Kieran O'Donnell (Limerick East, Fine Gael)
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Question 267: To ask the Minister for Transport when his attention was drawn, formal or otherwise, to Aer Lingus's proposal to withdraw all services from the Shannon to Heathrow route and BMI's not taking up the offer by Shannon Airport Authority to service the Shannon to Heathrow route. [24419/07]

Noel Dempsey (Meath West, Fianna Fail)
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A media article on 13th June 2007 reported the possibility of Aer Lingus opening a new base at Belfast. Following a query to the Company by my Department on foot of that article, the Company, on 13th June, indicated that it was considering opening a new base at Belfast and that, if the proposal proceeded, there would be implications for Shannon. An official conveyed the concerns of the Department, from an aviation and regional development perspective, about the implications for Shannon and asked the Chief Executive to give full consideration to the ways in which a new base might be accommodated before arriving at a decision, which he agreed to do. The matter was not brought to my attention.

Subsequently, an official of the Department contacted Aer Lingus on 27th July arising from a query to the Company on industrial relations matters. In the course of that conversation, it was confirmed that the Company's plans for a new base had solidified and that a formal announcement was to be made on 8th August. It was also confirmed that opening the new Belfast base would involve the reallocation of Shannon Heathrow slots to Belfast from early 2008. The official expressed concern about the impact of the loss of a Shannon-Heathrow service from an aviation and regional policy perspective, emphasised the importance of Aer Lingus commitment to Shannon and indicated that these matters would be raised with the Chief Executive of the company.

In an e-mail to my private office on 27th July the official stated "The Company intends to announce the new Belfast base on 8 August. This will involve the reallocation of Shannon-Heathrow slots to Belfast from early 2008" and referred to the concerns that he had raised. A meeting with the Chairman and Chief Executive was arranged for the earliest opportunity — 3rd August — to enable me to discuss these matters with the Company. At the meeting with the Chairman and Chief Executive of Aer Lingus on 3rd August, I was informed of the decision to open a hub in Belfast and of the re-allocation of all the Shannon-Heathrow slots to a new Belfast Heathrow service.

The decision by British Midland that it would not commence a Shannon Heathrow service was made public on 4th October and reported in the media the following day. I was made aware two days previously, on 2nd October, that the decision was likely to be negative. Prior to that I was kept informed, on an informal basis, of continuing dialogue between the Dublin Airport Authority and Shannon Airport Authority and British Midland. In the normal way of negotiations of this kind the views of progress alternated between optimism and pessimism before a final conclusion was reached.

Kieran O'Donnell (Limerick East, Fine Gael)
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Question 268: To ask the Minister for Transport the reason the Government will not call for an extraordinary general meeting of Aer Lingus to reverse the decision by the management of Aer Lingus to end the Shannon to Heathrow service in view of the commitments given by the Government at the time of floatation that it was retaining the 25.4% stake in Aer Lingus for strategic reasons. [24420/07]

Noel Dempsey (Meath West, Fianna Fail)
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The legal advice available to the Government is that shareholders do not have the power to over-rule management decisions on business matters. Even if the Government on its own or in conjunction with other shareholders called an EGM and voted for the restoration of the Shannon Heathrow service, the management of Aer Lingus would not be obliged to follow any such direction from its shareholders. At the time of the IPO the State had two key objectives in retaining a strategic shareholding of 25.4%. Firstly, this shareholding provides a major impediment to a hostile takeover.

The second strategic advantage of a shareholding of over 25% is that it enables Government as a shareholder to block special resolutions. Because of provisions specifically built in to the Memorandum and Articles of Association of Aer Lingus at the time of the IPO this provides for the potential for the State to protect against the disposal of Heathrow slots. The measures put in place at the time of the IPO do not apply to the re-allocation of slot pairs to new or existing bases.