Seanad debates

Wednesday, 8 February 2012

7:00 pm

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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I would like to share time with Senator Healy Eames.

Photo of Tom ShehanTom Shehan (Fine Gael)
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Is that agreed? Agreed.

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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I thank the Minister and appreciate him coming to the House for this Adjournment matter. It is an urgent matter and I am sure he is well aware of the situation in Galway Airport.

Táim ag ardú na ceiste i gcomhthéacs todhchaí aerfort na Gaillimhe, ceist a d'ardaigh mé cheana leis an Aire anseo sa Seanad agus ag cruinnithe eile mar is cosúl go bhfuil an t-aerfort i mbaol. Baineann an cheist seo freisin le cearta na n-oibrithe agus an infheistíocht Stáit atá déanta.

I am raising the issue in the context of the ongoing situation in Galway Airport. The Bank of Ireland has taken over €1 million out of its account. I appreciate the Minister does not have direct responsibility for that and that the airport is an independent company. The story of Galway Airport goes back quite a while. We have had discussions here on transport issues and I raised the future of Galway Airport with the Minister in the context of the OPEX grant having to be curtailed. The subsequent exit of the managing director was not a good omen. There was a board meeting today and we are not sure exactly what happened, but the airport is in jeopardy. I am eagerly awaiting clarification.

In regard to the funding given by the Government to the airport, certain moneys were made available for redundancy payments to staff. Can the Minister clarify whether that is true? If it is, is that part of the money that the Bank of Ireland has taken from the account and where does that leave the workers who, it would appear, are in danger of losing their jobs? They are currently engaged in a sit-in in the airport to make sure their rights are upheld. It is an important issue.

I ask the Minister to indicate his thoughts on the future of the airport. Those in Galway see it as an essential part of its infrastructure if we are to try and keep industry going and attract industry and tourists into the area. Therefore, whatever the future of the airport is, whether it goes into liquidation or is sold on, we need to know what the Government's plan is for the site in Carnmore. Can the Minister indicate where the Government stands? Has there been any engagement between the Government, the Department or officials and the airport management and workers to try to determine what can be salvaged from this very difficult situation?

8:00 pm

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I welcome the Minister. I want to confine my remarks to the workers, their sit-in and their fears about not getting statutory redundancy. I also want to refer to the actions of Bank of Ireland. I have one or two questions.

I understand it was largely State money that was lodged in the Bank of Ireland account and that the money, in an unprecedented manner, was raided by Bank of Ireland without any notice to the directors. I am a former director of Galway Airport myself and I always recall the prudence and exactitude with which business was done there to adhere to corporate governance and I understand the Revenue Commissioners are paid up to date.

I would like the Minister to comment on the behaviour of Bank of Ireland in this case and what action he thinks we should take as a Government given our reputation abroad is very important. We are trying to attract investors. We were ranked in the top ten of places to do business in the last week but this would not instil confidence in anyone thinking of investing here. This is one of our pillar banks in which we have a stake.

I can confirm that local businesses are very concerned about this. One gentleman spoke to me about having an up to date loan and working capital in another account. He has 43 staff and he says if the bank moved like this on him, he would have to make those staff redundant.

Can the Minister of State confirm the workers will get their statutory redundancy? In what ranking are they as preferential creditors? I understand the Revenue Commissioners have been paid up to date so are the workers next in line or are they guaranteed their money?

Photo of Leo VaradkarLeo Varadkar (Minister, Department of Transport, Tourism and Sport; Dublin West, Fine Gael)
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I announced in June 2011 that I had secured Government approval for additional funding to be made available to all six regional airports in 2011, including Galway Airport, reversing the cut in funding made by the last Government. However, at that time the Government also decided that it would not be able to provide operational or capital funding to Galway Airport or Sligo Airport from 2012 onwards, given the need to consolidate the number of airports on the west coast. In making that announcement, I encouraged Galway Airport and Sligo Airport, as privately owned entities, to use the opportunity provided by the additional funding in 2011 to engage with various parties, including business interests, investors and local authorities, to secure their ongoing viability in some form. Both airport companies have pursued this.

In December 2011, a total €5,392,334 was allocated to the six regional airports to cover a portion of their operating costs incurred in 2011. This included a subvention of €2,309,191 to Galway Airport. This funding was allocated under the regional airports operational expenditure subvention - OPEX - scheme to the airports at Donegal, Sligo, Ireland West Airport Knock, Galway, Kerry and Waterford. The operational funding scheme covers regional airports for a given range of costs arising from core airport services, but only when these costs cannot be fully recovered from their own income.

In addition, €222,943 was paid to Galway Airport in 2011 under the regional airports capital expenditure - CAPEX - grant scheme. This brings to €15.5 million the total amount of funding paid to Galway Airport in the past ten years under the OPEX and CAPEX schemes. The capital funding provided focuses mainly on safety and security projects, which aim to ensure that each airport can comply with the latest national and international aviation safety and security standards.

While Ireland West Airport Knock, Kerry Airport, Waterford South East Regional Airport and Donegal Airport will be eligible for funding up to the end of 2014, ongoing support during this period will depend on the availability of funds. These airports are expected to work towards achieving operational viability over this period. The decision to continue to provide funding to these four airports was based on the need to ensure the most effective use of scarce Exchequer resources to support the regional airports network serving the public both in terms of business and tourism. The aim is to ensure that Ireland has a sufficient network of regional airports while taking into account significant improvement in road networks, shorter and more reliable journeys by road and rail and the collapse in passengers flying domestically. I fully recognise the difficulties being experienced by Galway Airport at present. However, as a privately owned entity, it is a matter for the owners and management to work out how best they can secure their future.

In total, over €15 million in subsidies has been paid to this airport in the past ten years. Despite this, the airport has run up multimillion euro debts on top of that and even though subsidies continued throughout 2011, all scheduled flights ended several months before the subsidies were ended. Although it is no reflection on the hard work done by the board and staff at Galway Airport, the decisions made by the Government on the viability of the airport have been proven to be correct and there are no plans to extend support to airports not currently supported.

Bank of Ireland is a private company; the Government only has a 15% shareholding in the bank. I understand €1 million was taken from the bank account unilaterally by Bank of Ireland. I also understand, however, that Galway Airport had an agreement with Bank of Ireland that allowed it to do that. It is unfortunate that is the case given the loans are still being serviced.

The payments under the CAPEX and OPEX schemes are not for redundancy. CAPEX is for capital development and OPEX is to cover operating losses a company makes. Redundancy in private companies is not paid for by the State and the State does not provide redundancy payments in bodies it does not own. When it comes to redundancy, it must be paid by the company, or if the company becomes insolvent, by the Department of Social Protection under the scheme. Workers can be assured their statutory redundancy will be paid, although it may take some time for the payment to be processed either by the receivers or the Department of Social Protection, depending on how things spin out. Workers owed money or redundancy are first in line as preferential creditors, followed by the Revenue Commissioners and then other secured creditors.

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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How much of the money that has been taken by the bank is part of the CAPEX or OPEX grant that was paid by the State to the company? Does the State have any claim on that money?

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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Could the Minister outline the preferential creditor status again?

Photo of Leo VaradkarLeo Varadkar (Minister, Department of Transport, Tourism and Sport; Dublin West, Fine Gael)
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If the company is wound up, the first call goes to workers who are owed pay or redundancy, then the Revenue Commissioners and then other secured creditors.

The State has no claim on the money paid. It was paid to Galway Airport under the OPEX scheme to cover its operating losses, which were significant for the year. That is why the money was paid. Unfortunately, on top of that the airport had multimillion euro debts and the money appears not to be sufficient to cover those debts.