Dáil Éireann debate -
Wednesday, 24 Jun 1998

Vol. 493 No. 1

TEAM Aer Lingus: Statements.

Minister for Public Enterprise (Mrs. O'Rourke)

I am pleased to have an opportunity to discuss this issue again. We are making proper use of Dáil time by airing issues of the day in the House. If, having met FLS this evening, we believe it is necessary to report to the Dáil tomorrow, I will be glad to do so. The Whips should note that I will be attending a debate in the Seanad at 12.30 p.m.

A second opportunity is being afforded to those members of the TEAM workforce who declined to accept the proposed FLS deal a month ago. They are being asked to respond by 1 July 1998.

The TEAM issue has occupied much of my time in recent months; it is an issue that needs to be addressed. I have met the trade unions formally and informally on a number of occasions and the executive chairman and senior management of Aer Lingus. I have also met numerous individual members of the TEAM workforce, particularly in recent weeks, mainly in my clinics. Many members of the workforce took the trouble to come to Athlone to talk to me, not in a belligerent sense but as a way of seeking assurance on various matters, which I was not always able to give them. However, I was pleased to meet them.

I have repeated the same message to the unions that I stated in the House on a number of occasions. Our overriding concern at all times has been to secure the maximum level of employment in TEAM into the future. Any strategic developments on the ownership of TEAM can take place only with the concurrence of the workforce. That is what I said in mid-December. The offer of £54.6 million in consideration of the proposed transfer of ownership to FLS cannot be improved on. My personal understanding of the letters issued in 1990 to each Aer Lingus staff member transferring to TEAM is that they are letters of guarantee of employment in Aer Lingus but, as I said previously in the Dáil, the concept of a job for life is not valid in today's commercial world, where sustainable work must exist if a job is to exist. My personal belief is that TEAM, as a subsidiary of Aer Lingus, does not have a viable future. The best prospects for a secure viable future for TEAM lie with the proposals for the acquisition of the company by FLS Aerospace.

I have stressed to the management that it must redouble its efforts to address the genuine concerns that still exist among the workforce. From listening to the workers individually, I know pensions remain a major issue. Despite assurances that the pension arrangements with FLS would at least mirror those already available in Aer Lingus, and could be improved on, many workers still need further reassurances in this area. Yesterday I asked representatives of Aer Lingus management to explore carefully with FLS whether anything can be done in this area and to bring all necessary legal and pension expertise to bear on this matter. I put it to them that perhaps the workers could retain the Aer Lingus pension scheme when they become members of FLS, but I do not know if that will be the outcome. They are investigating the matter.

TEAM workers also have concerns about the security of employment with FLS. I have already given my view on that matter, but I accept legitimate concerns still exist. I will explore that question further with Stephen Harpoth, chairman of FLS Aerospace, when I meet him later this afternoon to determine the certainty of the job offers. My understanding of the FLS position is that it has suspended the due diligence process in light of the response of the TEAM workforce last month, but that it remains keen to complete the TEAM deal and convinced that TEAM, in FLS ownership, would be a formidable and successful player in the aircraft maintenance business. I would also expect, however, that FLS, which is anxious to expand in that business, would explore other options, but I have no knowledge of any specific options it may be considering.

My attention and energies are focused exclusively on trying to get the right outcome for TEAM in this situation. I am concentrating on the efforts of Aer Lingus management this week and next to address all the questions, doubts and worries of the TEAM workforce as best it can. If, notwithstanding the efforts of all involved in this long and difficult process, the deal falls through, the board of Aer Lingus will have to consider the position very carefully and in a calm manner and then advise me on how it sees the future for TEAM and for the Aer Lingus group as a whole. I asked it to consider that matter and get back to me if necessary, but I hope that will not be necessary. I do not believe it would be helpful for me to speculate on that scenario today. I gave my agreement to the proposal from the chairman of Aer Lingus last autumn that Aer Lingus should seek a buyer for TEAM. He did not think at that time the process would prove so complex and lengthy. Having said that, it is a very major step that is being proposed and we must give it all the time and attention it requires.

I have stated clearly that in my view the best outcome for TEAM and its workforce, and not just for the Aer Lingus group, is the acceptance of the FLS deal. We will continue to work up to the 1 July deadline to seek to bring the workers along on this deal.

On 16 December I stated publicly in the House to the workers and to the management that the future of the jobs rested in the hands of the workers. I have no better words to describe the position today. The jobs with FLS are a certainty. Uncertainty lies ahead if the workers do not accept the offer. They have a clear choice between job certainty in FLS, which has good relations with its employees, which has operated all the European directives and, in a commercial sense, has a fine future, or job uncertainty if they turn down the offer.

As I stated previously, a job is no longer for life. I agree the letters written in 1990 stated that the jobs would be forever. They sounded like a fairytale then, but they sound more like one now. A job must be commercially viable. Semi-State companies can no longer rely on State aids to prop them up. That is not allowed and, even if it were, it should not happen. Transference from a part of a company that is viable and profitable to a part that is not viable or profitable is no longer acceptable. The workers had high hopes in 1990 that aircraft maintenance was a job for the future. They had heady expectations. This did not turn out to be the case because there was a downturn in aircraft maintenance and in the aviation industry generally. They have not got any of the wage increases in the period 1994-98 which everybody else has enjoyed. Giving parity now would sink the ship overnight. It would mean a cost of £17 million while the company is operating on an even keel despite an injection of loans and equity of £100 million since 1990. There is now a chance of decent, certain jobs being provided by a decent firm which will make aircraft maintenance one of its strong core activities.

I met a considerable number of people individually as distinct from the formal union leadership. Employees have taken the trouble to come to Athlone, a distance of 75 miles, each Saturday. I have talked with them and told them I want them to have jobs with a certain future. I have nothing to offer if this deal does not go through.

If necessary I will be glad to return to this issue in the House again tomorrow or next week. The Houses of the Oireachtas should, in general, concern themselves with matters of the day as well as legislation.

Mr. Yates

I wish to share time with Deputy Owen in whose constituency the company is located. Of the 20 semi-State companies, the most serious and potential crisis arises with TEAM Aer Lingus. For some months I and my party have been seized by the gravity of the problem. The Government's handling of the sale of TEAM, including the handling by the Minister and the Taoiseach, has been totally lacking in clear-cut leadership. For almost one year the management of Aer Lingus has stated that the best and only future for TEAM was as part of a consolidated, global air maintenance conglomerate. There is huge change taking place, not only in airlines but also in air maintenance. The business is shaping into a handful of major companies connected with airlines which will tie up all contracts. If TEAM Aer Lingus continues on a stand alone basis to be wholly owned by Aer Lingus, a small European air carrier, it will not get the work or have the scale, scope and capacity to be a major player. We are experiencing a very buoyant growth phase in aviation, but TEAM is extremely vulnerable in the event of another downturn. It will lack the necessary network to ensure continuity of maintenance contracts.

I disagree with what the Minister said in her speech. She has failed over recent months to act as a persuader for a "yes" vote and to say that if she had a vote she would vote "yes", something I said at an early stage. The FLS option is not perfect for the workforce but remains the most viable opportunity to maximise employment in Dublin Airport for both TEAM and Aer Lingus employees. The worst scenario is for FLS to walk away without concluding a deal and with no prospective conglomerate for TEAM to join.

Aer Lingus cannot endure a repeat performance of the past six years in financial terms. I am not attacking anybody when I point out that TEAM lost £100 million over the past six years. This cannot be repeated as the European Commission will not allow a Government inject equity to make up for losses should they desire to do so. It is clear that the management of Aer Lingus does not view the maintenance sector as crucial to its future core business.

Moreover, the issue must be seen in a national context. The previous and current Governments asked the board of Aer Lingus to examine the question of a strategic alliance for the airline. Therefore, a resolution of the TEAM ownership issue is a prerequisite to the future of a potential strategic alliance which, be it a minority or majority deal, would mean a new network for trans-Atlantic slots which Aer Lingus does not currently have; the potential for huge interlining of ticketing and marketing of sales and the promotion of Dublin Airport as a hub in many different ways in the context of Atlantic and European business. An alliance offers Aer Lingus a wonderful new future.

It behoves us all to be constructive and I have no wish to hector anybody. I have received much criticism from TEAM employees who do not see things as I do, but the hard word is in their best interests. We should be straight in what we say rather than equivocal. I met FLS, including Mr. Harpoth to whom the Minister referred, some months ago. I put the concerns of the workers to the company and the fears among them regarding FLS in the context of its size and its limited duration in the business. I asked FLS about an employee share holding option. I understand FLS is putting up £25 million while the workers have already been offered £54 million. Any further cash will have to come from Aer Lingus, not FLS. FLS said that, while it could not offer shares in FLS Aerospace, it could offer shares in the parent company, something there was a precedent for in its other subsidiaries. I ask the Minister to break the impasse by asking that employee shares in the parent company be put on the table.

Mrs. Owen

I express my concern at the situation and pay tribute to our Whip, Deputy Barrett, who got the Taoiseach to agree to bring the Minister to the House. The Minister said she is willing to come to the House any time to discuss the matter, but when we asked for this short debate as she did not offer to arrange it. We asked for the debate to find out exactly what is happening.

Like Deputy Yates, I believe the deal to purchase TEAM is one we must all endorse and accept. I would not have said this a number of years ago, but I realise it is necessary for a company to take over TEAM, a company which is viable in its own right, to ensure the 1,540 people working with TEAM have some job security and that the company itself is given security.

The Minister spoke of dealing with the issue calmly. I would like to see a little less calmness and a little more strength of resolve. The Minister must act as a persuader in getting the staff to agree to the deal. I represent the constituency of Dublin North and I cannot sufficiently stress this. I do not believe the Minister has played a sufficiently significant role since 26 May when she came to the House and explained she would ask Aer Lingus to explain what was going to happen in the future and that she would meet the unions. Why has the Minister, with her persuasive powers, not convinced the unions that this is a sufficiently good deal for them?

I raised the issue of pensions with the Minister. There are a number of staff in TEAM in their late 40s or 50s who are concerned that shortly after FLS takes over, they may retire. The business is constantly moving forward in the context of technology, and young people's minds are perhaps more agile in coping with some of these changes. I do not believe those with pension concerns have had their concerns satisfactorily addressed. I am very disappointed by this as these form a coterie of people who voted against the deal.

There are 1,540 people working in TEAM, but there are thousands of others dependent on those staff for their livelihoods and income. I raised the issue of spouses and children and the many businesses in north Dublin which depend on the salaries from TEAM.

If something happens the company Aer Lingus will experience a seismic shock. Aer Lingus cannot deal with its future plans until the TEAM issue has been resolved. I join my party colleague in asking the Minister, even at this late stage, for less of the calmness she spoke about and to take more robust action as a persuader to ensure the package is accepted. I am deeply concerned by an article in today's edition of The Irish Times which says a FLS spokesperson would only say yesterday that the deadline for acceptance of the deal is coming very soon and that “there does not seem to have been any real progress made”. The whole tenor of the article by Barry O'Keeffe is that FLS is looking elsewhere. I hope it will not do so before this deal is finalised because many people are depending on it. I urge the Minister to spend the rest of the day taking whatever action is necessary to get this vote accepted.

Mr. S. Ryan

As a public representative for Dublin North, I welcome the opportunity to contribute to this debate. Having spoken to a number of TEAM employees in recent months, the Minister's approach to this issue has been contradictory and unhelpful. She remained silent when talks were ongoing between TEAM management and the unions and when reports appeared in the media in regard to a proposed deal with FLS, no response was forthcoming from her. The Minister subsequently stated that the express concerns of the workforce had to be addressed. In this House, she stated that letters of guarantee had to be honoured and conveyed the clear impression the workforce had a veto in regard to any proposed deal. Speaking on the radio last Sunday, she again intimated the workers had a veto but at the same time said the FLS deal was the best one for the future of TEAM and that workers should accept it. As far as the workforce is concerned, the Minister's contributions on this issue have been very contradictory.

TEAM is vital to the local economy of north Dublin and thousands of families depend on it for their livelihood. Throughout this debate, TEAM and its workers have been characterised as a millstone around the neck of the national airline. In some quarters, it has been said that TEAM workers are holding the Government to ransom and holding back the development of the national airline.

We should cast our minds back to the time TEAM was established. Aer Lingus workers, notwithstanding their professional opinion of the long-term viability of TEAM, were pressurised into voting for it and received letters of guarantee from the then Minister, Deputy Brennan. In that scenario, it is nonsense to suggest TEAM was holding back the development of Aer Lingus as nothing could be further from the truth.

I recall voting against my own Government in 1994 when the then Minister, Deputy Cowen, stated the only solution to the issue lay in the Cahill plan. I did not agree with that and stated that a solution lay in an agreed strategy between the workers, management and third parties to come up with a modified plan. A modified Cahill plan was subsequently agreed by the workers.

We are all aware of the facts in this case. There was a lack of proper infrastructure and finance invested in TEAM throughout the years and it was unable to keep pace with developments. Moreover, it was badly managed. I met management on a number of occasions and found it was not concerned with developing an ethos of productivity within the company. TEAM workers are now ahead of schedule in regard to the modified Cahill plan, a fact I would like the Minister to confirm.

The problem of lack of trust and confidence within the company must be addressed. If one manager said today was Wednesday, another would contradict him and say it was Saturday. Promises have been made throughout the years which have not been honoured.

Mr. Wright

The Deputy is the only one who made such promises.

Mr. S. Ryan

I reject that insinuation. Fianna Fáil backbenchers are attempting to turn this issue into a real political football. We should be talking about the concerns of TEAM workers and the leadership or advice they are receiving from this Government.

The history of this situation dates back to the time when the Minister's colleague issued the infamous letters of comfort to TEAM workers. The courts have acknowledged the legal nature of the letters of guarantee. The formation of TEAM as a separate company was dependent on a guarantee being issued to workers. Without those guarantees, they would not have accepted the deal in the first instance. Workers are now being told that if they do not accept this deal, there is no future for them. The Government and the Minister have sent out contradictory signals on this issue in recent months. How can we have any trust in the industrial relations process when negotiations take place, a deal is put on the table which is put to a vote and rejected, yet the workforce is pressurised to accept it? That outdated attitude will not help to resolve this problem.

Mr. M. Brady

What solution does the Deputy suggest?

Mr. S. Ryan

Promises were made in the past by Fianna Fáil in relation to the future of TEAM.

Mr. M. Brady

The Deputy made promises in the hangar to secure votes and made fools of people.

Mr. S. Ryan

The workforce must now make a decision on the direction it will take. I made a statement prior to the recent by-election to which the Minister referred. In it, I stated clearly that I fully accepted the validity of the letters of guarantee issued by the then Minister, Deputy Brennan. I said I was adamant that the Government and TEAM management should accept the validity of these letters and honour all commitments contained therein. The proposal to sell off more than 49 per cent of TEAM Aer Lingus is in direct contravention of the previous Government's commitments recently restated by the Minister, Deputy O'Rourke.

The Minister has given particular commitments. A strategic partner is required for Aer Lingus and my preferred option would be for a strategic partner to be found for TEAM Aer Lingus with a minority shareholding in the company. That option should be discussed further at this stage with FLS.

Mrs. O'Rourke

It does not want that.

Mr. Rabbitte

I am sceptical about the value of this debate unless we acknowledge we are staring an entirely unnecessary industrial disaster in the face if the present impasse cannot be effectively tackled. Given the lamentable performance of TEAM management to date, only a deliberate and considered intervention by the Minister for Public Enterprise can avoid the entirely unnecessary collapse of a valuable high skills engineering business.

To date the Minister has equivocated in the hope that somehow the dispute will resolve itself. Workers who have come to my clinics are taking different meanings and signals from her public utterances. This is a time for firm resolve and calculated intervention by the Government. Speaking out of both sides of the mouth is only misleading workers as to the solutions available. It would be wrong of this House to engage in similar equivocation. We have reached the juncture where FLS appears to be the only solution in prospect. It must be accepted that in the medium to long term TEAM can only survive in the third party maintenance industry if a suitable strategic investor is found.

The trawl to date has produced FLS whose terms remain unacceptable to a majority of the workers. I am alarmed to hear that some workers are being led to believe that once FLS is out of the way all they have to do is to put together an ESOP with Aer Lingus and everything will be rosy in the future. That is not possible. The prospective internal disputes that will inevitably flow from a situation where FLS pulls out will create the most serious problems for the airline.

In the face of such a major industrial crisis, the Government cannot go on pretending it is a mere onlooker waiting to know the outcome of discussions between management and the unions. The letters of comfort confer certain rights on 1,160 of the 1,560 workers. They are entitled to a fair price for trading those letters and to have their pension concerns addressed in so far as that is possible. There is an obligation on the Government to intervene directly to mediate a meeting of minds on the outstanding issues and within a framework of what is possible in the changed commercial circumstances. An immensely promising enterprise with 1,560 employees cannot be allowed to close. The Minister's detached hands-off approach betokens disaster. The Minister said that if, notwithstanding the efforts of all involved in this long and difficult process, the FLS deal falls through, then the board of Aer Lingus will have to consider the position very carefully and calmly and then advise her as to the future for the Aer Lingus Group.

Mrs. O'Rourke

Correct.

Mr. Rabbitte

We have long since passed that stage. I heard the Minister say the FLS way is the way of a certain job and the consequence of FLS pulling out is uncertainty. It is not uncertainty but disaster. There is no point in Members of this House misleading anybody outside it. If we are to have any pre-emptive effect at this stage, as distinct from discussing the situation here after the horse has bolted and trying to pick up the pieces then, we must discuss this matter now. We must honestly tell people the scale of the disaster that is facing us. It is not only a calamity for north Dublin, but for many people in my constituency who have jobs in the company and who, for whatever reason, are reading different things and taking different signals from what is being said to them.

When the Minister was in Opposition she tortured my life on the Packard closure. That closure was an inevitable consequence of a down market industry that was going to fold, but there is a future for this company. The Minister needs to get in there and to stop waiting for telephone calls from Aer Lingus. It is clear at this stage that Aer Lingus is not capable of solving the problem. As Deputy Ryan said the relations between the trade unions, the workers and TEAM management are disastrous. There is no trust and no progress is being made. The workers do not accept we have reached the juncture we are at. I appeal to the Minister even at this late stage not to equivocate, to get off the fence and go in there and try to get a workable majority in terms of the FLS arrangement going ahead and in meeting the outstanding concerns of the workers.

Mr. Sargent

This debate is valuable in setting out the grave concerns in the north city and, as Deputy Rabbitte said, in the greater Dublin area about the future of TEAM. This is in stark contrast to the fanfare of hype that surrounded its opening. The reliance on TEAM that has been built up in that greater area will be severely affected if TEAM is not transformed in the way we have to contemplate it should to be. I cannot help but think that if the Minister, Deputy O'Rourke, had been elected in Dublin North there would be a much more gloves off hands-on type approach to this matter and we would see her engaging much more directly. Nonetheless, Fianna Fáil, which was party to the setting up of TEAM, has a responsibility at this juncture. That legacy may be disowned by some in Fianna Fáil, given the central part played by Charles J. Haughey in the establishment of TEAM. A question still remains about the hold Boeing seems to have over TEAM in light of the general market which would favour a more European style development of aircraft maintenance. We should deal with that matter after we resolve this one.

FLS believes there is a profitable, efficient and highly skilled workforce and business at Dublin Airport and that is also my belief. However, it is the Government, not FLS, which must decide how to resolve the costs question which must be dealt with. The choice facing the Government is twofold. Either it deals with the costs that have grown as part of the TEAM operation, which includes the letters of comfort, work practices and staff situation, or it sells those costs to FLS at a consequential loss. The first option is the one the Government has a responsibility to deal with and from which it cannot walk away. Those costs have been built up under Fianna Fáil tutelage and it, as the main Government party, must deal with them. Responsibility for dealing with them does not lie with FLS and Aer Lingus, but with the Governments given its initial role in the setting up of TEAM. The courts have proved that the letters of comfort are worth the paper they are written on and more. It is also true that the TEAM commercial enterprise should have fewer staff and new work practices if the costing structures are to be realistic.

In 1989, the unions called for a realistic pricing structure. However, they did not receive the response they knew would be required for TEAM to be the long-term sustainable business it could and deserved to be. The unions have been let down. They saw the writing on the wall and were realistic enough to ask hard questions but they were not given the necessary answers. Now, another of Charles Haughey's chickens has come home to roost and the Government must face and deal with it. When one contrasts the profits in Aer Lingus with the failed promises to the staff of TEAM one sees that the Government has a grave responsibility to put right that injustice.

Lufthansa, Swissair and other airlines are increasing investment in aircraft maintenance and aircraft maintenance costs for Aer Lingus have been reduced. Fianna Fáil has a window of opportunity to ensure this problem is resolved but the Government must be proactive. It should not be left to the workers, Aer Lingus or FLS to make the running. That is the Government's responsibility.

Mrs. O'Rourke

I thank Members for their contributions, some of which I understood but some of which I could not. It is not a year since management approached me on this matter. They came to me last November.

Mr. Yates

The strategic alliance dates from a year ago.

Mrs. O'Rourke

Yes but that initiative was undertaken by Deputy Dukes. However, it was last autumn when management suggested to me that TEAM should be sold. I assented to their request although previous Ministers had not. Perhaps I am wiser after the event. I can see from Deputy Stagg's smile that he knows what I mean. A great deal will come out on this matter but I will not labour that at present.

There is no job for life in the letters of guarantee held by the unions. I said as much in the House two months ago and I said the same to the unions when I met them in December and each month since. The concept of a job for life is no longer valid in today's commercial world where sustainable work must exist if a job is to exist. Those warm, enthusiastic, glowing letters of guarantee mean only that Aer Lingus will take the workers back because that is what the letters oblige Aer Lingus to do. However, the workers will be taken back to no jobs. No sustainable job is contained in the letters. There are assurances that an employee can again become an Aer Lingus employee but that is no good if there is no job to which he can return.

Shouting and roaring will not persuade anybody in this situation. That mode of communication will not resolve the issue if it is to be resolved. I am the Minister who was in office when passing the parcel stopped. Several Ministers of different hues occupied the position I currently hold but the music stopped when the parcel was in my lap. However, I will continue to work through my political persuasion.

I smiled on hearing Deputy Owen's advice that I devote more time to this issue. I started working on it last Saturday at 12 noon and it was 11 p.m. when I finished. All 11 hours were occupied with TEAM personnel. The same occurred on the two previous Saturdays. I do not begrudge the time because, thankfully, I am energetic and can give it.

There is also no point saying that I spoke from either side of my mouth. I spoke openly to each person who came to my office. I laid out the facts with regard to each letter I was shown, that is, that they are not a guarantee of a job.

At this mid-point of the year, the only chance of a decent job with a decent firm that has a future is the offer from FLS. Workers came individually to see me as did members of the union management. I urge them to think of their spouses, partners, children and their future. There is no point, three or six months hence when TEAM is being wound down and I am bedevilled by Members of the House, saying "I told you so". It will be too late to say that then.

There will be no point bewailing the situation three or six months' hence. Some Members spoke from three sides of their mouths today and I do not mean Deputy Yates or Deputy Rabbitte. I wish those Members would be clearer in their comments. I also wish the union leadership would stop telling its members that there will be a way out of this and that they will keep their jobs. To paraphrase another woman, there is no other way at this point. I ask the workers to consider this issue and to make up their minds that this is the way forward.