I propose to take Questions Nos. 4, 10, 25, 43, 47, 51 and 52 together.
I have already dealt comprehensively with the matters raised in these questions both in the course of the Adjournment Debate which took place on Wednesday of last week and during my contribution on Tuesday of this week during Private Members' Time which resulted in this House confirming its support for the Government's air transport policy. I will, however, reiterate my position.
I have been deeply concerned for some time at the continuing deterioration in the financial performace of Aer Lingus, particularly in its core air transport business. I have repeatedly made this concern known to the chairman and management of the airline. I have consistently emphasised that it is the responsibility of the board of Aer Lingus to ensure that the commercial and operational strategies pursued are sufficient to ensure the airline's financial viability.
The board, as a first step towards bringing the air transport business out of losses to a position of profitability, are currently carrying out a fundamental and wide-ranging appraisal of their transport business.
I met with the board of Aer Lingus on this day week. I made clear my deep concern at the fact that the air transport division of Aer Lingus had lost over £80 million in the past two years and is facing further major losses again this year. This is despite a cost reduction programme which my prodecessor was assured would get the airline into a breakeven situation. This programme was introduced almost two years ago to counteract the effects of the economic recession and the Gulf War. It was still being negotiated into this year.
I have been criticised for not giving specific proposals to the board of Aer Lingus to solve the airline's problems. It is quite correct to say that I have not done so. That is the responsibility of the board. When the board has produced specific proposals then I, as the shareholder's representative, will carefully examine them.
The Government made it very clear when Aer Lingus were looking for approval to acquire aircraft that the acquisitions had to be funded without recourse to Government equity or State guarantees of borrowing. This condition was accepted by the board of Aer Lingus.
There is no doubt that if Aer Lingus's European fleet had been replaced in a more gradual manner over a longer period of years, the current problems might not be so serious. Aer Lingus's current problems highlight the need for the company to strengthen its corporate planning procedures, particularly in a cyclical business such as commercial air transport. I have urged them to do so.
On the question of funding, the Minister for Finance has already made clear on several occasions that the position of the Exchequer finances is such that the Government are currently not in a position to invest additional equity in semi-State companies, including Aer Lingus. In any event, such investment would not make sense unless the airline can produce a credible plan showing that its business will be operated profitably so as to produce a return on any investment. As I have already said, the days of free equity are gone. It is precluded in any event by EC competition rules.
Both I and my predecessors have over the years encouraged. Aer Lingus to develop linkages with foreign airlines with a view to improving access to international markets as well as achieving additional earnings in areas such as maintenance, overhaul and training. These objectives can be achieved in a variety of ways, such as minority cross investments, joint venture agreements and service contracts. No proposals for such minority cross-investments or joint venture agreements have been received by me. I have always made it clear that, if such a proposal were to emerge, I would give it every support.