To ask the Minister for Transport and the Marine the reason the Government through it's nominees on the Aer Lingus board of directors did not retain executive powers over the Heathrow slots at all times; if the Government will seek to regain these executive powers; and if, following the appointment of the two further Government nominees to the Aer Lingus board, there will be a request for a special meeting of the board to demand an immediate reversal of the decision to end the Aer Lingus Shannon to Heathrow route.
For ORAL answer on Thursday, 18th October, 2007.
Ref No: 24424/07
Answered by the Minister for Transport
The Heathrow slots are the defined time intervals during which aircraft are scheduled to take-off from and land at Heathrow airport. In view of the scarcity and value of slot allocations at Heathrow, it was considered appropriate to put in place measures to prevent the sale of Aer Lingus slot allocation to other airlines.
Arrangements to safeguard the Heathrow slots are built into the Companys Memorandum and Articles of Association. The effect of these arrangements is that any sale or long-term lease of Heathrow slots to other airlines can be prevented by 30.4% of the votes cast at an Extraordinary General Meeting.
The re-deployment of slots and other resources in this particular case was a commercial decision made by the executive management team in the Company. The decision was taken by management of Aer Lingus on foot of a mandate from the Board to examine and develop commercial opportunities, in accordance with the Memorandum and Articles of Association of the Company.
There is clear legal advice to the effect that, having regard to the duties of the Board of Directors pursuant to the Companies Acts and the Memorandum and Articles of Association of Aer Lingus, shareholders do not have the power to overrule management decisions on business matters.
In law, the Directors are responsible for managing the companys business and all Directors, including the State appointees, are bound by their fiduciary responsibilities under the Companies Acts.
I have decided to appoint two further directors to the board of Aer Lingus. I will ask the State appointees to seek to ensure that all future decisions of the company, that have significant implications for wider Government, aviation or regional development policies, are considered at board level. That will give the State appointees the opportunity to raise the public policy implications of each decision and to ensure the full commercial implications for the company are taken into account. The State appointees to the board do not, nor will they, have a veto on board decisions.
At the time of the IPO it was recognised that there was a need to balance the States strategic interests in relation to Heathrow slots with a need to allow the company to have reasonable commercial flexibility in its operations while respecting the EU Treaty requirements relating to golden shares. The safeguards put in place at the time of the IPO against disposal of slots were devised on the basis of legal advice.
It was clear from contacts with the European Commission that any measure for the protection of Heathrow slots that could be solely exercised by the Government would be regarded by the Commission as a special right, which would be challenged before the European Court of Justice.