Dáil Question No: 58
*To ask the Minister for Transport if he is still considering the privatisation of Aer Lingus in view of the fact that the company is expected to record a profit of up to €95 million in 2004; the consultation he has had with the board or unions representing staff regarding the future of the airline; if his attention has been drawn to plans from Aer Lingus to cut staff numbers further to reduce costs; and if he will make a statement on the matter.
- Liz McManus. (Nominated by: Róisín Shortall).
For ORAL answer on Wednesday, 7th July, 2004.
Ref No: 20417/04 Lottery: 21
Answered by Minister for Transport
I have previously indicated to the House that last March I advised my Cabinet colleagues of the state of my deliberations concerning the future of Aer Lingus. I also advised that I would be reverting to Government on specific options for the Company in the near future.
Those deliberations involved consideration of the reports from the Chairman of Aer Lingus and an independent corporate finance consultant whom I commissioned to look at the sale options for the Company.
However, the House will be aware of recent developments concerning a request from Aer Lingus senior management for permission to develop an investment proposal for the Company. In response to that request, my Department immediately requested that no further activity take place in relation to any proposal until the matter had been considered from a corporate governance, process and policy perspective. Appropriate legal and financial advice was then sought.
My primary concern since then has been to protect the shareholders interest and to guard against conflicts of interest. In that context, on 3 July last, I announced the appointment of Mr. John Sharman, an existing director, as acting chairman pending the appointment of a replacement for the previous Chairman. The Acting Chairman and Company Secretary have since sought legal advice on the appropriateness of the current corporate governance arrangements and are acting on that advice. I have also been advised that a Board meeting has been arranged for Thursday, 8 July 2004.
The Acting Chairman and Board are, of course, charged with ensuring the ongoing orderly management of the business, particularly in relation to the finalising of the Business Plan which is critical to the successful implementation of the strategy adopted for the airline.
My Department and the Department of Finance, who met the Chairman, Company Secretary and their legal advisors on 5 July 2004, are liaising closely with the Chairman so as to ensure that the governance arrangements put in place by the Board are robust.
The Government considered the matter at its meeting yesterday and decided:-
To establish a Cabinet Sub Committee, consisting of the Taoiseach, Tanaiste and Ministers for Finance, Transport and Tourism, to examine all of the issues involved and report back to the Government as soon as possible.
To advise senior management in Aer Lingus that in the interim there was to be no further activity as regards the request for consent to develop a proposal until such time as the Government has time to consider the matter in detail.
The Government will respond in due course to the request in the context of the Governments ongoing consideration of the ownership issue which has been underway for several months.
The Government will also consider the request in the context of the need for openness and transparency, the avoidance of conflicts of interest, reduction in risk, maximisation of value and consultation with stakeholders.
I cannot pre-empt the outcome of the Governments consideration in this matter. However, I can assure the House that if the Government decides to embark on a sale of all or part of Aer Lingus, I will be consulting with the appropriate interests, including unions.
In addition, in such an eventuality, I will set out for the House, in accordance with the provisions of the Aer Lingus Act 2004, the general principles of the proposed sale as well as the basis for the Governments decision and the arguments for and against such a sale. I will also set out how the Government proposes to deal with important strategic issues such as slots at Heathrow.
There is no doubt that under the current management, the airline has made enormous progress in the past two years. However, that work must continue in order to ensure the ongoing viability of the Company. In that context, it is vital that the new Business Plan is finalized in the near future and considered by the Aer Lingus Board. I therefore do not wish to speculate on its contents at this stage. I want to make it clear, however, that the Plan is essential, irrespective of any decision on ownership, as the challenging and difficult external environment facing the airline remains the same.