Vol. 405 No. 1
12 Mr. McCartan asked the Minister for Tourism, Transport and Communications if he will outline the present position regarding plans for fleet replacement by Aer Lingus; the proportion of the funds which will be provided (a) by the Exchequer and (b) from the company's own resources; and if he will make a statement on the matter.
Aer Lingus are engaged in a programme of fleet replacement in respect of the airline's European fleet to cater for the expansion in traffic arising from the general liberalisation of European air transport, the increase in inbound tourists and the need to replace older aircraft in the fleet. While the Gulf crisis and the current recession in the British and US markets are having a short-term effect on traffic levels, long-term traffic growth projections are of the order of 5 per cent to 7 per cent per annum. Combined with the recovery measures which Aer Lingus have recently announced, the increasing mix of new aircraft in the fleet will facilitate Aer Lingus' development when the Gulf crisis is resolved and a more favourable economic situation exists.
Since October 1987 a total of ten B737 jet aircraft and five Fokker 50 aircraft have been delivered to Aer Lingus. a further six B737s and one Fokker 50 are due for delivery between now and June 1992. The total cost of these 22 aircraft amounts to approximately $602 million and will be financed by the airline through a combination of their own resources and borrowing without resource to the Government for equity or State guarantee of borrowing.
By the end of 1992 Aer Lingus' European jet fleet will consist of 21 B737 jet aircraft, comprising 16 new generation B737s and five older generation B737s. Aer Lingus also have options on an additional four B737s in the period beyond 1992, but no firm proposals have been put to Government by Aer Lingus in respect of acquisition of these aircraft.
In addition, Aer Lingus have recently entered into an agreement with the Swedish aircraft manufacturer, Saab, for the lease of four new Saab 340B commuter aircraft. Saab will acquire four of Aer Lingus' existing Shorts 360s in return, as part of the transaction. This is a financially attractive package which will enable Aer Lingus to replace older generation commuter aircraft with new, technologically advanced aircraft, without the need for any major investment.
Aer Lingus are also planning for the necessary replacement of the North Atlantic fleet over the next few years and I expect to receive the airline's proposals in due course.
Although the commencement of the Los Angeles service has been deferred, I understand that it is the airline's intention to proceed with the lease of two B767 aircraft for the North Atlantic fleet. The first aircraft is due for delivery in April 1991 and will be deployed on the airline's existing North Atlantic network. It will largely replace the capacity of the Lockheed Tristar which Aer Lingus leased for the summers of 1989 and 1990 to provide additional capacity. The second aircraft is not due for delivery until December 1991.
(Limerick East): May I ask the Minister if he has examined proposals by Aer Lingus to offer to the public a portion of the equity of that company so that they will be able to replace their fleet? Secondly, if he has examined such proposals, has he done so in a manner which would enable him to look with favour on this partial privatisation proposal? When will he be in a position to make a full statement on the matter?
I have no plans at present to consider a partial privatisation of Aer Lingus.
Does the Minister agree that as there probably will be no Exchequer support, it is the intention of Aer Lingus to dispose of some of their ancillary company assets so that they can replace their fleet? As the level of air transport losses is likely to be £50 million this year, according to the latest reports, does the Minister not agree that the figures he gave in regard to fleet replacement no longer hold good and that the financial basis of fleet replacement will have to be reassessed?
As the Deputy rightly said, this is a difficult issue. The new recovery plan which Aer Lingus have brought to me and which I have approved is very severe. I support the plan and I have asked the workforce and the management to give it their best so as to ensure that the losses which they fear do not materialise. This is a good attempt to cut the losses down to the bare minimum. As I have said, I support the plan.
In regard to fleet replacement, as I said in my reply, since October 1987 a total of $602 million has been paid for the acquisition of new aircraft. That is a very substantial investment in fleet replacement. Aer Lingus have not sought State equity or guarantees for those aircraft throughout that period. I do not rule out the possibility of the situation changing dramatically, which is inclined to happen in this business, but as of now I have had no request from Aer Lingus to change the method of financing their aircraft.
I join the Minister in congratulating the workforce and management of Aer Lingus in their attempts to save £20 million to £30 million. However, the workforce are afraid that while they are expected to find £11 million in savings through reductions in their wages, at the same time the Minister will penalise Aer Lingus by forcing them to fly into airports which they want to get out of, that is, Knock and Derry airports. The same restrictions have not been applied to their competitors, Ryanair, who can clearly opt out of servicing whatever regional airport they like, or can bully the regional airport authorities into reducing landing fees.
I will try not to comment on many of the assumptions made by the Deputy. I want again to thank the staff and management of Aer Lingus for getting us through a very difficult time. In their plan Aer Lingus said they wanted to pull out of Knock and Derry airports. I asked them if they would continue to service these airports because of their importance to the regions. They looked again at their proposal and acceded to my request.
Ryanair have only recently said that they want to opt out of servicing a large number of regional airports. I have explained the position in regard to that proposal in reply to a previous question. I am trying to put together a package which will make it possible for both Aer Lingus and Ryanair between them to service the regional airports.
May I——
(Limerick East): A Cheann Comhairle——
I will call Deputy Cosgrave and then Deputy Noonan, Limerick East, for a final question, if he wishes to offer.
Aer Lingus seem to purchase all their aircraft in America, mainly through the Boeing Corporation. The European aerospace industry is very efficient and manufactures excellent aircraft. In view of the fact that our commitment to Europe is so great, would the Minister not require Aer Lingus to enter into negotiations with the European aerospace industry with a view to purchasing some of their aircraft from that industry? I understand that the European aerospace industry are very interested in setting up technological exchanges and so on in Ireland which would give employment here.
I will have the Deputy's comments passed on to Aer Lingus for analysis. I should point out to the Deputy that not all the aircraft used by Aer Lingus are purchased in America. Obviously the Boeing aircraft are American but the Fokker 50s are European, as, I think, are the Saab.
They are manufactured in Sweden.
Sweden is not in the EC. The European aerospace industry use European labour and technology, which could create jobs in this country. Will the Minister require Aer Lingus to at least discuss the matter with the European aerospace industry, which they are refusing to do?
They love going to America.
I will bring the Deputy's views to their attention.
