Deputy Thomas P. Broughan stated. I recommend that the Deputy get a copy of the motion before he spouts nonsense about what is in it.
The motion is very clear. I will set out the four key areas about which we expressed concern. We expressed concern about the fact that there was not at that stage an independent valuation of the assets of the company, in particular the Heathrow slots. We said there needed to be a firm commitment on registered employment agreements. We said there needed to be better long-term guarantees around connectivity in respect of the Heathrow Airport slots and we said we wanted to see a plan promoted for the regional airports, including Shannon Airport and its connection to Heathrow Airport. We put the motion to the Labour Party conference and I am delighted to note that we got unanimous approval for it and for getting a better deal for our key areas. That happened in Killarney.
The question now is whether we have capitulated or actually managed to get a better deal. If anyone looks at the four areas I have mentioned and takes a reasonably minded view, he or she will say that we have improved the situation in the last four months. If one takes the first issue of an independent valuation, that has taken place conducted by Credit Suisse. If it got it wrong, it can be sued. Credit Suisse looked at the Heathrow slots and come up with an independent valuation. Members might disagree with what it came up with. I might disagree, but I am not an expert. We have indepdendent valuers who have come up with a valuation and we have to go along with that. We must assume they have done their job properly. They have said the slots are worth a particular amount and, as such, we can take it that the criterion that a valid valuation be arrived at has been satisfied. The good news is that the €335 million we raise, which some had thought would go to pay off debt, is going to go to a fund to improve connectivity in transport related projects, broadband projects and energy projects. That is good news. It will mean we leverage additional funds in that area. That box can be ticked.
I do not need to talk about registered employment agreements because the Minister of State, Deputy Gerald Nash, has just outlined exactly how he sees them working in relation to the legislation he is bringing in and the role of the company and unions in ensuring agreements deliver in relation to no compulsory redundancies and the protection of pay and conditions. These are all things unions including IMPACT and SIPTU have written to us to express concerns about. I will take the Minister of State at his word that they will be protected. On connectivity and the Heathrow Airport slots, there is a guarantee as stated by the Minister for Finance that was not there before and an extension of the slots to seven years. That can be seen as a positive improvement over the original bid. On the plan to promote Cork and Shannon Airports, we have a clear outline of exactly what is intended to be done. For instance, it is intended to maintain the Cork-Paris and Cork-Amsterdam routes and to pursue growth opportunities with tourism and business interests in the general Munster region. For Shannon Airport, it is intended to look at strengthening the Aer Lingus flights outbound and at sustaining and enhancing the London City Airport service to New York via Shannon Airport. There are clear improvements there on how the regional airports will be served.
This has not been a capitulation. It is clear that there have been improvements over the original offer. The main thing we are trying to ensure is that the workers and the company are protected. I am glad to see the brand will remain in Dublin with the continued location of the headquarters here. That is a call for the Minister for Finance in the future. There are many positive benefits of the sale and, as a result, I will be supporting the motion. I will follow progress over the next year and if the unions have concerns at any stage about any slip-ups in relation to REAs or otherwise, we will be on the case. That is what we are here for. At this stage, we can allow the matter to proceed.
I am probably the Deputy who lives closest to the airport although I am probably not the Deputy with the largest number of Aer Lingus workers in his or her constituency. However, I have a significant number.
Whether I like it, the position for Aer Lingus before the deal was proposed was that its future could not be predicted.
There was strong evidence that, if this bid was not accepted, there could be in the near future a bid with unforeseen consequences such as a hostile takeover, to use bidding and takeover terminology.
Many of us have a sentimental attachment to the brand of the national airline, although technically it is not the national airline as it was privatised by the then Fianna Fáil Government in 2006, yet the people have a 25% shareholding in it. Unfortunately, that 25% shareholding, as we all know, can do diddly squat in protecting the future of Aer Lingus. Those who have spoken before me and who will vote "No" tomorrow are being hypocritical. They will sit on the sidelines to see where the wind blows on this issue, rather than make a real and mature decision which could create a viable airline, which is how we would all like to see Aer Lingus.
Many of the Deputies within my party were not happy with the original proposal in December as it offered no guarantees on connectivity, jobs or other airports such as Cork, Shannon and Knock airports. The current bid and proposal is much more positive than the original. I am genuinely satisfied that it offers for the first time a viable future for the Aer Lingus brand which we all know so well and to which we have an innate attachment. It offers the possibility of survival into the future as part of a much larger conglomeration and with increased access to other airports and services. The net result is that people's jobs will be safe and that their working conditions will remain the same, as the CEO, Mr. Stephen Kavanagh, stated today and yesterday.
In the past 15 years of restructuring Aer Lingus has been made profitable again. I must acknowledge that the workers, through the sacrifices they have made, have played a huge part in making it profitable. During the 15 years of restructuring the company never introduced compulsory redundancies; it has always relied on voluntary redundancies. This same process will apply in the future. I was delighted to hear Mr. Kavanagh say Aer Lingus's preference was to use direct labour - its own staff - and that it did not have a preference, in any way whatsoever, for outsourcing.
At the end of the day, it would be nice not to have this conversation, but that would not be the mature thing to do. We could all pretend the problem might go away. The reality is that Aer Lingus's future with a 25% State share must be discussed. It would not be mature to pretend we do not need to make a decision on the issue. Standing idly by is not an option. Voting "No" in the hope a better option will come along is also not an option. This is the best option before the Dáil and it offers the best opportunity for Aer Lingus to survive into the future.
I heard someone on radio this morning make a good point, although I would not agree with the particular gentleman on everything. He said that for a company to survive, it needed to have relevance and dependency. This proposal will increase Aer Lingus's dependency and relevance as an airline throughout not only Europe and the north Atlantic but also beyond. It gives opportunities for Aer Lingus to become better than what it is, yet at the same time maintain all of the things to which we aspire for it in terms of its brand, the Heathrow Airport slots and connectivity, the indefinite veto on their sale and, ultimately, the protection of the rights of every single staff member in the company, please God, into the future. I will be supporting this deal because we cannot say "No" to it. We cannot pretend that there is a better option in town. It may be too late to do so.
There is one last thing I wish to say. When the debate is finished, the conversation on what happened to some of the IAS deferred pensioners which was morally wrong must be taken up. With the Labour Party Members and some Fine Gael Members who fought for strengthened conditions, I, for one, will be following up on the issue to ensure we can in some way put right at least some of the wrong done to some of the deferred pensioners. This is not the day, however, to discuss that matter.
I am sharing my time with Deputy Billy Kelleher.
I woke up quite early this morning, as I do in Dublin, and the headline on the website of the Irish Independentwas "Coalition to sign off on offer to Aer Lingus". However, the sub-headline in the printed edition of the Irish Independentread, "The Labour Party has capitulated to Fine Gael demands and accepted an ... offer for the State's share in Aer Lingus from ... IAG". We had been told there was a gang of seven Labour Party Deputies who would valiantly hold out until the last, but today they professed themselves satisfied with a so-called new, improved, better package - a better offer. They are happy with the facilities being offered in the sale of the remaining stakeholding in Aer Lingus.
The main concerns identified by the gang of seven were outlined at the Labour Party's conference this year. I want to highlight their concerns because there was a skirting around the issue by Deputy Dominic Hannigan with respect to the detail of what the gang of seven had voted on.The first was, "That the bid fails to reflect the true value of Aer Lingus and, therefore, an independent valuation of the assets of the company is required, in particular, a valuation of the 23 Heathrow slots". I congratulate Aer Lingus and the Government for successfully managing in seven months not to increase the offer. Despite the fact that we are in the midst of an alleged economic recovery, the Government has not managed in its negotiations in seven months to increase in the interests of the State the value of Aer Lingus.
The second aspect was, "The need for a firm commitment in the form of Registered Employment Agreements....". I note the Minister's own words that we do not have legislative infrastructure in this country for an REA. I back the dedication, commitment and, above all, actions of Ms Patricia King of the Irish Congress of Trade Unions this morning who categorically said this was a bad deal for workers. It is a bad deal because the Government is not in position to guarantee protection for the conditions and rights of existing workers at Aer Lingus.
The motion concluded as follows: "The need to articulate a plan which would promote Shannon and Cork airports, taking into account their ... business models and impact on their individual operations". The same gang now claim that they are no longer concerned. They are now satisfied and willing to support the disposal of a State asset in Aer Lingus and, shamefully, will do so tomorrow. It is clear that the negotiations at the Cabinet are on the following lines. The Labour Party will support Fine Gael in terms of the disposal of Aer Lingus, while Fine Gael will back the Labour Party on the need for a registered employment agreement. I want to quote what Deputy Brendan Ryan, a Deputy for whom we all have a universal fondness and respect, said at the Labour Party conference:
We oppose the recent deal not out of political self-interest, but because it is a bad deal ... We have not heard any valid reason, for example, why IAG cannot purchase the other 75% of the company and work in partnership with the Irish State.He went on to say that being a stakeholder in Aer Lingus, the Government was a guardian of the people's interests and that it needed to act in their best interests and the State.
He said the best way the party could judge every single item in the deal was on its own merits. He also said the party needed to oppose the deal and Fine Gael in government on it. He further said: "There may be a deal at some point in the future which will meet all our concerns and copperfasten our connectivity and the terms and conditions of workers' employment."
As the Minister for Transport, Tourism and Sport today in the Chamber guaranteed the Oireachtas that there would not be redundancies in Aer Lingus, Mr. Willie Walsh was holding a press conference and saying there would be redundancies. That is his plan. He will fire hundreds of workers. At the same time we had a Minister saying there were guarantees and another that we did not have the legislative framework to protect conditions of employment. I agree with the comments made by Deputy Michael McNamara in March. He said there was no negativity in holding up a commitment to support workers at Aer Lingus and that he was keen to see increased value. In particular, he was keen to see the regional framework in place and support for the regions in the context of connectivity. He also said: "One of the values of the shareholding is that Aer Lingus cannot be broken up into its constituent parts and sold off." I doubt if there is anyone remaining in the Labour Party who honestly believes the focus of Mr. Walsh is not to break up the company as quickly and promptly as possible, accelerate redundancies and ensure only core elements of Aer Lingus will remain. Tonight the Minister of State may as well say goodbye to security, catering and auxiliary services in Aer Lingus. That is what we will be voting on in the coming 48 hours. If any Member has a shred of honesty towards the people, he or she should put his or her hands on his or her heart and say it is absolutely an untruth that jobs will not be lost. They will be. That is the stated intention of the chief executive. The Minister for Transport, Tourism and Sport said in the House today that there would be no redundancies. At the same time, however, the interested party's chief executive said there would be. How does that tally?
I am confused about the deal that has been announced. While the gang of seven might be satisfied, the monetary value of what was on the table seven months ago and what is on it today begs the question of why are we selling. What is the urgent need to sell a State asset of such significance? There has been some rhetoric in the House today to the effect that Fianna Fáil sold 75% of the company. However, the Government will sell 100% of 25%. Fully 100% of Aer Lingus will be disposed of by the Government. Let that be its legacy, the legacy of those who have not had the courtesy to come to the House to protect the terms and conditions of workers in Aer Lingus.
Let us consider the spin and how the Government is selling the deal to the people. Some 50 years of dividends will be flushed away. The methodology by which the Government has calculated the value of Aer Lingus will be drawn into question in years to come. We talk about a banking inquiry, but there will be an inquiry into the disposal of Aer Lingus. There is no justification for disposing it in the context of the capacity of the country to stand on its own feet. We are €2 billion ahead of the tax profile. Why would we dispose of a brand for which we, as a country, have fought? The dedication and commitment of ordinary people helped to provide a brand, but tomorrow it will be given to British Airways and we will not have something that we can call our own. Something is going on that simply does not add up. It does not stand up economically. It does not stand up today and it did not stand up seven months ago. The Government's logic on the Heathrow Airport slots simply does not add up. It is selling a significant entity for which the people of the country fought tooth and nail in bad times. What is the logic of disposing of this asset? Perhaps it is ideological and the Government has listened to some focus group suggesting the Tory element of the Government will secure one or two extra points in next Sunday's RED C poll. Let it be the legacy of the Labour Party which will turn around to workers in north County Dublin and tell them to say goodbye to their pay and conditions of employment.
What folly this is. The Minister of State is nodding his head. We spend €50 million every year in promoting St. Patrick's Day events, but we will lose a company that has €500 million in cash in banks. We would sell it for €1.6 billion. In Galway it is sometimes asked, "Who is codding who?" The Government is not codding us.
I have listened to the debate today and how the deal was announced, but the fact is that we do not know the full details. It has been a case of drip-feed. The fact is that Government backbenchers, including Labour Party backbenchers and others, are being briefed, while Parliament still does not have the full context in terms of the due diligence process that was carried out. The Nyras report and many other aspects of the deal are not accessible to us, but I know one thing. There was major opposition to the sale of Aer Lingus when 75% of the State's stake was sold. The Government is now selling 100% of the State's stake in Aer Lingus.
There is no rebel left in the Labour Party on that issue. I have listened to the debate and looked at the previous proposal made when IAG first pounced on Aer Lingus. I have looked at the proposals made today inasmuch as I can and find that there is no difference.
The Minister of State, Deputy Michael Ring, comes from the west. He knows full well that if he took a heifer to the fair in January, took her back again because he did not get a good enough price and then took her back again last week and was offered the same price, it is he who is the fool. That is what has happened in this case. The Government pretended for seven months that it was holding out for a better deal, but there has been no improvement in any aspect of it. There has been an improvement in the spin, the public relations and the softening up exercise of the various organisations throughout the country that have come out to welcome the proposal. However, when we strip it all back, there is nothing in this for many people. Most important, there is nothing in it for the people because we are selling our remaining stake in the national carrier, our national brand. We are selling it to the private sector and throwing it to the wolves.
Let us be very clear. If IAG really loves Aer Lingus so much, what would be wrong with buying 75% of it and working with the State to improve and enhance the airline? If the genuine interest of IAG was to expand, grow and develop and the Heathrow Airports slots were not of significance in enhancing IAG access to Heathrow Airport, as opposed to enhancing access from Ireland to Heathrow Airport, why not buy the 75% stake and let the rest of the shares remain with the State? It is simply the case that IAG wants to have 100% control. British Airways does not have the best history when it comes to takeovers. It has been predatory and stripped assets. It has undermined the airlines it has bought and taken out the best parts.
The history is evident. There is no logical reason Mr. Walsh and IAG could not purchase the 75% and work with the State with the 25%. Are the public interest directors on the board obstructive? Have they caused great difficulties in the context of the development of Aer Lingus to date? They have not.
When one examines the statistics, one sees that Aer Lingus carried 11.1 million passengers in 2014. I remind the Minister of State, as he keeps reminding us, that we have gone through a very difficult recession, both nationally and internationally. It was one of the worst among OECD countries, yet Aer Lingus increased passenger numbers. In recent years, its passenger number has increased remarkably and it outperformed IAG, with a 19% increase in the passenger number since 2007. Since that year, it has almost increased its passenger number by one fifth. This was during one of the most difficult international recessions. It has outperformed all its rivals. The company is working and competing against one of the most aggressive airlines in the world, Ryanair. Despite the competition with Ryanair, both companies grow. We are now told, however, that unless we sell the 25% stake, Aer Lingus will fall over, shrink as a company and not be able to perform in the international market. That is patently not the case because all the evidence to date shows quite clearly that the company is able to survive and grow.
Deputy John Lyons said that the option in front of the House was the best and only one. Let us be very clear: there are two options in front of the House tonight, one being to sell and the other being not to sell. Nobody is hamstrung in this House by having only one option with regard to the sale of the 25% stake in Aer Lingus. There are two options and the deal can be rejected.
Let us be very honest with ourselves. We have been criticised over the fact that 75% of the company was sold in 2006. The reason for relinquishing Government ownership in 2006 was to remove the operational management of the company from the vagaries of everyday politics. We all know that when politics is completely involved in the running of any company, it creates its own inherent difficulties as there are competing interests. The interests are not always those of the company. Sometimes politicians are known to put their own interests before those of a company or even the national interest. They do, and they are doing it again here tonight.
The remaining strategic share was to ensure that Aer Lingus would remain as an operational entity and not be acquired by a rival in an anti-competitive manoeuvre or be stripped of its assets for short-term balance-sheet gain. What is happening? The proceeds of the sale are to go into the strategic investment fund. In the next number of months, this will effectively be an election slush fund. We know what will happen. The money will be in the strategic investment fund and the roll-out of promises will occur. Broadband to every house, investment in connectivity, and investment in ports and roads will be promised. We will have it all.
All will be announced on this side of the election and the Government will say it has the money to carry out the investment, but it will not acknowledge the fact that the money will have been obtained by selling a State asset.
Aer Lingus has been successful. Deputy Michael Ring is the Minister of State responsible for promoting this country and travels the world to do so. Aer Lingus is synonymous with the country. It is the national carrier, but it also symbolises something about Ireland internationally. The slots in Heathrow are critical. We have got a guarantee that, for seven years, the slots will not be sold. As a representative of Cork, I realise that companies of international importance do not locate there or in the southern region based on a short-term guarantee of seven years. They project well beyond that horizon.
The Members on the Government side should look at the placards they held up in 2006 in O'Connell Street in Limerick.
In the context of Cork, it is critical that we retain access to Heathrow, Amsterdam and Charles de Gaulle airports. That is of considerable importance. I see nothing in this other than glib commentary to the effect that we will continue to develop those routes. This is no guarantee at all. Clearly, the Government's U-turns on this have been contemptuous not only of this House, as evident from the way it has treated it, but also of the thousands of people it promised on O'Connell Street in Limerick all those years ago that it would never sell Aer Lingus. It is selling 100% of the State's stake tonight. I appeal one more time to the Labour 7. There are two choices before them tonight: to sell and not to sell. I ask that the Government not sell.
I have listened to some of Deputy Billy Kelleher's rendition and believe it is hilarious and disingenuous. It is typical Fianna Fáil and the reason it is in the quagmire it is in. The reason I say that-----
I reiterate what I said. The disingenuousness of Fianna Fáil knows no bounds. A man stands up in the Dáil and talks about selling 100% of Aer Lingus. It was sold into private hands by Fianna Fáil, let there be no doubt about it.
The deal that the Government has done is a good deal, for Dublin and Ireland. It will provide a boost to jobs and tourism while securing the future of Aer Lingus. This is something that did not bother the two gentlemen who are now leaving the Chamber.
This deal secures in perpetuity a veto on the sale of the Heathrow Airport slots. This was not achieved by Fianna Fáil either. Today, the State has no control over the airports that use the Heathrow slots. This deal guarantees that Aer Lingus will continue to operate its current daily winter and summer scheduled flights, based on current frequencies, between Heathrow Airport and Dublin Airport, Heathrow Airport and Cork Airport and Heathrow Airport and Shannon Airport for at least seven years. In addition, the slots currently operated from Belfast airport to Heathrow Airport will continue to be used at airports on the island of Ireland for the next five years.
This deal secures the future of Aer Lingus. There will be significant job creation. Eight new wide-bodied jets will be added to the Aer Lingus fleet. By next summer, two new transatlantic routes will serve Dublin Airport. By 2020, this will increase to four new transatlantic routes. This ensures more jobs in Aer Lingus and in Dublin Airport. It will deliver up to 2.4 million additional passengers, providing a boost to the tourism industry throughout the island. In the coming year, an additional 150 jobs are expected in Aer Lingus. This is 200 jobs in all when one considers the 50 that may have to go. The figure is to rise to 635 by 2020.
The use of lAG's network will enable Ireland to become an important hub for European traffic across the Atlantic. IAG has confirmed that the existing employment rights of Aer Lingus employees will be fully safeguarded.
All registered employee arrangements will be re-registered. This is a great tribute to the patience, skill and negotiating ability of the Minister for Transport, Tourism and Sport.
Aer Lingus is a great company. I am proud that Aer Lingus is one of the oldest airlines in the world still operating today. The decision to establish Aer Lingus was more than just the setting up of an airline. It was an expression to the rest of the world of the determination of a fledgling nation to take its place among the countries of the world. Its success over the decades is a source of national pride. This deal respects this unique heritage of Aer Lingus.
Aer Lingus will remain an Irish company. It will maintain its head office in Ireland. Its flights will continue to operate under the "Aer Lingus" brand name. Aer Lingus will keep the affection of many Irish people throughout the world. The world in 2015 is unrecognisable from the world of 1936, the year Aer Lingus first took flight. Nowhere is this more true than in the world of aviation. Today, Aer Lingus faces difficult challenges and risks. Across Europe, many state airlines have failed. Cyprus Airways, Malev and Hungarian Airways have all gone the way of the dodo. Finnair and the Portuguese airline, TAP, are the only other examples of national, small independent airlines competing against larger rivals. Aer Lingus had already been privatised by Fianna Fáil. That aeroplane has long flown. We need to find a way to use the remaining quarter of Aer Lingus that we own to put the company on the best possible path to secure its future. This deal does just that.
Some Members of the Opposition are suggesting doing nothing is an option without consequences. Let us be clear - it is not an option. Aer Lingus has already been privatised. The State only has a minority shareholding. There is nothing to prevent a hostile takeover of Aer Lingus. A hostile takeover will not have the interests of the airline, its employees or the country at heart. A hostile takeover would be free to move the Heathrow slots away from Irish routes overnight. A hostile takeover would not be obliged to respect registered employee arrangements. A hostile takeover would not provide assurances that Aer Lingus will grow and employ more people in the future
Fianna Fáil has spoken here tonight and I must say that it is galling to hear those who privatised Aer Lingus criticise this deal. They surrendered State control of the airline and of the slots in Heathrow Airport a long time ago. When they privatised the company, they failed to secure the assurances that we have now received. They failed to control the use of slots at Heathrow Airport. They left themselves powerless to act when Aer Lingus decided to switch the use of these slots from Shannon Airport to Belfast airport. Fianna Fáil's attack on this deal is old-style cynical politics at its worst. They are attacking this deal for the sake of attacking it. They are hoping to mislead the public in a desperate attempt to win back a handful of votes at the next election. This cynical approach to politics has served this country so poorly in the past. Where is responsible opposition? Where is Fianna Fáil's sense of national pride? I do not see a single Member of the Opposition in this Chamber - people who would stand over there and display some passion for this company that is such an integral part of our nation. Not one of these individuals is to be seen. Where is their national pride and where is their desire to put the country ahead of their party? Have they learned nothing? After the painful recession that we are now emerging from, the public expect better from politicians. This is the type of behaviour that makes the public switch off from politics.
It is the exact opposite of what we experienced over the past few weeks. In every constituency in the country, people who never even voted before were knocking on doors campaigning for their rights or for the rights of others. The Irish abroad sacrificed their annual leave and their savings to travel to the polling booth from all parts of the world. The decisive result provided a new optimism in what politics can achieve. A minority were made equal by a majority through persuasion and sharing stories. That is the power of politics. Fianna Fáil may not have noticed this. It may have been oblivious to it. After barely lifting a finger to participate in that process, it is now reverting to type and is engaging in the type of politics that disillusions young people to the point where they do not even to register to vote. Is it any wonder that the public have turned their backs on Fianna Fáil and that its own members are turning their backs on Fianna Fáil? Is it any wonder that one of its brightest young leading lights has turned her back on Fianna Fáil?
Let me emphasise again why this is a good deal for Aer Lingus and for Ireland. It strengthens the competitive position of Aer Lingus, reduces risk to the company and provides it with an opportunity within a larger group to grow and face the challenges in a changing aviation environment. It gives greater certainty around our connectivity to Heathrow. It strengthens the guarantees we have around the disposal of Heathrow slots and provides new guarantees around slot utilisation for at least seven years that we do not have today. It promotes Ireland's wider connectivity and can bring growth to our airports. It is anticipated this move will bring benefits to both Aer Lingus's long haul and short haul networks within the IAG group. There will be a focus on sustaining and growing routes from Dublin, Cork, Shannon and Knock airports. It will create employment. It is envisaged that by the end of 2016, a new net 150 jobs will have been created in Aer Lingus, rising to a new net total of 635 jobs by 2020. It protects the Aer Lingus brand and keeps its head office in Ireland.
Before I sit down to allow Deputy Pat Breen to speak, there are many great and brave people in our country who can compete on the world stage and many of them are in Aer Lingus. Aer Lingus need have no fear. Its ability, innovation and entrepreneurship will see it well into the future and will ensure our future connectivity to the rest of the world.
The empty Opposition benches speak volumes. I welcome the opportunity to contribute to this debate. The Government's decision to recommend the sale of the State's 25.1% stake in Aer Lingus to IAG brings an end to the uncertainty that has been there since December regarding the future of the company, which is very welcome. The initial offer was grounded because it did not satisfy concerns about jobs, connectivity and the Heathrow slots and I compliment the Minister for Transport, Tourism and Sport who has been here for most of the day. He played hardball on this issue and as a result, he secured significant concessions in a deal which is in the best interests of the future of Aer Lingus, connectivity to our regions and for the travelling public. We all remember the IAG chairman's comments when he addressed the Oireachtas Joint Committee on Transport and Communication earlier this year when he said he did not do "second bids"; therefore, the Minister's achievement in securing these concessions is all the more remarkable given the backdrop of Mr. Willie Walsh's comments.
Both Government and Opposition Deputies have said that everybody in this country has a deep affinity with Aer Lingus and that is understandable given its long tradition as the driver of air services into this country. However, Aer Lingus is now a small player in the global aviation industry where mergers, strategic alliances and consolidation are now the norm. We have seen this in the mergers of Air France and KLM and Lufthansa and Austrian Airlines along with mergers in the United States. The aviation industry is very volatile and must adapt to the changing environment on a regular basis. If I said to somebody ten years ago that we would have 25 direct services per week to Abu Dhabi and Dubai, they might have laughed at me. We now have those services and they are very successful. Aer Lingus is a small airline that moves around ten million passengers per year. Ryanair moves 100 million passengers per year so the merger with IAG will be good for Aer Lingus and will provide the airline with greater growth opportunities than it would not have as a stand-alone airline. At the same time, it will retain its branding, a brand which has a strong international reputation.
I am particularly pleased that the issues I raised about Shannon Airport, about which everyone in the mid-west region was concerned, have been addressed and are enshrined in this deal.
I listened to members of Fianna Fáil criticise the deal earlier. That party sold 75% of the company and retained the 25.1% shareholding, but it had received no guarantees whatsoever concerning the Heathrow Airport slots. As we know, Aer Lingus moved the slots from Shannon Airport to Belfast airport in 2007. When I questioned the then Minister for Transport about this, he told me that the State did not have the power to overrule management decisions on business matters. We have learned a lot since, which is why I am delighted that the Minister fought hard to have legally binding guarantees written into the articles of association from the outset. For the very first time we have secured a deal which guarantees the current level of Heathrow Airport services for the next seven years and effectively gives us a veto over any possible future disposal of the Heathrow Airport slots. Deputy Billy Kelleher and his colleagues failed to acknowledge the reality that if Aer Lingus was to decide to move a service from Shannon, Cork and Dublin airports, there would be nothing we could do to prevent it from doing so. Now, however, we will have security as we move forward.
The Shannon-Heathrow route is very profitable and extremely important in the context of foreign direct investment. There has been a lot of foreign direct investment in the mid-west region, including 70 US multinationals which employ over 10,000 people. Connectivity to both Heathrow Airport and the United States is extremely important. An indication of the opportunity for further growth on the route is the recent announcement that Aer Lingus is increasing capacity on the route by 25,000 seats this winter, representing an increase of 20% or an additional 65,000 passengers in a full year. If the route was not profitable, Aer Lingus would not be increasing capacity on it.
On the potential disposal of Heathrow Airport slots in the future, it is very significant that the Government has secured a guarantee by way of the retention of a golden share which will be controlled by the Minister for Finance, effectively giving him a veto. I have listened to criticisms inside and outside the House to the effect that this is not possible but it is. The Government has fought hard for this concession and despite the reservations expressed, I have no doubt that it will be copperfastened by the European Commission. It is hugely significant that the Government, as a golden shareholder in a private company, has secured this concession. This guarantee is exceptional in the aviation world and the Minister is to be commended for negotiating it.
The big concerns in my region centred on Heathrow Airport connectivity and the disposal of the Heathrow Airport slots, but these concerns have now been addressed comprehensively. I have listened to some Opposition Deputies questioning the commitments on Heathrow Airport connectivity, but the proof is in the response from the chairperson of the Shannon Airport Authority, Ms Rose Hynes, who said any IAG deal would open a new era, not just for Aer Lingus but also Shannon Airport. This is the airport authority which has transformed Shannon Airport and turned it into a successful enterprise. The airport was a shambles under the previous Fianna Fáil Administration when passenger numbers were falling. The authority is to be commended for the 17% increase in passenger numbers it has secured this year and the continuing growth in business at the airport. That is proof of the Government's commitment to Shannon Airport.
We have nothing to fear from change and the proposed change will be for the good. Shannon Airport is looking forward to a new era in aviation and will be in a position to exploit new growth opportunities which arise. Aer Lingus has committed to enhancing the transatlantic services to Boston and New York and will replace the current 757 aircraft with the wide-bodied 767 aircraft on the Boston route, for example, thereby increasing capacity considerably. It is also considering the expansion of its twice daily service from London City Airport to JFK Airport, which has been very successful. This would benefit the business community across the west of Ireland.
IAG is also examining growth opportunities with tourism and business interests in the mid-west region which are being pursued with its US partner, American Airlines. I have spoken before about the importance of the oneworld alliance American Airlines has returned to Shannon Airport and will schedule 114 additional flights to Philadelphia which is a fantastic hub airport. Given that American Airlines is lAG's partner, Shannon Airport is ideally placed to exploit growth opportunities which may arise from this partnership. In addition, it also has pre-clearance facilities and an uncongested airport supported by an excellent hotel and bed and breakfast sector. Even though Dublin Airport will be the hub in this deal, there are opportunities for Shannon Airport, too. Hotels in Dublin are congested and almost at full capacity, but there is spare hotel capacity in the mid-west region. There will also be opportunities for Shannon Airport to further expand transatlantic services down the road. The sale of the State's shareholding will realise €335 million and I very much hope the proposed connectivity fund will stimulate connectivity to Ireland because as an island nation connectivity is extremely important to us. I hope some of the connectivity fund will be used to push transatlantic services into Shannon Airport.
On the future of Aer Lingus employees, I would not be signing up to the agreement if I thought that it would negatively affect the jobs of the workers, particularly those at Shannon Airport who have given so much time and commitment to the company. I certainly would not want their jobs to be jeopardised. I am happy that the Minister has secured commitments from Aer Lingus that the workers' concerns will be dealt with through the expansion of registered employment agreements and I expect Aer Lingus to live up to its commitment, as it has done previously, that there will be no outsourcing of employment.
Various Opposition Deputies have taken to their feet in the House today to criticise the deal. That is not surprising, given that some elements of the Opposition oppose everything. Fianna Fáil has no policy whatsoever, other than to oppose the Government for the sake of it. That has been proved here today by its arguments about Aer Lingus. It left Shannon Airport in limbo for seven years and is not looking to the future now either. It is not positive and its members do not see the potential for change and growth in the deal. I have received numerous calls from constituents who are complimenting the Government on securing these guarantees, particularly the commitment on the Heathrow Airport slots. I will be supporting the deal and commend the Minister for the work he has done on it.
I am not shocked, but I am deeply saddened that the Government has decided and will force through its decision by weight of numbers to sell the State's stake in what has always been to so many, me included, the national airline. Shame on Fine Gael but even greater shame on the Labour Party for this. We are told the Government decided to sell our Aer Lingus shareholding because the offer included improved connectivity to and from Ireland. I urge the Minister to spell out the improvements and guarantees and the timeframe involved. We are told the Government decided to sell our Aer Lingus shareholding because the offer included real benefits for the economy generally and would have a positive impact on aviation jobs in Ireland. I challenge the Minister to spell out what the real benefits are and their long-term prospects for the economy and to explain to those who will lose their jobs in the company - a fate which is awaiting dozens of Aer Lingus employees, as acknowledged by the Minister earlier today - how this proposition represents a positive impact on their jobs in the aviation sector in Ireland. The Minister tell us that employment rights will be fully safeguarded. What about the right to keep one's job and continue to work in the employment of one's choice?
The offer, according to the Minister, is consistent with the Government's aviation policy.
I am reminded of the children's rhyme in which reference is made to any so-called Government aviation policy - fly away Enda, fly away Joan and please do not bother to come back either of you.
The Minister tells us that Aer Lingus's current position is that it does not envisage compulsory redundancies or non-direct employment into the future. This is clever language that guarantees absolutely nothing. The current position referred to is the position today. A reference to not envisaging and not foreseeing is easily overcome by, "We could not see these changed circumstances back then. The situation has changed and so too must our response." Time will tell and we will see.
Aer Lingus has a proud record of service to the people of Ireland. Care, comfort and courtesy are all traits of the Aer Lingus brand and its cabin crew staff who have always impressed me in their dealings with passengers, whether on short or long-haul flights. I use the opportunity to congratulate and thank them. This acknowledgment is no more than they deserve.
I also acknowledge and express equally deserved thanks and congratulations to members of Aer Lingus senior management who have acted with compassion and understanding in circumstances of real difficulty for Irish families dealing with a crisis overseas. I am conscious of one such intervention recently that merits our collective appreciation. That, too, is deserved recognition.
Aer Lingus has been and still is for so many loyal customers, including for me when I have had the chance and opportunity to travel overseas, seen as our airline, Ireland's airline, our flag carrier at home and internationally. Irish people abroad, whether on holiday or having relocated for work purposes, believe they are already back home when they board an Aer Lingus flight from any overseas airport, even before it departs. The sense and the shared feeling is, "Ah, we're home."
We are an island people whose Government is willing to sell off a critical part of our transport infrastructure and give away control over our access to and from all of the important destinations and markets with which we have historical and newly built relations. It is with great regret that I am participating in the debate. I had hoped better counsel would have prevailed and that the Cabinet would not have approved selling our shares in Aer Lingus yesterday. This is not just a sell-off; it is a sell-out.
We should all probably all declare our interest in Aer Lingus. The majority of Members in this House travel with Aer Lingus. If we had a choice, that is the airline with which we would travel. Increasingly across the country people adopt that position.
I know people who have worked for Aer Lingus during the years. They have had good employment. There have been difficulties in relations between management and staff in the company, but it is still a successful airline.
I also know many Aer Lingus pensioners and have heard many of their stories about the shortfall in the pension fund. I also knew TEAM Aer Lingus staff, many of whom were given letters of comfort about job security. As we know to our cost, these letters turned out not to be worth the paper on which they were written.
In my previous spell in this House one of my many jobs was as spokesperson on transport. At the time there was considerable difficulty within Aer Lingus and the then Fianna Fáil-led Government was discussing selling it. Ten years ago, on Tuesday, 24 May 2005, I tabled a motion on Aer Lingus. It may be for historians to read, but many of the things included in Sinn Féin's motion at the time are still relevant. It recognised the enormous contribution to the economy made by the national airline, Aer Lingus, since its establishment; commended the workforce in Aer Lingus, as we have all done tonight, for building up the company over many years as one of the foremost airlines globally and for their major contribution in returning the company to record profitability since 2001; and noted that State funds, through the National Pensions Reserve Fund, were at the time being invested in aviation companies throughout the world, while the Government refused to invest State funds in Aer Lingus.
The Government tabled an amendment stating these were matters for the board having regard to its statutory remit and that the Government did not have an input into them. The amendment welcomed "the Government’s recent decision in principle on the sale of a majority shareholding in Aer Lingus to provide the funds needed by the company". The narrative now is that it was sold to bring the company into the 21st century and to make it more profitable and accessible. The amendment also welcomed "the Government's decision to maintain a significant minority stake in the airline to protect the State’s key strategic interests". The debate at the time was about whether that stake was sufficient. Many of us argue that it was a strategic mistake.
I note what Deputy Caoimhghín Ó Caoláin said about the importance of Aer Lingus. One of the debates at the time was about a simple thing that was so important to families. When someone dies abroad, there is the difficulty of getting the remains of a loved one flown back to Ireland. That was a major concern at the time and people were talking about how it would happen in the future. I have not heard that matter raised in this debate. It will certainly be a concern of people in the future. We all know about cases in which, unlike other airlines, Aer Lingus went the extra mile. I would be as critical as many about changes we have seen in how Aer Lingus deals with customers and so on. However, compared with other airlines that operate in the State, its connectivity with passengers is excellent.
My motion in 2005 deplored "the decision of the Government to sell the majority stake in Aer Lingus held by the State on behalf of the Irish people, thus leaving the company and the workforce open to exploitation by private commercial interests who will profit from the decades of investment by the Irish taxpayer in building up Aer Lingus and from the sacrifices of the workforce who saved the company in recent years". It also called on the Government to retain Aer Lingus in State ownership; invest in Aer Lingus; and safeguard the employment, pay and conditions of all Aer Lingus workers. If we are really honest, we have to say the sale of Aer Lingus is a cheap, quick fire sale that will generate huge profits for a multinational conglomerate that will do well out of it.
It is certainly not motivated by the needs of the workers and definitely not in the short-term interests or benefit of the people. The Minister has outlined his view on the matter. The sale of Aer Lingus will conceivably cost jobs, but, again, there are no guarantees in that regard. As stated by other speakers and in my humble opinion, jobs will definitely be lost and this sell-off will damage Ireland's connectivity and development. This profitable and growing company which has key landing slots in an important airport is being sold for €350 million, far below what it is worth, a matter on which other speakers have also commented. We are now being told by the Government that revenue from the sale will be spent to increase connectivity to Ireland. To be clear, we are selling off a key component of Ireland's connectivity to invest in its connectivity. Perhaps I am being simplistic in that regard, but that is how it appears to me. We have been told that the Heathrow Airport slots and that thousands of Aer Lingus jobs are safe for seven years. We are asked to believe this stay of execution will hold for seven years, but I do not believe there is any guarantee that will happen. To inject an air of honesty into the debate, I do not believe anybody can guarantee the jobs will be retained.
I heard on radio today that a Labour Party Member, Deputy Michael McNamara, wanted to read the details of the proposal. That is the right approach. We all want to hear exactly what is contained in the proposal. We know that IMPACT has still not received any correspondence from Aer Lingus on issues raised by it with the company in relation to its members. Not only do Members of the House want to know the details of the proposal, so, too, do the trade unions.
If IAG decides to sell Aer Lingus or wrap up the company, what will happen to these wafer thin assurances that the Government and many back benchers claim are key assurances? As I said, I opposed the original 75% sell-off of Aer Lingus, in respect of which I moved a motion in 2005. Fianna Fáil has some neck to pretend that it cares about Aer Lingus when it set in train the sale of that key shareholding in the company. During the debate on the aforementioned motion I argued that a limited sell-off of shares would lead to full privatisation in the future, which is what is happening. I will leave it to historians to work out. While the Labour Party supported Sinn Féin on the issue at the time, because it is part of the Government it now feels a need to back it on this matter.
The belief is that revenue from the sale will be used to generate spending and a goodwill factor among the electorate. I am sure the Minister will say the opposite. The track record of the IAG indicates that its interests do not lie in providing jobs or supporting countries in which it purchases airlines. Many speakers have commented on that issue also. It was also stated in the House that following the takeover by IAG of Iberia in 2011, 4,500 jobs were lost, a huge number of jobs which is more than the entire staff of Aer Lingus. Does anybody seriously believe the IAG board or its shareholders will be arguing in the interests of Ireland or its people? That is the stuff of fairytales. Members on this side of the House are regularly accused of all sorts of things but to suggest any of these people will care about what is happening in Ireland which is only a small cog in what they dream of as regards overall profits is a fairytale.
What is the position on the deferred members of the Irish airlines superannuation scheme, IASS, who worked for Aer Lingus? These workers are to be forced to take a 40% reduction in their pension entitlements by way of Government legislation. What hope they do have of a fair resolution of their issues? Perhaps the Minister might say whether some of the revenue derived from the sale could be used to meet the shortfall in that scheme in recognition of the hard work, commitment and sacrifices of the workers who built the company? I do not know if that it is possible, but I am sure the proposal would have cross-party support.
Aer Lingus brings secure and consistent connectivity to Ireland that is vital to any island but particularly a country that relies heavily on foreign direct investment. For years Aer Lingus has made Ireland an attractive destination. Often, the first connection people have with Ireland is when they board an Aer Lingus flight. The airline's reputation for quality promotes a positive image of Ireland across the world. Irish people are proud of Aer Lingus, as I am sure all Members of the House are. It is not possible to bottle the Aer Lingus brand, but it is worth its weight in gold. The personal touch in the approach of Aer Lingus staff is the first indication visitors from the United States get of the welcome they will receive when coming to Ireland. This sell-off will change the dynamic in that regard.
This is a bad deal for Ireland, as will become evident in the years to come. I have referred to the motion I tabled in 2005 and what was happening at the time. There have been huge changes in this country since. Some believe this is a sell-out rather than a sell-off of Aer Lingus. The motion will be passed by the House. I genuinely hope the Minister's predictions of what is to happen will come true. I am the doubting Thomas, the negative back bencher and so on, but I genuinely hope it will be a success. While I am not in favour of the sale, I am sure it will go ahead. I take the opportunity to wish the staff and company well.
I have three concerns I would like to highlight during this debate. Like many of my colleagues, my first concern is the general, economic and social well-being of our country into the future so that our people will have the best possible standard of living, the best possible employment and the best opportunity for a good quality of life. My second concern, which was addressed by the previous two speakers, is the maintenance of the fundamental character of Aer Lingus, its brand name, our pride in it and its role as a marketing tool for Ireland. My third concern is very important. I represent the same constituency as Deputy Ó Caoláin. There are many people in my constituency who commute to work in Dublin Airport. I know of a few people from my town of Bailieborough who travel to Dublin Airport to work. This would be a feature across south Monaghan, Cavan and so on. I am deeply concerned about the security of their jobs and those of the people from across Cavan-Monaghan who commute alongside them to work at Dublin Airport. These are my three concerns regarding this matter.
It is worth noting that some 4,000 people are employed by Aer Lingus and that aviation supports 26,000 jobs directly in this country and some 16,000 jobs in the supply chain. Tourism, which is significantly linked with the industry and is intricately linked with this debate, employs 180,000 people here.
The Minister has had a departmental steering group and advisers engaged in discussion with IAG over a number of weeks and months on the issues of employment creation and retention and I applaud him on the extraordinary, skilful and professional manner in which he has dealt with the issues throughout this time. He has kept the national interest to the fore at all times and has bargained toughly and consistently and scrutinised every sub-clause in every proposal from IAG. We are very lucky to have had someone with his skills to do that. The process has continued over weeks and he has done well.
Today, I asked the Minister and a senior official of Aer Lingus on behalf of my Cavan-Monaghan constituents how we will fare in regard to job retention, new jobs, standards, salaries, working conditions and agreements etc. I was assured by the Minister, and I accept his assurance totally as it is part of the agreement, that 200 new direct jobs will be created before the end of 2016 in Aer Lingus as a consequence of the deal, expanded business and new destinations. Some 50 jobs will be lost, however, in the process, in back office areas. However, the 50 jobs lost will be absorbed by voluntary restructuring, redeployment and ongoing voluntary severance, which suits certain people at a particular juncture in their lives. Jobs will come from investment in the Aer Lingus fleet and route expansion. Up to 2020, some 635 jobs will be created. Some 470 of these will be pilot and cabin crew, 165 will be engineers and the remainder ground staff. As a result of increased connectivity, more flights and activity, a greater volume of business coming through the airports and the increase in destinations, the volume of tourism and all that goes with it will also increase.
An important part of the agreement that will, hopefully, be agreed by the Dáil is the safeguarding of the current rights of employees. I was delighted to receive assurance from the Minister on this. Not only will new jobs be created and existing jobs be maintained, the rights of employees will be safeguarded. IAG will re-register existing employment agreements and these will have legal standing. This reassurance is critical.
The buzzword in this debate is "connectivity". We are all concerned that Ireland will not lose any outward or inward flights or business and that we will have access to other countries and markets. It is essential that Aer Lingus remains a competitor for the well developed airline, Ryanair. In the context of connectivity, Heathrow is the most significant destination airport from Dublin. The destination for some 8% of seats is Heathrow, some 3% and 2% go to Paris and Amsterdam respectively. Some 20% of seats from Cork and some 25% from Shannon go to Heathrow. Heathrow delivers a comprehensive service of long haul flights across the globe, with flights to 180 destinations in 85 countries provided by 82 airlines. Therefore, the slots, access, entry and continuation of flights from Ireland to Heathrow are of vital national interest.
Under the terms of the agreement, the Minister for Finance, in consultation with the Minister for Transport, Tourism and Sport, will ultimately have a veto on the sale of the slots. The sale of the slots cannot legally arise for seven years. This veto is critical. I believe that we will see such an improvement of business as a result of more global marketing and a more enhanced trading position that the sale of the slots will not arise. We will have such a volume of business that we will have significant use for the slots and Aer Lingus. Nonetheless, it is important for us and the workers that we have the legal guarantee.
All Aer Lingus current winter and summer daily schedule frequencies will be maintained for seven years and all of Aer Lingus's flights to and from Heathrow from other Irish airports will continue for the first five years. In other words, airports around the country will be protected for five years. It is worth noting that these are guarantees we do not have currently. These are critical enhancements. Other enhancements are the expanded number of jobs, this guarantee and a better tourism product. For the 2016 summer season, two new transatlantic destinations in North America will be added to the Aer Lingus schedule. By 2020, four new transatlantic routes delivering 2.4 million more passengers will be in existence. Therefore, we will have the sales and marketing potential of the larger IAG group. This rationalisation is a pattern throughout the aviation industry across Europe and the list of exceptions to this kind of merger would be a short one. Those airlines operating alone are not very successful. We need access to global markets for long-term success.
In his contribution this morning and in previous internal party communications, the Minister referred to the fact that he had to avoid a situation where there might be a disadvantageous or aggressive takeover in future that would not be in our interests and needed to protect the airline against an adverse situation that might arise later.
Finally, I would like an assurance from the Minister when he responds on this debate regarding the moneys earned from the sale. He mentioned using the proceeds for connectivity. I hope he can assure me that some of these moneys might be used to ensure we can get broadband delivered to areas such as Cavan and Monaghan and rural areas across the country where it is not currently viable to deliver it. I would like to hear the Minister say the moneys accruing from this sale will deliver this connectivity. Following his assurance to me on the delivery and retention of jobs, the promise of the delivery of broadband connectivity would be most reassuring, particularly in an area like mine which is effectively a commuter area as a result of the newly developed motorways.
All in all, this is the best call for the country and will serve the country's interest best.
Ba mhaith liom fáilte a chur roimh an Aire. I welcome the Minister and compliment him on his tenacity in dealing successfully with what has been a substantial challenge.
In December 2014, when IAG made its first bid for Aer Lingus, many of us were appalled at the woeful inadequacy of the bid. It appeared to be a predatory bid - a straightforward takeover of the company without protections for the workforce that had made Aer Lingus such a proud, successful international brand. There was no consideration given to the crucial Heathrow slots and the connectivity that was the lifeblood of Aer Lingus. There was no commitment to ensuring the future viability of the regional hubs in Shannon and Cork. Indeed, the valuation of the shares was sloppy and unprofessional and was later improved substantially to reflect a truer value for the company.
Aer Lingus was seen by IAG as simply another company that could be bought and sold through the shareholders, and with the company's directors on board there was little or no consideration for the Irish national interest. The main thrust of the takeover bid was to acquire the 25.1% golden share held by the Irish Government so that henceforth there would be no State involvement in the company. It was expected that once the State's shareholding was acquired, the other main shareholder, Ryanair, with 30% of the shares, would fall into line and sell its shares too. It was a stark scenario, and it posed a major threat to the national interest. Thankfully, the Government said "No".
A group of eight Labour TDs, mainly from the north side of Dublin, were so concerned that we banded together against the takeover bid. We did not go shouting and roaring, as some sectors of this House do at every problem that raises its head. Instead, we took a leaf from the book of James Connolly and James Larkin: we organised. We made our opposition to the deal very clear. We consulted widely with the trade union movement and other stakeholders. We drew up a motion that incorporated our concerns and that needed to be addressed before the sale of the 25.1% State shareholding could be considered. That motion included the concerns of the trade union movement. It was put to the Labour Party national conference in February 2015 and, passed unanimously by the delegates, it became Labour policy.
I wish to put the motion on the record of the House as some Members have referred to it, many inaccurately. It is as follows:
Conference welcomes the Government’s decision to reject the terms of the present bid from International Airlines Group (IAG) for the takeover of Aer Lingus and,These four requirements have been addressed in the new deal that has been negotiated by the Minister and proposed to this House.
1. Aer Lingus was formed in 1936 and has established itself as a proud flag carrier for our nation through its 79 year history and remains a potent Irish brand today
2. The Labour Party has always strived to act in the best interests of Aer Lingus throughout its history, in particular opposing the privatisation of the company in 2006 by Fianna Fáil
1.Aer Lingus has demonstrated a robustness and resilience in surviving the worst crisis in the history of the aviation industry after the September 11 terrorist attacks in 2001
2.Aer Lingus has also survived the worst crisis in the history of the Irish economy in 2008
3.Aer Lingus has established a unique pre-clearance transatlantic hub at Dublin and Shannon airports
4.Aer Lingus has achieved in 2014 record high levels of revenue and traveller numbers, which are forecast to continue to grow solidly
5.Aer Lingus is now a very healthy company which is in a strong position to further its own growth plan
Recognising, in particular, the special role played by workers, who had to go through multiple restructuring programmes, in ensuring the company’s survival and continuing strong growth
Conference therefore calls on;
The Government to reject the IAG bid for the state’s shares in Aer Lingus and any further takeover bid that does not clearly address the following:
1.The serious concerns that the bid fails to reflect the true value of Aer Lingus and, therefore, an independent valuation of the assets of the company is required. In particular, a valuation of the 23 Heathrow slots.
2.The need for a firm commitment in the form of Registered Employment Agreements precluding the outsourcing of jobs and/or compulsory redundancies to protect Aer Lingus workers' employment and conditions of employment.
3.Meaningful, reliable and long term guarantees around connectivity and the "Heathrow Slots".
4.The need to articulate a plan which would promote Shannon and Cork airports, taking into account their distinct business models and impact on their individual regions.
In regard to the valuation of the company, an independent valuation has now been carried out by external financial and legal advisers.
In regard to employment, IAG has agreed that a registered employment agreement will be introduced into Aer Lingus as provided for under the framework enshrined in the Industrial Relations Bill 2015 to protect the terms and conditions of Aer Lingus employees and, as the Minister of State, Deputy Gerald Nash, said earlier in the House, those negotiations can start immediately.
Furthermore, Aer Lingus is committed to there being no compulsory redundancies, agreed to extend the application of registered employment agreements, REAs, to new sectors of the workforce, and committed to extending the scope of the REAs. A vital new platform for industrial negotiations in this country has been established not just for Aer Lingus but for the entirety of the trade union movement.
With regard to the key Heathrow slots, the proposed deal will strengthen enormously the Government control over the disposal of Heathrow slots. At present, the Government's 25.1% shareholding cannot by itself prevent the Heathrow slots being sold. The proposed deal will give the Government unilateral power to block the disposal of the Heathrow slots for an unlimited period, a veto that will guarantee crucial connectivity into the future for this island nation. Likewise, there is a veto on the removal of the name Aer Lingus, the removal of the brand and the removal of the headquarters in Dublin.
Regarding the promotion of Cork and Shannon airports, IAG has outlined plans to sustain existing services and to grow Cork and Shannon.
We must remind the House that Fianna Fáil privatised Aer Lingus in 2006 by selling off 75% of the shareholding. At any time there could be a hostile takeover of the company through acquisition of that 75% shareholding, with the Government not in a position to lift a finger. That genie cannot now be put back in the bottle.
None of the Fianna Fáil Members in 2006 that are in the House today ever spoke a word when the debate was taking place. They never said a word about the shameful sale. Not one of them said a word about guarantees. Not one of them said a word about Heathrow slots. They said nothing about the connectivity that they are so worried about now. Not a single attempt was made to protect the workers when the sale took place. Now Fianna Fáil's crocodile tears are flooding into this Chamber.
I listened yesterday to Deputy Adams, the leader of Sinn Féin, state categorically in this Chamber that 1,200 jobs would be lost in Aer Lingus due to compulsory redundancies. That was his statement, and it is on the record of the House. I am afraid that honourable Member is something of a stranger to the truth. I am also afraid that the two Opposition parties are like the emperor; they have no clothes.
I commend this deal to the House. It is an incredible deal considering the situation at the outset and the situation that had to be addressed. I compliment the Minister on a job well done.
I may take less than ten minutes.
We thought we had seen everything in terms of how low the Labour Party was prepared to go in this Government but this decision it has reached is a new low. Aer Lingus was a successful, profitable State enterprise established in 1936, and an important symbol of the independence of this island nation. The decision to part privatise Aer Lingus was a purely ideological one taken by Fianna Fáil and the Progressive Democrats, and rightly denounced as such by the Labour Party at the time.
I heard somebody say earlier that in 2006, the Fianna Fáil Party allowed two hours for the debate. Are we supposed to thank the Government for giving us six hours or eight hours? We are not talking about the time for the debate; we are talking about what the Government is doing. Despite that, Aer Lingus today is a successful and profitable company employing 4,000 people directly and as many again indirectly.
This decision has major consequences for jobs. The verbal guarantee on jobs, that the company does not foresee any future redundancies or job losses, is not worth the paper on which it is written.
In 1990, Aer Lingus's 2,000 workers seconded to TEAM Aer Lingus were given letters of comfort. Those guarantees were not just from Aer Lingus but also from the Government and the Irish Congress of Trade Unions. The ink was not even dry on them when those 2,000 workers were transferred to a new employer without their knowledge.
While there will be an increase in the number of pilots and air crew, which the company had already planned - the Government is rehashing the same jobs - they will be offset by job losses among ground crew, catering, check-in and maintenance staff.
Heavy maintenance will be outsourced. Job losses will be inevitable as IAG seeks to rationalise the workforce. Many of us have received e-mails from Aer Lingus workers. A woman who has worked there for a long time e-mailed to say:
I am an Aer Lingus worker. I am very worried about the security of my job with the sale of our fabulous airline. Have our Government learnt nothing after the sale of Irish Ferries and eircom? To me this is a short term gain for long term pain to all employees and to Aer Lingus. Aer Lingus management are set to gain lotto figures with this sale, so they are, of course, pushing this sale. You have one vote on this, guys. We have one vote for the rest of our lives.That was just one of the many e-mails I have received already about this. This is why the Government is trying to railroad this in before the weekend and the Dáil break, to try to take the pressure off them.
There are serious questions about the €1.3 billion valuation of Aer Lingus in this deal. How can a company with €1 billion in cash, Heathrow slots worth at least €500 million, a fleet of modern aircraft including large transatlantic aircraft, a valuable brand and a brilliant safety record be sold for €1.3 billion. It is incredible that the Government is settling for such a figure. I will quote another e-mail I received from a man who has been an Aer Lingus employees for 42 years and six months:
So much for the protection of Irish workers, but in particular the people who have been robbed of their rightful pensions. We now have certainly the hardships to look forward to in our old age. All politicians who go along with this sale without any reference to our group, the IASS Deferred Pensioners, should hold their heads in shame.These e-mails are very important, given that they come from the people who are affected by a sale of Aer Lingus. Another e-mail stated:
As you will all be aware, Joe Costello, TD, stated publicly on the Pat Kenny show that deferred pensioners would be factored into any sale of Aer Lingus agreed by the Government. The Labour Party so-called Aer Lingus seven have not even been able to deal with that.There are 5,000 deferred pensioners and 5,000 current pensioners. Deferred pensioners have been treated disgracefully. Workers with more than 40 years service have seen their pension entitlements reduced by up to 50%. One deferred pensioner who wrote to me has had his pension cut from €12,000 per year - hardly a fortune - down to €6,000 - a pittance. At the very least, the Labour Party Deputies who make promises on these issues should have insisted that money from the deal be set aside to alleviate the problems faced by the deferred pensioners.
Once again, the Labour Party has shown its unwillingness and inability to do what it promised to do in government, namely, to protect working people. The final 25.1% "golden share", as it was called the time, is to be sold to a major multinational, IAG. Like the banks and other major multinational companies, its shareholders will come before the needs of a nation or the workers. We have seen this across the board. Their interests are not the national interests or the workers' interests but the shareholders' interests. The Minister rightly said that Fianna Fáil paved the way. The Minister has put the nail in the coffin. He has carried through the full privatisation of Aer Lingus, our national State airline. As with the implementation of the austerity measures to which Fianna Fáil had committed, the Government took the baton and ran with it, despite having said differently.
This is part of the sale of our State assets, a deal made with the troika whereby €3 billion is supposed to be raised from the sale of State assets, two thirds of which is to be used to pay the bank debt. It is disgraceful, and the Government should hang its head in shame. We cannot wrap it up in a nice Christmas box with a bow around it and talk about all the brilliant things that will happen. Again, the Government is extending the inevitable for another five to six years, or possibly seven years, if we even get that from it. In the meantime, there is no guarantee that IAG will not be taken over or that conditions will not change and employees again face job losses or redundancies.
I appeal to the Government to step back and give itself time to re-examine this. The B share that is supposed to be part of the Government's protection of the connectivity and slots must be checked to ensure that it is the situation. We do not know. Nobody has come out and said the Government has checked it legally and that it has been cleared with the people in Europe who monitor and check these things. The Government should hold off, give itself breathing space and examine the entire deal. Government backbenchers should not listen to Willie Walsh but should listen to the unions.
I contacted the chairperson of the central representative council in Aer Lingus, Evan Cullen, and he said:
We remain absolutely opposed to this offer. We believe the Government has sold Aer Lingus for all the wrong reasons for a ridiculously low price. We believe, in time, the connectivity will be reduced to the island and fares will rise. We believe there will be substantial job losses in Ireland and there will be outsourcing of work to other cheaper jurisdictions.Labour Party backbenchers should listen to the Aer Lingus unions, not to Willie Walsh.
I welcome the opportunity to speak on the proposed disposal of Aer Lingus shares by the Government to the UK multinational, IAG. The Government assumed power in 2011 amidst a self-proclaimed democratic revolution. Its programme for Government listed the many reforms it would implement to create what is called "a fairer and more equal Ireland". One such reform was Dáil reform, which set out, in its own words, to "deal with the problem of legislation being shunted through at high speed". The manner in which this motion is being bulldozed through the Dáil makes a mockery of those reforms and, more seriously, is an abuse of the democratic process and the Government's power. The Government has made a concerted effort to keep members of the Opposition in the dark over the details of the motion while ensuring the media and everybody else were fully briefed. This is an unprecedented level of arrogance from the Government and is grossly disrespectful to Members of Dáil Éireann who have been elected by the people. It smacks of a Government which is rapidly trying to clear the decks before the next general election.
Deputy Costello's contribution a few minutes ago highlighted the other reason for the rush through the House, namely, to protect windy Labour Party Deputies across north Dublin, who gave commitments and promises to deferred pensioners and Aer Lingus workers that they would oppose this deal. Like many in the House, I received an e-mail late last night from one of those deferred pensioners and it is worth noting the first few sentences of it, as follows:
As you will be aware, Joe Costello TD stated publicly on the Pat Kenny show that deferred pensioners should be factored into any sale of Aer Lingus agreed by the Government. This outcome is one that would save deferred pensioners such as myself from an old age of poverty and I urge and plead with all right-thinking TDs in a position of responsibility and power, especially Labour Party TDs, to support Joe in his public stance on this matter.That says it all. The level of cynicism from the magnificent seven Labour Deputies of north Dublin is shocking. The proposed sale of the shares is bad for jobs, Aer Lingus workers and Ireland's connectivity and economic development.
Last month The Irish Timesreported that it contacted a number of Ministers who said that selling Aer Lingus to IAG would make commercial sense and was in the long-term interest of the airline. This is an example of everything that is wrong with this Government and the motion before us. The Government should not see its role as fighting for the commercial interests of a company instead of the best interests of the Irish people. IAG is a multinational corporation which is seeking to expand its commercial interests. If it succeeds in this takeover bid with the assistance of the Government, it will be at the cost of the Irish people.
The sale of Aer Lingus to IAG would make it a very small part of a huge multinational corporation for which shareholder value, or profit in other words, is the dominant concern. IAG has no regard for the best interest of the Irish people, whether they are customers and employees of Aer Lingus or those whose livelihoods depend on business and tourism. The winners in this takeover will be the executive and senior members of Aer Lingus management, some of whom will receive multi-million euro payouts, IAG shareholders and Ryanair. The Government is attempting to steamroll its short-sighted decision through the House because it is deaf to the protests of workers, unions and the general public, who are the real shareholders. If this sale proceeds, the interest of IAG shareholders will always trump the needs of the Irish economy, the travelling public and Aer Lingus workers. The State should retain a majority shareholding, at the least, in Aer Lingus because it is a strategically important company for this island economy. The idea that State ownership is bad and private good has been proven false.
Since it was established in 1936, Aer Lingus has developed into one of the best performing state-owned airlines in Europe, with a powerful international brand, key routes and great staff. It provides a more reliable service than low cost airlines and is a profit making player on transatlantic routes. It has cash reserves of more than €1 billion and its Heathrow slots have been valued by Deloitte at more than €500 million. It is also an adept regional independent player in a world dominated by big airlines. In 2014 it carried 10 million passengers on its 50 aircraft and enjoyed a turnover of €1.6 billion. It is no wonder that IAG shareholders want to get their hands on it. Currently Aer Lingus employs approximately 3,900 people, not counting the many thousands employed in downstream industries. IMPACT estimates that a takeover by IAG could put up to 1,200 jobs at risk because the new parent company would be likely to seek substantial cuts to justify its investment. One of the primary cost cutting measures will come from a reduction in staff numbers. Following its takeover by IAG, Iberia announced 4,500 job losses. A secret report prepared for Aer Lingus by Nyras suggests potentially significant job losses, including cuts of 20% to ground handling staff, 40% to catering staff, 15% to maintenance staff and 25% to heavy maintenance staff.
Far from selling its shareholding in Aer Lingus, the Government should make the strategic decision to purchase a majority shareholding. It will be able to do so when Ryanair divests itself of its shareholding. This would allow Ireland to retain a major indigenous company and continue to expand its air bridge with the rest of the world. The ideological hostility to state ownership is outdated and wrong. The tentative assurances given by Aer Lingus and IAG are not sufficient to address workers' concerns about compulsory redundancies and the outsourcing of jobs. Aer Lingus workers, who have made a huge contribution to the company's success, will rightly ask why a legal guarantee be offered in some areas but not in regard to their conditions of employment, including compulsory redundancies and outsourcing of jobs. This sale and the offer by IAG must be seen for what it is, a sell-out and a money-grab at the expense of the Irish people and the workers of Aer Lingus. It is part of a continuing campaign by this Government and its predecessors to sell off the hard won assets of this country under the heading of liberalisation. The Government has capitulated to the troika's demand to sell every State asset that can be sold.
Deputy Costello's contribution was the height of cynicism. It is worth noting the position of the two major trade unions in Aer Lingus. SIPTU has stated it will vigorously oppose the Government's plan to sell off its 25% shareholding in Aer Lingus due to the failure of the company to provide a commitment to workers that it will not impose compulsory redundancies or outsource jobs. IMPACT has stated that the proposed takeover of Aer Lingus is bad for jobs, workers and economic development. Staff at the company have genuine concerns about compulsory redundancies if the deal is completed, as well as further erosion of terms and conditions of employment due to the inevitable restructuring of the company. The commitments that the magnificent seven Labour Party Deputies gave to the deferred pensioners and workers have come to nothing. I oppose the motion.
I thank the board of Aer Lingus and the Minister for Transport, Tourism and Sport for the considerable work they have done on this matter since the original offer was made. That offer was not acceptable to the vast majority of people, including the Cabinet and myself. The revised offer brings certainty to a situation in which the airline was relying on a number of aging aircraft on its transatlantic routes. Eight Airbus A330 aircraft are due to be retired and the airline had ordered a number of new aircraft, the Airbus A350, but it had to delay its purchase of the aircraft because of a lack of funds. This highlights a particular issue for Aer Lingus as a small operator in the international scene in terms of sustaining itself as a company employing more than 3,500 people. It currently owns 48 aircraft and leases another three but it has to enlarge and improve its fleet if it is to expand and remain on a sustainable footing. It is not in a position to do that at present.
By joining a conglomeration of airlines under IAG, it will have the financial backing to expand. This morning we heard that IAG will invest €1.5 billion in Aer Lingus.
That is clearly welcome and it will allow them to expand not only on the routes they have suggested - four new transatlantic routes, two of which will be started up next year and the other two by 2018 - but also growth in employment levels. The current employment figure from last year is 3,766 and I understand that an additional 630 will be taken on over the next five years. That is a beneficial part of this arrangement. Not only have we seen investment in the fleet, but also in the size of the airline's employees. There has also been an increase in the number of destinations that Irish customers can avail of. In addition to direct flights from Dublin, as part of the IAG group, cheaper flights will no doubt be offered to passengers who are continuing their journeys to other places, particularly in Africa and the Far East which are growing destinations for Irish customers.
I still have concerns about the terms and conditions of existing employees, a great many of whom are in my constituency and dotted elsewhere around Dublin. I have received the 36 page document but have not yet had time to read it. The business case for the disposal of the shareholding of this private company is warranted. In addition to the value placed upon it, the strategic investment fund will give the Government an opportunity to invest in critical infrastructure in and around the airports, which I assume is the plan for that fund.
The international airline industry is a fragile one. A bit like our economy, it is on a high at the moment and is doing reasonably well but it is fragile. A number of industry experts have spoken about this matter in the last 24 hours and I was listening to some of them on radio programmes this morning. They stated that the reality of a small airline like Aer Lingus is that there are international issues, including the ash cloud, military events or terrorist incidents, which can cause massive problems for airlines.
We saw a number of such firms go out of existence following the September 2001 attacks in the United States. They included Swissair and Malev. They were flag carriers, as is Aer Lingus. No doubt they were considered to be strategic assets in their countries of origin. Aer Lingus is an asset to all of us. Like most Irish people, we are loyal to that brand with the shamrock, but it is not a State asset. It is a plc and was sold in 2006. The realisation of the value of the State's 25.1% share was inevitable. It was only a matter of time before a suitable firm purchased the company with a view to improving its service to the Irish people and its connectivity across the world. IAG has made clear its ambition to do that.
I assume and hope that the loyalty Irish customers have to Aer Lingus will continue on that basis. If Members will pardon the pun, the sky is the limit in terms of where the company can go and how its workforce can continue to grow.
The previous speaker raised the issue of Iberia, which is an interesting one. First and foremost, Iberia was a state-owned company when it was sold. Back in the day when Aer Lingus was State-owned, the pension fund was used as an exiting tool to encourage people to leave. Iberia, however, was purchased and not downsized but its staff were because it had too many employees. It was in a crisis scenario, but Aer Lingus is not. Aer Lingus is a lean, profitable airline serving 48 destinations, with an additional transatlantic route starting this summer to Washington. As part of this proposal, we will also see the four transatlantic routes. From my perspective that is a positive thing.
Dublin Airport has grown over the last few years since the beginning of the crisis. The numbers are now getting back to an encouraging level concerning the availability of jobs both on and off the airport campus in recent months. I know of three firms in the airport that are providing services to airlines that are currently enlarging their staff.
If one looks at the ratio of employees to aircraft, the effect of new routes on ground staff, and the eight new aircraft that have been promised as part of the takeover, it is very positive. However, I do have some slight concerns about the employment terms and conditions of existing personnel. They have contracts which are being adhered to, as has been stated, in line with the proposed takeover, and there is an increased number of employees.
At the same time, as a private company Aer Lingus is susceptible to market forces. If, for instance, the international aviation industry was to nosedive and face difficulties following an event that caused airlines to be grounded for a period, Aer Lingus would be the first firm to feel such an impact. However, as a cog in a much larger organisation it would not feel the impact as quickly, which is positive for employees both in Dublin and the regional airports.
The sale of the State's 25.1% shareholding in Aer Lingus will result in €330 million plus another €6 million which is due in a dividend. That sort of money can readily be used for investment in infrastructure around the airport. We have seen investment in Dublin and Shannon airports in recent years. It would be welcome to see that money targeting airport infrastructure the public uses daily, including roads.
As regards the €330 million the State will gain from the sale if it goes through, I will selfishly mention my constituency and the Minister's in terms of the north Dublin transport corridor. I will take the opportunity to plug that because €330 million would go a long way towards an investment directly serving Dublin airport and Swords. It is a critical piece of infrastructure for the northside of Dublin, hopefully linking into the existing Luas network which serves Dublin and the rail network which serves the country at large.
If that is what the Minister has in mind, such connectivity will certainly be of great benefit to everyone who uses Dublin airport from time to time or travels through Dublin to other locations, for example, on the northern rail line. Such an amount of money would be welcome for infrastructural and connectivity investment, particularly in Fingal where Dublin airport is located.
As regards the Heathrow slots, I do not want to go over the same ground that has already been covered by every speaker who has contributed to the debate today. Those slots have a value of approximately €300 million. They are of critical importance to this island nation which does an enormous amount of trade with our partners in the UK and the rest of Europe. Those slots have been guaranteed as part of this deal. It was a guarantee we did not have up to the point of that offer yesterday.
The only example we can give is the decision of the Aer Lingus board to relocate its services from Shannon and move them to Belfast.
That did not work out in the end but with the State's 25.1% shareholding, we were powerless to do anything about it. My perspective on the Heathrow slots is that we were powerless to do anything about the movement of slots but we have now been given a guarantee that nothing will happen to them and they will remain attached to Dublin Airport. That would be a very significant gesture on the part of IAG. It did not need to do it and it could have taken over the company in a hostile manner. It could have taken over the vast majority of the shares - perhaps even the balance of 74.9% - and done whatever it wanted. The company did not need to give guarantees in the proposed business model but it gave the commitments, one would assume, because of an element of loyalty that Mr. Willie Walsh has for Aer Lingus, having run it for a number of years beforehand. It also presents opportunities to make a profit for shareholders and the citizens of Ireland, who will utilise the airline and the rest of the group in getting around the world. That must be borne in mind in this discussion.
Individuals mentioned the "paltry" sum of approximately €300 million. I do not believe it is paltry, as it would pay for half of the north Dublin transport corridor or a large number of services in and around our airports across the country. That is not even mentioning the guarantee of an increase in jobs over a five years, which is a significant investment. We should bear in mind that if these individuals happened to be on the unemployment line now, the State could save in the region of €20,000 per individual per annum if they could be taken from the unemployment line into Aer Lingus. It is a very significant figure for the State to bear in mind.
The brand and headquarters, etc., are being retained and 2.4 million passengers will be delivered to Dublin either in transit or as direct customers to our shores for tourism purposes. There were fantastic results published today by Tourism Ireland relating to growth; there was a 25% figure for Spain, a 15% figure for the UK and a 20% figure for mainland Europe. These are really significant and terrific figures and each one of those travellers would no doubt bring in excess of €1,000. I am sure it would be more than that but I do not have that figure to hand. The investment that such people bring to our shores really helps us to keep up employment and continue growing our economy in a sustainable fashion.
There was mention of a report from Nyras. I have not seen the report but I have helpfully printed the Fianna Fáil press release, for which I thank Deputy Fleming. The statements from Aer Lingus are quite telling in its view of the report, which is an industry standard. It is not an unusual report to have done on behalf of an airline. It has no bearing in the context of the IAG offer and Aer Lingus has stated that this type of exercise is part of the normal course of business in the highly competitive international airline sector. The company argues that it is highly misleading to suggest that there would be reductions in employment within the airline as a result. We have heard from the commissioners of that report that it was a marking or comparative exercise on the international competition to Aer Lingus. From that perspective, I do not believe for a moment that this in some way undermines the IAG offer. I am positive, given the commitments received by the State, and some of which will be written into the constitution of Aer Lingus and legally binding agreements provided to the Minister, that the guarantees will be upheld.
On the jobs issue, if the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, took to the plinth tomorrow morning and announced 635 new jobs, I am fairly sure members of the Opposition would welcome it, particularly if they were around the airport in the constituencies of Dublin North-West, Dublin Central-----
-----or Dublin Bay North. It is a positive that we have had such a commitment given to us. Of course, it will be subject to the market conditions in the next five years but 150 net new jobs by next year would amount to significant growth within the airline, given that it has 3,766 employees now. Back office staff will be lost as part of this takeover and it is regrettable that as part of this, there will be some function within the airline that would be duplicated across the group. There were commitments given today by IAG at its press conference that some functions within the firm will remain, as is the case with its other group airlines. Some administrative functions remain in existing organisations. Ultimately, a result of 150 net jobs is what it is, and I am sure it would not be impossible for individuals to apply for the positions if they already work within the airline, given the experience they could bring.
I am cautious about the approach of IAG but I welcome the ability to sustain employment in the airline and expand the Aer Lingus network and routes so as to provide additional destinations for the Irish customer base. The airline is currently serving 70 destinations, and that number will increase significantly as a result of this propose takeover. I reiterate my thanks to the Minister for bringing all of this to us. I am sure dealing with IAG and the board of Aer Lingus has taken a considerable amount of his time over the past number of months since the first offer was made. I am clearly stating that I will support the motion on the basis of the jobs that will be delivered, primarily to my constituency, and the investment that this country will receive as a result of the takeover.
I know my time is short but I wish to speak to the motion regarding the takeover of Aer Lingus by IAG. This is a sell-out of a national asset. Aer Lingus is a profitable and expanding company, with increasing passenger numbers and rising revenue and profits. That is the reason it is a target for this hostile takeover bid. The airline is growing and the question is why it should be sold or even for sale. It should not be for sale and the hostile takeover bid should have been rebuffed.
Lest we forget, this is an Irish-owned and controlled company. The Irish taxpayer owns 25%, the employees and pilots own approximately 5% and an Irish company, Ryanair, owns 30%. That means 60% of the company is Irish-owned and controlled but the Government is selling it out. The Minister is making out that we are only selling a little bit but his actions will mean part of the Irish-owned share will be sold. The partnership involving Ryanair and other private investors was working well, so it should not be sold. The guarantees that have been mentioned by the Minister cannot and will not hold because there is no legal mechanism to enforce them. When Aer Lingus is sold, it is sold. Has the Minister got that? He should not give us waffle about guarantees, as when it is sold, it is sold. If any Government tries to influence what happens in Aer Lingus, it will be told to butt out as these are commercial decisions in which the Government would have no business interfering.
This is a hostile offer to buy the company and the Government has acted in an unpatriotic fashion by going along with this. The Government could have said "No" and looked after Aer Lingus.
The Government is selling a national asset that will never be replaced. It was 60% owned and controlled by Ireland or Irish companies until now but tomorrow it will be owned by the Arabs. The Government is guilty of an unpatriotic act.