Written Answers. - Aer Lingus Group.

Ivor Callely

Question:

43 Mr. Callely asked the Minister for Transport, Energy and Communications the current financial position of the Aer Lingus Group; the likely developments of the group over the next two years; and if he will make a statement on the matter. [3409/97]

The annual accounts of the Aer Lingus Group for the year ended 31 December 1996 are in preparation and will be published in the near future. Prior to publication they will, as is customary, be presented to Government and subsequently laid before both Houses of the Oireachtas. It would, therefore, be inappropriate for me to discuss specifics at this stage, but I am aware that the Aer Lingus Group performed satisfactorily in 1996.

Deputies will be aware that not too long ago Aer Lingus was in the grip of a financial crisis which, if it has not been satisfactorily addressed, would have led to the demise of the airline. A restructuring programme covering the periods 1993-5, supported by Government equity of £175 million, was implemented which was designed to save the company in the short term and alter its commercial outlook in the longer term.
Successful implementation of the restructuring programme required radical change in Aer Lingus. Substantial cost savings were achieved and changes in work practices and employment were implemented. These measures, with the disposal of non-core assets, refocused the efforts of Aer Lingus on the core business of air transport.
The achievement of the objectives of the restructuring programme resulted in the Aer Lingus Group returning an operating profit of nearly £50 million, and a net profit in excess of £15 million, in the year ended 31 December 1995. The coming years will be a testing period for the company. Deputies will be aware that aviation is a cyclical industry which is at present enjoying a period of global profitability. Aer Lingus, like all other airlines, must use the opportunity afforded by the current upturn to position itself to withstand the effects of the inevitable market decline. To achieve that, the 1993-5 restructuring programme must not be seen as a one-off exercise.
State aid and the protection of flag carriers are things of the past. The Aer Lingus of the future must operate in a resolutely commercial manner, concentrating on its core business — air transport. In a liberalised airline environment, the secret of success lies in a commitment to service and value for money, allied to a constant focus on reducing costs.