Seamus Brennan
Question:9 Mr. S. Brennan asked the Minister for Transport, Energy and Communications his policy in regard to the financial situation at Aer Lingus and TEAM Aer Lingus. [3776/95]
Ceisteanna—Questions. Oral Answers. - Aer Lingus's Financial Position.
Seamus Brennan
Question:183 Mr. S. Brennan asked the Minister for Transport, Energy and Communications when he proposes to advance further funds to Aer Lingus under their agreement. [3786/95]
Seamus Brennan
Question:184 Mr. S. Brennan asked the Minister for Transport, Energy and Communications the current situation at TEAM Aer Lingus. [3787/95]
You will be aware, a Cheann Comhairle, that this is my first time to take questions as Minister. I note from the range and quality of questions put down by the Opposition that I will get a very warm reception.
I propose to take Questions Nos. 9, 183 and 184 together.
Before I was appointed to my present portfolio I was under the distinct impression, along I suspect with most other Deputies in the House, that the restructuring programme at Aer Lingus was being implemented successfully. I am now in a position to give a more measured assessment of the airline and the group in general.
Substantial progress has been made at the airline under the restructuring programme and the airline core business has benefited from the general uplift in world aviation. Regardless of the world aviation backdrop the airline is continuing to make the sort of progress envisaged in the restructuring programme.
I am, however, seriously concerned about TEAM. While it may have appeared to the House and, indeed, to the wider public that similar progress was being made at TEAM my own analysis from information provided by Aer Lingus is that there are still major problems to be overcome if TEAM's operating and financial results are to ensure the long term viability of the company.
More immediately my concern with TEAM revolves around the final £50 million tranche due for payment in 1995 under a decision on State aid provisions made by the European Commission on 21 December 1993 whereby a total of £175 million could be injected over three years into Aer Lingus by way of equity, subject to detailed conditions. Before we have permission to make the final investment of £50 million the Commission wants a detailed report on progress under the restructuring programme, including the performance of TEAM. I have directed the executive chairman of Aer Lingus to submit to me by next week updated proposals to address the problems at TEAM.
I congratulate the Minister on his appointment and wish him a happy and fruitful, but not necessarily long term of office. I am concerned about his comments in regard to TEAM Aer Lingus. Is he aware that accounts for Aer Lingus have not been published since March 1993 and that a decision has been taken by the company to postpone their publication until some time in 1995? This means that instead of 12 month accounts the company will publish 20 month accounts. Does the Minister approve of this decision and has it anything to do with the situation in TEAM Aer Lingus about which he said he is genuinely concerned?
I am aware that the accounts for the period ended 31 December 1994 have not yet been published.I brought this to the attention of the executive chairman of the board and asked for the accounts to be prepared and forwarded to me at the earliest possible date. A company of this size, with its resources and personnel, should have its accounts prepared in good time.
I do not understand the Minister's reply. The last accounts were published in March 1993 and, therefore, the next accounts should have been published in March 1994. I understand the board decided not to produce accounts in March 1994 but instead decided to publish them in December 1994; in other words, to add an extra nine months to the accounting period. The accounts which should have been published in December 1994 are still not available. It is not a matter of delay; rather there seems to have been a deliberate decision by Aer Lingus not to publish annual accounts. Has this anything to do with the time at which money is paid in and the apparent anxiety to incorporate two summer periods into one set of accounts? Will the Minister inquire into these matters and report to the House?
I am concerned about this matter and raised it with the executive chairman. The board of Aer Lingus has advised me that the change in the period of annual accounting to the calendar year was made to bring the company into line with the practice in most airlines and other State bodies. That is the reason I have been given by the executive chairman of the board——
Does the Minister accept it?
No, and I have asked that the accounts be published at an early date and that the question raised by the Deputy be addressed by the executive chairman and the board.
Question No. 10.
May I ask——
The House should be aware of the time factor involved in dealing with priority questions.There are 20 minutes only for five questions and we cannot dwell over long on any one question.
It has been some months since we had an opportunity to discuss Aer Lingus.
A brief question, please.
Will the Minister publish the document after he receives it from Aer Lingus next week to facilitate a discussion on it? Are jobs in TEAM Aer Lingus at risk in the immediate future?
I am willing to take any questions put to me about TEAM and Aer Lingus in general. Under the restructuring programme, TEAM was projected to return pre-tax profits by year end 31 March 1996. While the Labour Court recommendations of last year have been accepted, leading to increased flexibility in work practices, I am informed by Aer Lingus that the improvements achieved are insufficient, particularly in the light of plummeting world market prices and rates. The hourly aircraft maintenance rates projected when the restructuring programme was formulated did not materialise.Even as late as the latter half of 1994 TEAM was predicting rates which were almost 50 per cent higher than some of the rates now being quoted on the world-wide market.
The restructuring programme provided for 250 redundancies in TEAM and I am informed that these have been achieved. However, the real crux of the problem is that the market rates have deteriorated, making it more difficult for TEAM to secure profitable work. In the light of the foregoing and the information available to me, it is clear that the projections in the restructuring programme are no longer achievable in the international market in which TEAM operates. In the circumstances, it is now apparent that the means of achieving the objectives for TEAM set out in the restructuring programme must be reassessed by the management and board of the company. I have asked the executive chairman to carry out a reappraisal and to report back to me at the earliest possible date. I expect to receive the report in the Department within the next seven-ten days. This is an urgent matter.
Will the Minister publish the report?
I will not publish the details of the report which will obviously contain sensitive information. I will accept the report and have it assessed. I want to make it clear that the resolution of the problems at TEAM is a matter for the executive chairman, management and board of the company. I am not happy that the projections are in line with the previous projections and I have asked the company to carry out a reappraisal and to report back to me at the earliest possible date so that I can assess whether the progress made is adequate.