asked the Minister for Transport and Power if he will explain the difference in the fiscal structure between Aer Lingus and CIE with particular regard to the investment of State funds in these two concerns and the manner of repayment of such moneys.
Ceisteanna—Questions. Oral Answers. - State Investment in Aer Lingus and CIE.
11.
The air companies are financed partly by share capital and partly by loan. No dividends have been declared on the share capital as, in accordance with Government policy, the profits of the companies have been reinvested in the expansion of their activities. The loan capital which has been raised from commercial sources is repayable and interest bearing. The Deputy will see from the Report and Accounts for the year ended 31st March, 1967, which have been presented to the Dáil that the net assets employed by the air companies at that date amounted to £23.86 million which were financed as to £13.61 million by share capital, £6.98 million by loan capital and £3.27 million by revenue reserves. This latter figure, of course, represents undistributed profits. This financial structure is appropriate to the air companies which are engaged in competitive commercial activities in the international field.
CIE is financed by loan capital now totalling £22.39 million on which interest is payable by the Board. This interest and sinking fund charges for the redemption of transport stocks are a first charge on the annual statutory grant of £2 million and accounted for £0.95 million of this sum in the year ended 31/7/67. In addition, loan capital liabilities of CIE totalling £17.12 million have been written off and the burden of repayment and interest in respect of this sum is borne by the Exchequer.
The financing of CIE by equity shares, that is, by risk capital, would be inappropriate as there is no prospect of a return being earned on such capital.