asked the Minister for Transport and Power the exact manner in which the purchase of the new jet aeroplane by Aerlínte for the trans-Atlantic route is to be financed, indicating whether it is to be purchased (a) by borrowing, and, if so, the source of such borrowing and its terms, or (b) from existing reserves, and, if so, the exact nature of the reserves, and how they were created.
Ceisteanna—Questions. Oral Answers. - Aerlínte Jet Aircraft.
43.
The purchase of the aircraft will be financed partly from the company's own resources and partly by borrowing. Negotiations for the borrowing are at present in progress and the terms of borrowing have not yet been settled. The company's own resources are represented by surplus cash which is or will become available from profits and from depreciation reserves on the existing fleet.
Could the Minister say what proportion of the cost price will be borne by the company out of their own reserves and what proportion will be secured by borrowing?
I am unable to say that, as negotiations are in progress with regard to the matter and it would be most unwise to make a statement when the company are negotiating.
Why does the Minister speak of the profits and reserves of a company who in fact owe £400,000 a year in interest but are not paying it to the Exchequer?
I made a full statement on the Estimate which is a much more appropriate occasion to discuss the financial state of the company. It would be impossible to discuss it at this stage.
I do not propose to discuss it. I am asking a question. How does the Minister reconcile his statement that the purchase of these aircraft is to be financed out of the profits and reserves of a company at present defaulting on their interest payments, as they have done for some time, to the Exchequer? Where are the profits and reserves of a company in that position? Is it not more honest and better to say it is being paid from moneys advanced by the Exchequer?
The air companies have grown at a speed which has made it impossible for them to earn the type of surplus to remunerate their capital. It is hoped in the future they will be able to remunerate some portion of their capital. In the meantime, they are still earning depreciation reserves and acquiring assets as a result of the profitable exploitation of the company.
It is a good job they are not a railway company.