asked the Minister for Tourism and Transport if his authorisation was sought by Aer Lingus for the decision to sell off its chain of hotels in the United States; the reason a decision was taken to sell off these hotels; the manner in which it is intended to use the money raised from the hotel sale; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Sale of Aer Lingus Hotels Chain.
18.
In the context of Aer Lingus plans to restructure its hotel and leisure interests, I advised the company in February last that I would raise no objection to the proposed acquisition of full ownership of the Berkshire Place Hotel, New York, in which it had a 40 per cent shareholding, or so its proposal to dispose of all other assets in the Omni chain and to use the proceeds of sale to finance the acquisition.
In addition to financing the full acquisition of the Berkshire Place Hotel, Aer Lingus intend using the funds from the disposal of the Omni Hotel chain to finance its programme for the development of its hotel and leisure interests in other markets. This programme includes the recent purchase by the company of the Copthorne chain of hotels in the UK, continental Europe and Africa. It also includes significant investment in upgrading the Brussels and Glasgow hotels which were part of this chain. Further investment is also envisaged in the company's London Tara Hotel. Aer Lingus are also looking at opportunities for further hotel investment in Ireland.
Arising from the Minister's reply can I ask him to give an assurance to the House that there will be no interference by the Government in proceeds achieved by Aer Lingus in the sale of their hotel interests and that the plans for the reinvestment of this money will, as suggested by the Minister in his reply, proceed unhindered?
I am afraid I do not understand what the Deputy means by "interference".
What I am referring to are the competing interests within Aer Lingus, in terms of fleet replacement, or because of a shortfall in Government funds, the Government might at any stage contemplate imposing a charge, which is not unknown to other public sector companies in the field, which would contribute to Government funding. I am asking the Minister to give an assurance to the House that Aer Lingus in achievement, on which no doubt we all congratulate them, will not have any interference with their plans for reinvesting the money in the way outlined by the Minister.
My information is exactly as contained in my reply with regard to the money received from the sale of the hotel.
Can I ask the Minister whether Aer Lingus make a practice of consulting him about the wisdom or advisability of their day-to-day commercial operations such as deciding to sell some item of their property and reinvesting the money in something else? Is that a normal practice?
As the Deputy puts it he might indicate that the minutiae of administration and the making of commercial decisions might be referred to me but that is not so. In large ventures like this, the Department are consulted by Aer Lingus and the Government.
I am not casting any reflection on the capacity either of the Minister or his Department in regard to the administration of that Department, but may I ask the Minister what expertise he or anyone in his Department possesses of a kind which would enable them to make a judgment about the advisability or otherwise of selling or buying a chain of hotels?
The fact is that there is available to my Department, in the substantial and sophisticated commercial life of this city, plenty of advice if we seek such advice. In general we rely on the commercial judgment of the company. Where we are chary, and where the Deputy or any Minister would be chary, is where public funds are concerned and where the danger of public funds becoming involved in any commercial deal is obvious. In reply to various questions with regard to the funding of the purchase of aircraft, I have indicated that in all cases when consultation took place there was an indication from my Department, acting for the Government, that Aer Lingus would fund these ventures themselves and that there would be no Government guarantee on borrowings.
Deputy Austin Deasy.
What is the Minister——
I have called Deputy Deasy.
Can the Minister tell us: do, or did, Aer Lingus own the Omni hotel chain in their entirety, or just a percentage, seeing that they own 40 per cent only of the Berkshire Place Hotel, New York?
The Omni hotels were held in various ways: some are fully owned, some are managed and some are franchised; there is no similar pattern in all cases. They owned 40 per cent of the Berkshire Place Hotel, they now own 90 per cent of it and are taking steps to acquire the remaining 10 per cent.
Then it would be more correct to say that they sold their interest in the chain rather than the chain in its entirety?
That is right.
I want the Minister to realise that what I am trying to get from him is a window into the style of Government which this and similar matters display. The answer he gave to the original question contained a phrase to the effect that he raised no objection to Aer Lingus's proposals. Where, in the legislation setting up Aer Lingus, is he given any status whatever in regard to either raising an objection or forebearing to raise an objection to a commercial operation which the airline, in their judgment, have decided to undertake? If the Minister has no such status, would he say how he feels himself entitled to give that advice, to raise an objection or block a particular move?
I feel entitled, as do the Government — as the sole shareholder in Aer Lingus — to express an opinion, just the same as Deputy Kelly, if he were a shareholder in a company, would hold himself free to make a comment on whatever commercial deal they might be undertaking.
Usually a shareholder in a company can sell his share if he is not satisfied with the performance of the company——
We have encroached on time allocated for Questions Nominated for Priority. Deputy Kavanagh's supplementary will have to be very brief.
Would the Minister assure the House that the sale of property in America will not result in any reduction in Aer Lingus's share of the transatlantic route?
I can assure the Deputy that the sale of the interest in the Omni hotels will not impact in any one way on Aer Lingus's transatlantic services.
Question No. 21, the first question nominated for priority.