Paddy Burke (Fine Gael)

I welcome the Minister to the House and wish him well in bringing a speedy conclusion to the serious situation involving Aer Lingus. The Minister's speech can be summarised in his comments on two issues. He stated:

A major issue for any airline is the upgrading and replacement of aircraft. Aer Lingus is funding the upgrade of its short-haul fleet, all from within existing resources, but this is of course based on meeting performance and profit targets as set out in the business plan. In addition, the airline is currently examining its long-haul fleet requirements and expects to complete a proposal in the coming months which will have to be approved by my Department and the Department of Finance. Pending the outcome, the company has confirmed to the Department that the airline will require equity funding to replace the existing long-haul fleet and to support future growth.

The Minister went on to state:

There is no doubt that there are concerns about strategic issues in the context of the State exiting from ownership of Aer Lingus. These concerns relate to issues such as the Aer Lingus brand, direct services to and from Ireland and the slots at Heathrow.

The problems at Aer Lingus are summarised in those two paragraphs. However, the Government has caused many of the problems by its inactivity in this area and the future of Aer Lingus has been severely jeopardised by the Government's ineptitude and incompetence. I make no bones about laying the responsibility for endangering the future of Aer Lingus squarely at the door of the Government.

Since this Government first took office in 1997 it has shifted from one position to another regarding Aer Lingus while steering clear of producing any viable proposals and development plans for the airline. All the current talk about the need for the Government to take a decision on whether the airline should be privatised is old hat. This has been announced at least three times since 2000 and nothing has happened.

One can go back even further. I have a statement from the then Minister for Public Enterprise, now Leader of this House, Senator O'Rourke announcing in December 1999 that, "the Government has given approval for the flotation of shares in Aer Lingus". Even as recently as last year, the passing of the Aer Lingus Act 2003 provided for the private issuing of shares in the company in addition to allowing for workers to obtain 14.9% of shares in the airline once the company has moved towards privatisation. It would appear that the decision to privatise at least a portion of the airline has already been taken by the Government, yet in its now typical fashion it is creating the appearance of being proactive and seizing the initiative when in fact it is merely rehashing old announcements. The dithering of this Government over Aer Lingus has reached epidemic proportions.

One of the worst outcomes of this inaction by the Government has been to lose our State airline its highly successful management team, headed by Mr. Willie Walsh. In co-operation with the staff and unions at Aer Lingus, the management team did a fantastic job in turning around the airline's fortunes from a company about to go under to an airline which is now one of the most successful carriers in Europe, the envy of many in the aviation sector.

The management team worked tirelessly to achieve this feat. It is less than three years since Aer Lingus faced a debt of €150 million while today it is heading for a profit of over €100 million. This is an extraordinary achievement. However, it is clear that the management team got sick of requesting the Government to take a decision on the airline's future and became increasingly frustrated by the wall of silence it met from the coalition partners on every occasion. In the end, the Government's inaction appears to have become too much for the management team and eventually the members walked away. Their decision to leave is more than just about losing an excellent force for progress and change at the airline since the loss of the management team is estimated to have knocked up to €200 million off the value of the airline. That sum, money badly needed in other areas of Irish society, is lost to the ordinary taxpayers of this country.

In addition to this significant loss in value to the airline it is likely that there will also be a long delay of up to two years in updating the airline. Time will be needed to acquire a new management team and allow it sufficient time to bed down before any outside investors would have confidence in the new management team and would be willing to invest in the airline. By driving out the successful management team, this Government has done what it had always intended to do, namely, to stall a decision on the future of Aer Lingus until after the next general election in 2007.

The total funding required by the company is more than €1 billion. Even the Goldman Sachs report has pointed out that maintaining the status quo is not a viable option for the company. The extent of the finance required effectively rules out the possibility of the State providing it, particularly when one considers the need for increased investment in areas of greater priority such as our health and education services. Regardless of how greatly investment of this level would stretch Exchequer finances, I am far from convinced that the EU would even permit the State to invest in the company. We could still find ourselves coming under the scrutiny of EU competition rules, as is currently the case with the Italian state airline.

The Goldman Sachs report, while setting out the range of options which could be availed of by the Government, and while not coming down conclusively in favour of any one option, appears to favour the IPO or initial public offering. Fine Gael supports such an option and will support a limited sell-off of the company to raise private funding for future growth, with the State retaining a significant stake in the company that would protect our national strategic interests yet remain attractive to outside investors. We remain confident that Ireland's strategic interests in terms of maintaining key routes into and out of Ireland, the transatlantic routes, the slots of Heathrow, the maintenance of key areas of importance to Ireland in terms of interconnectivity with the US and Europe, the needs of our business community and the continued success of our tourism sector can be retained. It is clear that mechanisms can be tied into any flotation, which will allow this to be the case. In addition, as the Goldman Sachs report notes, if the Government retains a shareholding of above 25%, the State can be assured of continuing to exert influence over the keeping to the fore of the national strategic interests.

Time is of the essence if Aer Lingus is to retain its strategic and economic position of strength and if it is to continue to grow and expand. I call on the Government to fulfil its commitment and to announce a definite decision on Aer Lingus before Christmas, as promised. I hope the Minister will stick to the deadline he set in the past week or so. Once this decision is declared, the Government must move quickly to see it is carried through. If the Government fails to do this, its inaction will threaten the future of this company. This would not be acceptable to the travelling public or to the taxpayer.

I was disappointed by the Taoiseach's comments about the chief executive, Mr. Walsh, and the management team of Aer Lingus to the effect that they were out to make a quick buck. I do not know how he could say that when he had not met or spoken to the management team of Aer Lingus. However, he used the privilege of the Dáil to say that this was all about the management team of Aer Lingus making a quick buck for itself.

The management and the staff of Aer Lingus have done a wonderful job in turning the airline around. Each day we see airlines going under but Aer Lingus is a credit to the management and staff who have turned the company around. Costs have been cut and there have been redundancies but the airline has no other way to cut costs. For this company to survive, it must grow and expand and to do so, it needs an immediate input of cash, whether from the State or from a private source. That is of the essence.

Mr. Walsh spoke about he would like to grow the transatlantic routes. It is very important for this country that there is competition on the transatlantic routes. I have no doubt if they were opened, they would bring a huge number of tourists from the United States. Considerable finance is required to do that, which is one of the problems. The chief executive of Aer Lingus, Mr. Walsh, recognises that but obviously his message did not get through to the Government. If it had got through, the Government would have acted sooner.

This Government has dithered on the issue of Aer Lingus. I am very disappointed, as are the people in Aer Lingus, that the Government has not taken a decision on the future and stability of the airline. I call on the Minister to stick to the deadline he set. The airline is in crisis. It has no chairman, although it has a vice-chairman, and its management team has tendered its resignation. For investors to have confidence in a company, it needs a chairman and a management team. However, the Government has left the company without a chairman and with a management team which has tendered its resignation. It is now looking for investors. The position in which Aer Lingus finds itself is quite serious. The management and staff have played their part and it is now up to the Government to act. I call on the Minister to act with haste.