Dáil Éireann debate -
Thursday, 23 Mar 1995

Vol. 451 No. 1

TEAM Aer Lingus.

Mr. Sargent

I thank the Minister for coming to take the question. I am not sure what signs I am to read into the fact that the Minister for Defence and the Marine has to deal with TEAM Aer Lingus. One can only speculate that the Government has plans that sea planes be maintained there or that it be taken over by the Air Corps. I await with interest the Minister's reply.

TEAM Aer Lingus is still very much a burning issue in north County Dublin and in the greater Dublin area where many people depend on the company for employment. The wider economy is affected by whatever happens in TEAM. The former Government made a commitment to TEAM on the understanding that the first tranche of £25 million equity would be evenly divided, £12.5 million was to be paid for early retirement and the other half was to be used for upgrading and investment in the infrastructure of the company to ensure it was competitive and at the forefront of the world of aircraft maintenance.

It is sad to report that gross mismanagement has been allowed to whittle away a £25 million equity. Of that amount £18.9 million has been expended on early retirement for the initial 250 people, leaving 1,700 employed. Those who remain say the money is not being invested in upgrading equipment as promised.

Is the Government taking note of the gross mismanagement in the company and, if so, is it taking steps to alleviate the crisis? I hope that the Minister for Transport, Energy and Communications, Deputy Lowry, is not present is not another indication of negligence.

The reference by the Minister to a dispute in the company and to a debt of £96 million is inflammatory language and does not reflect the truth. The £96 million is not an operating debt. One would expect the Minister to point out, when referring to it, that he is taking into account that a significant amount, almost £8 million, is a bad debt from an African airline; that £28 million has already been spent on redundancy payments; that £17 million is stock written off as a result of spares made available by Aer Lingus, which have since been devalued greatly; that £13 million is owed in interest payments to the banks; that £20 million has been borrowed from First National for the construction of a hangar which was intended to be paid for through equity and that a debt of £10 million has been incurred through a section 84 loan from the Bank of Ireland.

The morale of highly skilled people, whose credentials in the aircraft maintenance world are unquestioned, is severely damaged by reference to exorbitant debt and problems in the company. I hope the Government, as the chief shareholder, will take its responsibilities seriously and will ensure it is well informed by speaking to the management and the people who keep the company in operation; those skilled in aircraft maintenance, who are suffering as a result of the mismanagement.

I urge the Minister to remind the Government of its responsibility not to allow TEAM Aer Lingus slide further through lack of attention.

In many cases, the management does not have the experience in aircraft maintenance one would expect. Experienced people are not being offered early retirement but are being asked to stay on to keep the company in operation but when the time is right from management's point of view they are being let go without redundancy payment. That is the crisis and it is a terrible indictment on a Government that calls itself responsible.

Mr. Coveney

I apologise for the unavoidable absence of the Minister for Transport, Energy and Communications, Deputy Lowry.

The subject of TEAM Aer Lingus has been well aired in recent weeks. The Minister for Transport, Energy and Communications answered parliamentary questions on the matter on 21 February 1995 and it was also the subject of an Adjournment Debate on 28 February last.

The Minister has, accordingly, dealt with this issue in some detail in the recent past and has made his position clear. He has also kept this House and the public well aware of his actions. For the benefit of the House, I will recount the substance of his statements in the matter.

The Minister has informed the House that prior to his appointment he was under the impression that the restructuring programme at Aer Lingus was being implemented successfully. Having assessed the position following his appointment, he was able to give the House a measured assessment of the progress made by the Aer Lingus Group in general. In fact, he took the first available opportunity to do so.

He informed the House that the airline was continuing to make the sort of progress envisaged in the restructuring programme. At the same time, he advised the House that he was seriously concerned about TEAM Aer Lingus and that there were still major problems to be overcome if TEAM's operating results were to ensure the long term viability of the company.

On taking up office, one of the first directions the Minister gave was for a comprehensive update on the situation in the Aer Lingus Group. It was only when the 1995 budget for TEAM was submitted to the Department and the figures brought to his attention that he became aware of the extent of the problems at TEAM. Having discovered the seriousness of the problems facing the company, the Minister decided to take immediate and decisive action. It was quite clear to him that the targets set for TEAM Aer Lingus under the restructuring programme were not being achieved, with all the implications this could have for the European Commission's clearance of the final tranche of equity for the airline.

The Minister called in the Executive Chairman of Aer Lingus and asked him to submit updated proposals to address the problems at TEAM Aer Lingus. Following receipt of the Executive Chairman's report, the Minister issued a press statement on 7 March indicating that he had written to the Executive Chairman of Aer Lingus requesting him to submit a five year business plan which will provide a basis for developing an assured commercially viable TEAM Aer Lingus.

In his press statement, the Minister acknowledged that significant progress had been made in introducing improved work practices and flexibility but stated that further substantial progress was required to establish competitiveness. He is awaiting the submission of this five year business plan which is at present being prepared by Aer Lingus. When received, it will be examined thoroughly and carefully, in consultation with the company if necessary. As the Minister indicated in the past, he will not rush this examinationn or allow himself to be rushed as any such mode of action would be irresponsible.

For reasons of commercial confidentiality, the Minister will not be publishing details of any reports to him on TEAM Aer Lingus. Clearly, it would not be in the interests of the company to do so. As he has already explained, it is the responsibility of the board and management of TEAM to brief the company's employees and, in particular, to take the necessary steps to inform staff of the nature of the difficulties which face the company. The Minister will not interfere in management's responsibility in that regard.

The Deputy referred to the £25 million equity injection in TEAM Aer Lingus by Aer Lingus Group plc and has criticised the management of the company in strong terms. The Minister does not propose to get involved in discussing issues which are essentially the responsibility of the management. Recrimination about the past will not resolve TEAM's problems. The task of the board and management is to prepare a five year business plan which will assure commercial viability for TEAM Aer Lingus.

As the Minister stated in the House on 28 February last, the resolution of the difficulties at TEAM Aer Lingus is a matter for the board and management of the company. The problems must be addressed, not alone for the sake of TEAM, but for the sake of the airline.

The Dáil adjourned at 5.25 p.m. until 2.30 p.m. on Tuesday, 28 March 1995.