Written Answers. - Bid for Shareholding.

Kathleen Lynch


30 Kathleen Lynch asked the Minister for Transport, Energy and Communications if he will confirm reports that Aer Rianta has teamed up with a British partner to make a formal bid for Birmingham Airport; if he will outline the thinking behind the decision; and if he will make a statement on the matter. [8947/95]

I confirm that I have given approval for Aer Rianta to make a bid, in conjunction with a leading London financial institution, for a shareholding in Birmingham Airport.

The bid builds on Aer Rianta's expertise in its core business of airport management and, as such, has a low level of risk attached. The bulk of the company's investment will be financed from past profits generated by Aer Rianta International, the subsidiary of Aer Rianta which manages the overseas business activities.

The bid has no implications for the Exchequer. Aer Rianta International's exposure will be limited to the extent of their shareholding.
Duty free revenues from EU traffic are under threat and could end in 1999. Aer Rianta's corporate strategy includes a plan to develop alternative sources of profit to replace this significant source of revenue. International activities will be the main source of these profits, should duty free sales within the European Union be abolished. The proposed investment in Birmingham Airport by Aer Rianta International fits in with this strategy.
A further need for expansion of Aer Rianta's overseas business is the fact that aircraft landing charges and passenger load fees at Irish airports have been frozen since 1987 in order to keep access transport costs into and out of Ireland to the absolute minimum. This highlights the need for generation of new revenues overseas to support development of the Irish airports.
It is my policy that the State sponsored bodies, for which I am responsible, should source external strategic partners where appropriate, to allow the full potential of their business activities to be realised and reduce their own exposure. I was particularly pleased that Aer Rianta succeeded in finding a suitable business partner for the bid for Birmingham Airport.