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Dáil Éireann debate -
Wednesday, 21 Oct 1992

Vol. 424 No. 1

Adjournment Debate. - Aer Lingus Threatened Job Losses.

I seek the permission of the House to share the time at my disposal with my colleagues, Deputy Owen and Deputy Cosgrave.

Is that satisfactory? Agreed.

What is clear in the teeth of the crisis at Aer Lingus is that neither the Minister nor the Government have any detailed air transport policy to deal with the problem. The development of an aviation policy is now of critical importance not only for the 7,500 people employed by Aer Lingus but for the jobs throughout the State. Aer Lingus will not survive without a Government policy. The Minister must bear in mind that the loss of 1,500 jobs at Aer Lingus would have the same devastating effect as the proposed loss of 30,000 jobs in the coal mining industry in Britain.

Recent packages, however laudable, agreed between management and unions have not been sufficient to solve the problem. It must be patently obvious to the Minister and to everybody else that Aer Lingus will not survive without a detailed plan of positive action. Our geographical location renders it essential that Ireland be assured of a regular scheduled air service on the main routes to the United States, and Europe while air access must form a fundamental part of regional policy.

In this regard consideration must be given by the Government towards the injection of EC Structural funds to assist our national airline. As the Minister will be aware, the European Community have already approved schemes of investment for the airlines of France and Belgium. As sole shareholder, the Minister has a national responsibility to protect the jobs at Aer Lingus.

The problem, as the Minister must concede, has been compounded by five years continuous neglect on the part of the Government. Fleet renewal for the next three years will cost £200 million. What plans has the Minister in this regard? What does the shareholder propose to do? It is simply outrageous for the Government's response to be a shrugging of shoulders, insisting that the present budgetary position does not allow for action. As one of the Government backbenchers announced this evening, we are in a doomsday situation. Capital requirement for the next five years will exceed £700 million and, with continuing annual losses of almost £40 million per year, this should be sufficient to trigger the necessary alarm bells on the Minister's desk. The importance of State assistance for indigenous Irish companies is underlined in all the major reports of recent years — the Culliton report, NESC reports and the Government's most recent report, the first report of the Oireachtas Joint Committee on Employment. The Minister must act immediately.

I thank Deputy Flanagan for sharing his time with me and I shall be brief as I am anxious to allow Deputy Owen to contribute also. Aer Lingus employ 7,600 persons, of whom I represent at least 2,000, ranging from management and the highly technically skilled to the lowest paid worker. These employees have provided a marvellous service to the people. However, they tell me that ludicrous travelling arrangements exist whereby Americans must fly into London, Glasgow and Manchester before travelling to Dublin and Canadians and west coast travellers must fly into Amsterdam before travelling to Dublin. The increased cost of such travel arrangements puts Aer Lingus out of the tourist and charter business. Holidays from America are keenly priced and because of these flight arrangements Aer Lingus are losing out heavily on the North Atlantic route. The Government should carry out an independent study to ensure the continued existence of Shannon Airport and that it will continue to provide the same level of employment as is the case today.

The company will have to discuss their future, hopefully by way of joint venture with other airlines in Europe. However, the workers' interest will have to be protected and this should be done by way of a golden share. In the B & I episode the Government refused to allow a golden share and the rights of the workers in B & I were sold off. We do not want that to happen with Aer Lingus. The Government should retain a golden share, thereby protecting employment and the interests of the employees.

Aer Rianta could contribute to the retention of jobs, especially at Dublin Airport, by reducing landing fees. Aer Lingus management must be congratulated for recently purchasing the latest and most modern fuel efficient aircraft. However, if they continue to lose passengers on the north Atlantic route, those highly technical purchases will be of little value.

The Government are the chief shareholder in Aer Lingus and therefore they will be responsible for the resulting loss of jobs and damage to the company. Aer Lingus are responsible for bringing into this country 40 per cent of our tourists through their own marketing strategy. Without these tourists the tourism industry would be very lean indeed. In their 56 years of existence Aer Lingus have received £68 million in Government equity as against £100 million a year to CIE. The EC have allowed Air France and Sabena to be subvented by their Governments. The Minister should not allow our national airline to go to the wall. If it does, she will be held responsible.

Tá áthas orm deis a bheith agam labhairt faoi chomhlacht Stáit Aer Lingus ar an ócáid seo. The air transport division of Aer Lingus suffered a loss before tax of £38 million in the year 1991-92. This followed on a loss of £42.5 million in the previous year. It is no secret that the division is facing major losses again this year. I have been deeply concerned for some time at the continuing deterioration in the financial performance of Aer Lingus, particularly in their core air transport business. Both I and my Department have repeatedly made this concern known to the Chairman and management of the airline, especially over the past year.

I recognise that the world aviation industry is going through a difficult period. Despite this, there are many factors within the airline's control which must be addressed. Like all businesses, it is the task of Aer Lingus to ensure that they have a realistic strategy for dealing with the commercial environment in which they operate. This strategy must be constantly evaluated by reference to its primary objective which, in the case of Aer Lingus, is the return of the air transportation division to profitability at the earliest opportunity.

It is the responsibility of the board of Aer Lingus to determine and have implemented the appropriate commercial, financial and operational policies to ensure the ongoing viability of the company. I expect the board to spare no effort to fulfil their obligations in this regard.

Because of the urgent need for significant improvement, as first step towards bringing the air transport business out of losses to a position of profitability, the company have put in place a plan to carry out a fundamental and wideranging appraisal of their air transport business. Based on this appraisal, the board of Aer Lingus will be taking decisions on the appropriate measures necessary to achieve the aforementioned objective. Such decisions are a matter, in the first instance, for the board.

I am, however, keeping in close touch with the situation on behalf of the shareholder. Both I and my Department have had discussions with the company on the situation on an almost weekly basis. I will be meeting with the board tomorrow morning at their regular monthly meeting. I must stress that as the board have not yet made any submission to me on a package of remedial measures I am not prepared to comment in advance of receiving and considering such a submission. I am certainly not prepared to comment on rumours or media speculation.

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