Dáil Éireann debate -
Tuesday, 27 Nov 2001

Vol. 545 No. 1

Priority Questions. - Aer Lingus Funding.

Emmet Stagg

Question:

31 Mr. Stagg asked the Minister for Public Enterprise if a detailed written case has been made by her on behalf of the Government to the European Commission in support of the Government's stated intention to provide funding for Aer Lingus; if so, if she will make that written statement available to Dáil Éireann; the details of subsequent meetings she has held with other transport Ministers, EU Commissioners and officials of the EU since 16 October 2001 in pursuit of the Government's stated intention to provide funding for Aer Lingus; and if she will make a statement on the matter. [29972/01]

Mrs. O'Rourke:

I assure the House that Irish efforts to achieve the maximum support for Aer Lingus from the European Commission have been continuous and unremitting since the Transport Council on 16 October 2001. I have outlined to the House my efforts in the build-up to that Council. I have met the Secretary General and other senior officials in my Department on almost a daily basis since 16 October to review the Aer Lingus situation and under my direction specific action was put in train. On 17 October, the Taoiseach met President Prodi and the full Commission and outlined the Aer Lingus difficulties. A host of different meetings and actions have also taken place.

My Department is keeping all competition and State aid rules and regulations under review in conjunction with the Attorney General's office. We have also engaged on a consultancy basis the services of a former senior official from the Competition Directorate of the European Commission to advise us in this area. My Department will be in a position to make a comprehensive case in respect of any proposal for investment in Aer Lingus which the Government may wish to make to the European Commission. We have also engaged legal advisers. We have taken a number of actions, the details of which will be forwarded to Deputy Stagg who tabled the question.

Mr. Stagg:

The essence of my question concerns whether a case was drawn up and submitted in writing to the Commission. The Commission has said that no Irish case has been submitted. We asked the Minister's officials about this last week and they eventually said that no case had been submitted in writing. Because that has not been done, the Commission has said there is no case to be considered. Has the Department submitted a written case to support the Irish application for State aid to Aer Lingus of £120 million?

Mrs. O'Rourke:

A sum of £120 million.

Mr. Stagg:

Yes.

Mrs. O'Rourke:

No, not that amount.

Mr. Stagg:

What is the amount?

Mrs. O'Rourke:

I propose to furnish the Deputy, not just with the documents accompanying the answer, but with any correspondence we have had and any case we have made. I would propose either laying them before the House or supplying them to the Deputy, whichever is better. I do not have the amount that the Deputy seeks.

Mr. Stagg:

It was the amount mentioned by the Minister initially in the House as that which would be required by Aer Lingus.

Given that the Minister and the Government disagree with the Commissioner's interpretation of the state aid rule and believe that she is wrong in that interpretation, why does the Minister not make the payment to Aer Lingus that is required and let it be tested in court? Would the Minister consider that route?

Mrs. O'Rourke:

Testing a matter in court is a lengthy process, whether it is a European court or a court here. It is far better to proceed as we have done which is by careful study, by engaging the services of a former Commission official and by maintaining our contacts. Next week there is a Transport Council meeting when we will meet bilaterally with four or five ministers who we have identified as also preparing cases.

It is interesting to note that in 1993 Deputy Cowen, then Minister for Public Enterprise, met the Commissioner as I did, in March of that year. The Commission decision was made on 21 December 1993. Even before things became tight and spiky it was a nine month process.

Mr. Stagg:

Does the Minister agree that all the talking could be done after the payment was made if the Minister was of a mind to do so, bearing in mind that the court case could be in five or seven years' time and the matter could well be resolved by then? Would the Minister take a leaf out of the Italian Government's book? Without reference to the Commission, it paid a large subsidy directly to its airline when it suddenly got into trouble last week. Does the Minister agree that if the Government was serious about saving Aer Lingus and keeping it as a public company it would do the same as the Italian and Belgian governments?

Mrs. O'Rourke:

It has ended up sadly for the Belgians because their airline has ceased trading in its normal format. That intrusion into the Commission's business did not work very well. The Italian minister and I had discussions at the last Council meeting about Alitalia. Deputy Stagg's assertions are inaccurate. They have decided to do something but they have not yet done it. I intend to speak to him next week. He was one of the ministers who was vocal with other ministers and in public. The Deputy suggested that if the court case took five to seven years, it would not matter because the money would already have been put in. That is no way to do our business. The way we are going about this is careful and it is the correct way.

Jim Higgins

Question:

32 Mr. Higgins (Mayo) asked the Minister for Public Enterprise if she proposes meeting with the board of Aer Lingus, prior to the deadline of 30 November 2001 for the acceptance of the voluntary redundancy offer; and if she will make a statement on the matter. [29823/01]

Mrs. O'Rourke:

I have no plans to meet with the board of Aer Lingus before the deadline of 30 November which is the closing date for receipt of applications for the early retirement and voluntary severance packages. I maintain regular contact with the chairman in relation to the situation in Aer Lingus and he keeps me fully briefed on the position of the board on all relevant matters. I met him early this morning for further discussions. There is a meeting of the board this Thursday and there will likely be one on 8 December. As the House is already aware, very sensitive negotiations have been taking place over the last two weeks on the survival plan. With the assistance of the Labour Relations Commission, Aer Lingus management and unions agreed a process and a timetable for discussions on the survival plan on the understanding that these discussions will end no later than tomorrow, 28 November 2001, with voting to take place between then and 7 December 2001.

Essential components of the plan are the voluntary redundancy programme and early retire ment scheme announced last week for which £40 million – 50.79 million – will be made available by the company through the sale of aircraft and borrowings. The other main element of the survival plan is the essential restructuring of the airline so as to establish a robust, flexible business model which will ensure long-term viability, thereby safeguarding the remaining 4,000 jobs.

In order to facilitate the commencement of staff voting on a full package relating to the survival plan, the LRC must conclude its deliberations and produce its report on the matter by tomorrow. I understand that the LRC is on track to meet this deadline.

Mr. Higgins

(Mayo): Will the Minister confirm the outline of yesterday's meeting between the Labour Relation Commission and the unions? Is it still the plan to shed 2,086 jobs and slice £100 million off the company's operating costs? Is it still the company's intention to sell two aircraft and how much will the sale yield? Are the unions, or one in particular, seeking an increase in the employee shareholding from 14.9% to 30% as part of the deal?

Mrs. O'Rourke:

I have no comment to make on the content of the meeting between the LRC and the unions because it is not my business to get involved in the negotiations. The LRC, as an arm of Government, is talking to and dealing with the unions. It is in the public domain that it is the thrust of the trades unions to seek an increase in employee shareholding. Aer Lingus has borrowed £40 million against the collateral of the aircraft.

Mr. Higgins

(Mayo): In relation to the increase sought in the employee shareholding from 14.9% to 30%—

Mrs. O'Rourke:

I have answered that. The unions are seeking it as the main thrust of their negotiations.

Mr. Higgins

(Mayo): At a meeting yesterday of concerned staff, two issues arose. The first was a commitment that pay rises would be repaid when the airline turns around given that it is anticipated it will be 2003 before a profit is made. Second was the indexation of pensions and full redundancy being offered to all employees even after 36 years' service. The Minister may have seen large newspaper advertisements placed by SIPTU. They state that staff are prepared to cough up £45 million by forgoing increases. Does the Minister appreciate their perception that the Government should make a quid pro quo gesture acknowledging the staff's sacrifice?

Mrs. O'Rourke:

I did not answer one of the Deputy's earlier questions. He asked if the plan was to cut 2,000 jobs. The answer is yes. I am not aware of the detailed content of the meeting yesterday between the LRC and the shop stewards. I have seen most of it in today's paper and I know that there were union proposals on pay rises being kept intact for when the company would hopefully come around.

I saw the large advertisement in yesterday's paper which stated that the Government should match the £40 million which Aer Lingus has borrowed. Apart from the 5% which is owned by the workers, the Government is the main stakeholder on behalf of the people so they would be backing the £40 million which is being raised by using the airline's aircraft as collateral.

I thank all the parties for their valuable contributions to the talks. The LRC has put a lot of work into it and so have the trade union members. It has not been easy for them. I urge them to give the matter very careful consideration. It is clear from the conversation I had with the chairman this morning, which I have reported to the Taoiseach, that matters remain serious within Aer Lingus. The fact that there is a meeting on Thursday and a meeting on Saturday, 8 December means that the vote will have been concluded. The chairman has outlined to me his continuing serious view of the situation which will prevail then.

Mr. Higgins

(Mayo): What about the indexation of pensions?

Mrs. O'Rourke:

I do not know, but I can inquire. I was not at the talks.