Rory Kiely (Fianna Fail)
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I call Senator Wilson. For the information of Senators there are 25 minutes remaining before I call the Minister.

Diarmuid Wilson (Fianna Fail)
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With your permission I wish to share my time with Senator Daly.

Rory Kiely (Fianna Fail)
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Is that agreed? Agreed.

Diarmuid Wilson (Fianna Fail)
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I welcome the Minister to the House and congratulate him on his appointment as Minister for Transport and wish him well in that position. I welcome also his officials.

Aer Lingus is an important Irish asset and a most important symbol for this country. Since 1936 Aer Lingus has served us well. As an island nation we need first-class air communications. People trust their national carriers all over the world and we are no different in Ireland. We cannot, however, be complacent. Aer Lingus must have a sound financial footing and be profitable. Great work has been done to turn the company around from being a financial basket case into a sound profitable company. Under the stewardship of Willie Walsh, Aer Lingus——

Rory Kiely (Fianna Fail)
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It is not correct and it is dangerous to mention names. The Senator may be inclined to praise him but somebody else may not be inclined to do so.

Diarmuid Wilson (Fianna Fail)
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That is understandable. Under the stewardship of the chief executive officer, Aer Lingus embarked on a radical restructuring of the company and the board, management, staff and unions at the airline should be complimented by all of us on the manner in which they have addressed the problems. Aer Lingus is expanding its role across Europe and has returned healthy profits in recent years. From being on the brink of bankruptcy in late 2001 when the company registered a loss of €52.1 million it had an operating profit of €63.8 million in 2002 and a profit of €78.5 million in 2003. As my colleague, Senator Dooley, said earlier, it is well on target to make a profit of €90 million this year. That is against the backdrop of the war in Iraq, the SARS scare and other difficulties. It is, therefore, good news for the company.

The airline operates 42 routes as it did originally. A further nine routes have been established this year which must be welcomed by all of us. Senator Dooley outlined a concern that Aer Lingus may be bought by one of the larger airlines if floated. His fear that four or five of the bigger airline companies could act as a cartel is justified. It is conceivable that we in Ireland could end up with no direct access to North America and may have to fly to London or Paris to join a connecting flight. That is a genuine fear.

In his contribution Senator Ross suggested that Aer Lingus is a company in crisis. I do not agree with him. As I have pointed out to him it is financially sound and viable. He said the acting chairman did not want to stay with the company. I do not believe that is correct. He said the Government was having a difficulty in appointing a chairman. I do not believe that is correct. He said 1,600 people would lose their jobs. That is incorrect. A voluntary redundancy package is on offer and is over-subscribed. He said the resignation of the chief executive officer and his two colleagues was a disaster. However, in this contribution the Minister stated:

I make it clear on behalf of the Government that the recent developments will not deflect any of us from the necessary measures that need to be implemented in respect of Aer Lingus at both the operational and strategic levels. By the operational level, I mean that it will certainly be a matter for the board, management and trade unions to work through the implementation of the business plan by direct engagement with staff representatives and, where appropriate, with the assistance of the State's industrial relations machinery.

He said the resignation of the chief executive officer and his colleagues is not unusual in any company. It is not unusual for Aer Lingus, it has happened before and, possibly, it will happen again. The main issue here is that Aer Lingus needs finance which it will have to get either from the private sector or the Government. The best place to get it is from the private sector but the Government should hold a major share in the company.

Brendan Daly (Fianna Fail)
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I thank Senator Wilson for affording me a brief opportunity to contribute to the debate. I welcome the Minister and thank him for the comprehensive statement he has made to the House which sets out the scene clearly. It is difficult to discuss in such a short time the future of Aer Lingus especially in the encircling gloom of the aviation business. While a decision before Christmas would be welcome I recommend strongly the Government takes some time because one cannot decide the future of Aer Lingus in isolation from some of the other issues. One cannot decide the future strategy for Aer Lingus in the absence of decisions on the open skies issue, which will be discussed in the new year, and in the absence of a clear indication as to how the new airport authorities and their costs will be managed during the next few years.

While some Members have called for an early decision from the Cabinet sub-committee on the future strategy, ownership, direction and fly path of Aer Lingus, all of which are important, it is equally important to keep in mind that one cannot decide the future of the airline and its strategic way forward in isolation from some of the other issues. It needs further time to make the right decisions and it is important to take that time. I would not like to be in a situation where a decision had to be made before the end of the year.

The Cathaoirleach is fully aware, as I am, of the involvement we have had in the mid-west with Aer Lingus in the past. I wish to put on record our appreciation of all the various managers and those involved with the company, including those who left recently. The airline has always been bigger than the staff involved. The whole effort is a combined one where all the workers from the ground handling staff in the various airports to the top management have had an important role to play and, in the main, are responsible for the success of the airline. This was at a time when many airlines in the United States and Europe, such as Italia, which I knew in my dealings with Shannon over 30 years, had severe financial difficulties.

Not only does the success and future development of Aer Lingus have implications for management and staff but it has implications for other airport staff. Any change in the number of flights would have a drastic impact on staff of the airport authorities and the various people who provide services. In making a decision on the airline, one is not only making a decision for the staff, management and passengers of Aer Lingus but also for many others providing services, such as the airport authorities.

The Government should take some time to consider the options fully. There is a general feeling that there is a public service element attached to the national carrier that must be protected. If such an element is to be attached to Aer Lingus in the future the public must pay for it. I have no hesitation in saying, and the Minister alluded to this in his contribution, the Government could invest in Aer Lingus. It should be possible in any new arrangement with Aer Lingus to maintain the public service element. The Government should be prepared to protect this interest without breaching EU regulations.

I am pleased to have had an opportunity to contribute to the debate. I hope the Government will make a firm decision but I am not sure it should make a speedy decision. It should make a decision when it is fully au fait with the position regarding the future of the airline, in particular, the future of the bilateral arrangements.

Michael Finucane (Fine Gael)
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I wish to share my time with Senator Quinn.

First, I ask the Minister to make a clear decision on Aer Lingus and aviation policy. His predecessor, the Minister, Deputy Brennan, showed a sense of dynamism in trying to get movement in certain areas, including the new terminal at Dublin Airport. Anyone who goes on a continental holiday during the summer will witness absolute chaos at the airport. Ministers may be used to by-passing the normal terminal but, given the congestion that exists, the Minister should stop dithering and make a decision on the issue for the benefit of consumers who use Dublin Airport. Many proposals have been put forward because the debate has been going on for two years. The Minister should make a quick decision on the matter.

It is not so long since we debated in this House the break up of Aer Rianta. If Shannon continued as it was, it would not be a viable entity. The new airport authority stated that it must encourage a low cost model in order to make Shannon sustainable. It is worth bearing in mind that Shannon is losing approximately €5 million a year. When the Minister was dismantling the different airport authorities, he stated that only voluntary redundancies would be involved. Shannon has been identified as having approximately 470 staff and 100 seasonal workers. The new airport authority will have to grapple with this issue because not only is it important for airlines such as Ryanair and other low cost airlines who may use Shannon in the future, it is important for the Shannon entity to be a viable proposition. The resources within Shannon must be examined.

The recent decision by Ryanair to create 14 new routes and operate to different holiday destinations, and to have four aircraft based at Shannon, is extremely important. It is not just important for Shannon but for the west of Ireland, south of Ireland and the mid-west. It could be the gateway for tremendous tourism potential for these areas, which is why it was an important decision.

The Minister might have a discussion with the National Roads Authority vis-À-vis the Limerick-Galway route from Ennis to Galway. This is a deplorable road on a national primary route. Even though we are progressing, we need other components to fit into the jigsaw. It is important to have a decent road infrastructure. If we harness the potential of Shannon and attract low cost carriers, the beneficiaries will be the tourism outlets throughout the region. The road from Ennis to Galway is very important. The Ennis bypass is currently going ahead and I hope it is completed without delay.

Aer Lingus has been debated at length and it is important for the Government to make a decision and remove the uncertainty that exists. I will not elaborate on the virtues of the chief executives and so on because I heard other speakers make contributions in that regard. It must be said that the current financial status of Aer Lingus is very credible but it does not mean that people can sit on their laurels. We must examine the future of Shannon and what happens in regard to the bilateral agreement.

Senator O'Toole asked if the EU could examine whether Ryanair received a more favourable concession. Shannon Airport Authority made it quite clear that if other users come in the same financial arrangements will be made available to them. There is no problem in regard to the European Union. I decided to use most of my time to talk about Shannon because what has happened there is very beneficial. I welcome the direction the airport is taking.

Feargal Quinn (Independent)
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I thank Senator Finucane for sharing his time with me. I congratulate the Government on publishing the Goldman Sachs report. However, I would like to focus on what the report does not contain. It does not contain any discussion on the merits or demerits of the State putting more equity capital into Aer Lingus. It does not refer to that matter because it was excluded specifically from its terms of reference. The report takes as its starting point the assumption that this is a closed issue because the State has already decided it will not invest more capital in Aer Lingus. The consultants worked on that basis but we should not consider it a closed issue, particularly in view of the report's conclusions. The question of the State investing more equity capital should be re-opened.

This is an interesting report which considers the various options open to the Government in seeking new investors. It is clear that just one of the options is a runner on the basis that the State is excluded from investing money, namely, the sale of part of the Government's stake in the company through a flotation on the stock market. The report knocks on the head comprehensively any other approach. However, it makes it clear that the sale of a stake in the airline must be part of raising fresh capital for the company's expansion, which is interesting. In other words, the Government must be prepared to put whatever it gets from a sale back into the company, not into the national pensions reserve fund as happened with Eircom.

The Goldman Sachs report pours cold water on the prospects of the Government being able to run the airline in the strategic interests of the country when the State is reduced to a level of 25%. I know 25% is not necessarily the correct figure, but if the State holds on to some stake in the airline, it opens up the prospect of the Heathrow slots being sold off or put to more profitable use than bringing people to Ireland. It also opens up the possibility that a future investor-owned airline would use its aircraft for routes that were more profitable than ones linking Ireland to its main tourism and commercial interests. It comes down to a single option — they did not have a choice — which is not particularly attractive and will be difficult to carry off with success, namely, the flotation.

This brings me back to my original point that this issue cannot be properly considered if we exclude any possibility of the State investing more equity in the airline. Coming from my background, I tend to oppose the idea of the State running commercial businesses. I am even more against the idea of turning over essential parts of the national infrastructure to purely profit-driven businesses and enterprises, as we did so disastrously in the case of Eircom, which was a misjudgment. If we can spend many millions of euro building a road network throughout the country, is it all that mad to consider a few hundred million euro on building a transport network that will guarantee our links with the outside world?

I found it difficult to come to this conclusion. When I started with the Goldman Sachs report, I started from a similar viewpoint to Senator Morrissey, which believes the State should not be involved in running businesses. I had the experience in the past of being chairman of An Post. I came to the conclusion at the time that the State must be involved in certain businesses. I do not think we have a choice in the case of Aer Lingus between a low cost airline or a different kind of airline. We have a choice between a low cost airline or no airline. When it comes to making a decision, it will be in management's hands, but directed by a Government stakeholder. I suggest that, if necessary, we go back to Goldman Sachs and include the option which was excluded in the first instance.

We must re-examine this aspect because it is a worthwhile proposal. We are at a crossroads and a number of Senators spoke about the urgency of making a decision. We began from the wrong premise. We should re-examine this decision-making aspect but not exclude the possibility to which I referred. This may be an exception to what I as a business person would normally say. I know our colleagues and partners in Government would say that this is something in which the State should not be involved but the issue should be re-examined.

Mary O'Rourke (Fianna Fail)
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I thank the Minister for coming to the House and his officials with whom I worked closely in the past. As the Minister will know, he is very well served.

This has been an interesting debate and people have not been afraid to state their points of view. Senator O'Toole said we did not give credit to the unions. I constantly spoke about the role of the unions in saving the airline whenever the opportunity presented itself, and I know the Minister for Transport, Deputy Cullen, feels the same.

There is no crisis now that compares to the crisis of September 2001 after the fateful events in New York. Aer Lingus was already on the decline, but when that happened the sky fell in for aviation. First, nobody wanted to travel. Second, there were concurrent difficulties because of the approach taken by Madam de Palacia who was Transport Commissioner at the time. I am sure the Minister has seen the files. We continually begged to be allowed to provide funding and came back with our tail between our legs. It seemed very odd that while other national airlines throughout Europe were somehow miraculously able to get permission to fund — maybe they dressed the issue up a bit — the Commissioner said "No" to Ireland far more often than former British Prime Minister Margaret Thatcher ever did. The result was that we were faced with an airline that had no money, aviation in decline and the horror of September 2001. However, everybody pulled together and that is a lesson that should be learned.

That was entirely different from the oil crisis of the early 1990s when a very fine chairman, Mr. Cahill, since deceased, pulled the airline around. On this occasion the chairman had taken up the position only three weeks earlier and found himself in the middle of a maelstrom. However, he worked amazingly hard. The three Aer Lingus executives who are retiring have given great service to the airline. They are very clever people and have worked very well with the airline. However, the Government has nothing to do with the appointment of CEOs or ancillary staff in management. That is the duty of the board and of the chairman.

That brings me to my next point. I am sure the current chairman is an excellent person. However, a working chairman is necessary. Decisions must be made by the board and the chairman. I agree with Senator Quinn, but I would like to see a timetable for the commissioning of new planes. I was on a new Aer Lingus plane recently. It had all new shiny leather and so on and was built by Shorts. There should be a timetable of when the real money will be needed. If it is for planes, and we believe it is, the Government should consider an equity injection to achieve that.

Martin Mansergh (Fianna Fail)
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I thank the Minister and the Leader for sharing their time with me. Former Taoiseach, Seán Lemass, once said that the advent of air transport was the single most liberating factor vis-À-vis Ireland in the 20th century. We are talking about elements of a vital strategic interest, although we might feel nostalgic for the old-style Aer Lingus in the same way as we feel nostalgic for Bewley's. A series of crises was overcome and great tribute is due to the Leader who, as Minister, steered Aer Lingus through one of the most difficult crises of all in 2001 against the hostility of Commissioner de Palacio.

There are three strategic interests we must protect. One is the retention of the Heathrow slots. The second is the international links. The third is the maintenance of adequate traffic through Shannon Airport for both industrial and tourism reasons.

I remember, as would the Leader — I was an adviser at the time — a memorandum to Government in the late 1980s, when things were very tight, which nonetheless sought investment in Aer Lingus to buy planes for specific purposes. It was approved.

This should not be approached in an ideological manner. We are talking about a vital strategic interest. The State should be free to invest in it, not to rescue or subsidise a lame duck but to keep a vital and important concern going. We should not approach this with ideological blinkers. If we are able to invest in buses and trains, we should also be able to invest in aircraft. I was very impressed by a representative in the House who comes very much from the free market viewpoint also expressing that point of view.

Martin Cullen (Waterford, Fianna Fail)
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I thank all Senators in the House for the discussion this morning and for their very measured and well thought out contributions regarding all of the issues surrounding Aer Lingus and aviation in general. Aer Lingus is not in crisis at present. The difficulty is that the aviation industry globally is in serious crisis. The evidence of that is apparent, whether one looks to the US airlines which fly the north Atlantic, all of which are in very serious difficulties, or to airlines in other parts of the globe which are also in enormous difficulty. We are very mindful of that.

The Government is very seriously and heavily engaged on this process. I assure the House that no discussion in which I have been involved has been driven by ideology. There is only one issue, that is the best interests of Aer Lingus and its staff and employees in developing a growing airline into the future. This is what this debate is about.

I want to make two points in order that the House may understand this issue. Aer Lingus has achieved a tremendous turnaround since 2001, from losses of €140 million in that year to where it stands today with a profit of €90 million plus. However, the profit of €90 million plus is a bit dazzling. The net profit of Aer Lingus this year will be approximately €5 million. That must be understood. Nevertheless, I congratulate everybody involved in a tremendous achievement. Aer Lingus is far and away the best performing traditional national airline in the European sphere of operations today. It is clear that many other airlines will not exist in 12 months' time, never mind beyond that. It is a fragile market and within that market the issue is the ability of Aer Lingus not just to develop but to grow into the future.

There is a very cogent, cohesive and important context regarding Shannon. Everybody understands the issues there. There was very good news this week. There will be more good news on Shannon because it is beginning to focus on the future, not the past, which is very important. I take on board the points made by my colleagues regarding the infrastructure deficit that must be addressed if we want to develop Shannon Airport, for example, the Galway connectivity to Shannon and passengers' accessibility not just to the European routes but to the transatlantic routes as well. No airline, and nobody in the aviation business, has said to me at any stage that there is a doubt over the demand for a sizeable Shannon market into the United States, and they see the potential for growth, new opportunities, new airports and new destinations.

Nobody questions the necessity for investment in the airline. However, it is important to make the point — Senator O'Rourke as a former Minister with responsibility for this area will be very aware of it — that, while it is very important, the issue is not merely about putting equity into Aer Lingus today but about the ability of Aer Lingus to react in a cyclical market. Aer Lingus and everybody else knows that, given the cyclical nature of the market, there will be downturns as well as upturns. The State's input in the medium term will be very limited, no matter what choices it makes today.

I stated in my earlier contribution that if the State were to invest funding or to decide to do this, it is inevitable the matter would go to the European Commission, and possibly the European Court, due to objections of many other airlines, of which some 90 fly into this country, a figure many forget. The issue concerns access to markets and the flexibility this brings with it because, inevitably, in a crisis, and there will be crises in this business, the State does not have options, whereas, with equity available there would be options for planning a better way forward. It would also mean that when finance was needed, one would have access to it.

We must not think only of the present but must give this airline all the opportunities it requires. Strategic issues are clearly involved and have been discussed in this debate. That these issues form the backdrop to the decision-making process is crucially important. I do not agree with the school of thought that suggests Aer Lingus should be sold off as one would sell off an asset or bauble. I have no interest in such a foolish move because the State has strategic interests in the airline. However, these strategic interests must be balanced with interests in regard to tourism, trade and growth, our island nation status and the huge potential growth of the north Atlantic routes for the company. This also applies to other airlines but we want to give Aer Lingus the best opportunity to be the number one airline on those routes, as well as looking towards Europe, the east and Far East.

Our airports and Aer Lingus have huge potential for the future and this is why the Government is so engaged at present in trying to have these decisions made and bring clarity to the process. We do not want to seem as if we are being rushed to make the decisions, but there is a sense that all sides need clarity. I thank my colleagues in Government for giving so much time to this issue and I assure all sides that the issue is not being jumped about. Time and thought has been given to this because we must make good decisions for the future.