Ivor Callely
Question:55 Mr. Callely asked the Minister for Public Enterprise the position and developments in Aer Lingus; and if she will make a statement on the matter. [4091/02]
Written Answers. - Aer Lingus.
Richard Bruton
Question:73 Mr. R. Bruton asked the Minister for Public Enterprise the details of reports which she has received from Aer Lingus regarding progress in respect of its survival plan, outlining in particular, the developments in relation to staff layoffs, cost reductions, air traffic and profitability; the details of discussions which she has had since Dáil Éireann went into Christmas recess with officials of the EU on the issue of additional compensation for the 11 September 2001 disaster which governments would be permitted to provide to companies directly affected; and if she will make a statement on the matter. [4090/02]
Proinsias De Rossa
Question:79 Proinsias De Rossa asked the Minister for Public Enterprise the progress made to date on the rescue plan for Aer Lingus; the number of voluntary redundancies agreed to date; the saving arising therefrom; and if she will make a statement on the matter [4384/02]
Bernard J. Durkan
Question:81 Mr. Durkan asked the Minister for Public Enterprise the degree to which Aer Lingus will have a capacity to recover from the effects of the international downturn in air transport; the extent to which the airline will be in a position to effectively compete on European and transatlantic routes; the number of new routes proposed to accomplish such targets; and if she will make a statement on the matter. [4466/02]
Trevor Sargent
Question:128 Mr. Sargent asked the Minister for Public Enterprise if she will make a statement on the progress being made at Aer Lingus to prevent industrial action. [4538/02]
Bernard J. Durkan
Question:142 Mr. Durkan asked the Minister for Public Enterprise the extent and degree to which agreement has been reached with the various unions arising from operational changes in Aer Lingus; the extent to which it is intended to increase services to various locations at home and abroad with a view to safeguarding the future of the company; and if she will make a statement on the matter. [4820/02]
I propose to take Questions Nos. 55, 73, 79, 81, 128 and 142 together.
As I indicated in my reply to composite Dáil Questions Nos. 105 and 108 on 6 February 2002, I have been informed by Aer Lingus that there has been substantial progress on the implementation of its survival plan and that the company is on course to meet the financial targets set out in the plan. This plan is designed to return the company to viability and to secure its future.
Progress has been made on the following key elements of the plan: 25% reduction in capacity came into effect with the introduction of the winter flight schedules; reduction in staffing – over 740 staff have left the company since last September, a further 600 will leave within the next week or so and arrangements for the departure of remaining staff exiting are under way; extensive work practice and other changes, as set out in the survival plan, are being implemented to yield the required cost savings and a number of non-essential assets have been sold. Furthermore, the survival plan has been assisted by aggressive cost management and a recovery in volume of sales due to fare promotion initiatives and the upgraded internet facility.
With the exception of the pilots, all groups within the company have accepted the survival plan and the work practice changes contained therein. As the House will be aware, following a day of talks on Monday, 4 February 2002, the Labour Relations Commission issued proposals to resolve the pilots dispute which were accepted by both sides. These proposals involve the appointment of an arbitrator to resolve outstanding issues relating to the changes in work practices with the process to be completed by 25 February 2002 and a facilitator to examine all mechanisms for addressing pilot surplus with the process to be completed by 1 March 2002. The LRC also proposed that the notice of redundancy already issued by Aer Lingus management to pilots be withdrawn and that IMPACT/IALPA withdraw notice of industrial action for 11 February 2002 with no further notice of industrial action to be issued during the process. This was agreed by both Aer Lingus and unions. I would urge all parties involved over the next few weeks to make every effort to resolve this dispute. It is essential that agreement be reached and that all the remaining changes which are fundamental to the company's survival and the retention of 4,000 jobs are fully implemented.
In relation to the overall financial results for 2001, I am awaiting the company's draft accounts which I expect shortly. I understand, however, that due to the progress on the survival plan measures outlined earlier, the results for the year will show an improvement on the projected substantial loss at the operational level in the survival plan. However, on top of this, I am advised that significant exceptional costs arose in 2001 with the result that a large overall loss will occur for the year. In relation to projected performance in 2002, the company advise that as set out in the survival plan it does not expect any significant improvement in market conditions before the end of the third quarter. At this stage, Aer Lingus does not see any change in the survival plan projections for a loss in 2002.
According to the company, current market conditions can be summarised as follows: Significantly reduced advance passenger booking, reduced business traffic levels, significant pricing reductions required to stimulate traffic and average yields lower than in 2000. In relation to route performance, there has been some recovery in traffic volumes on the transatlantic routes but yields are low, while on some European routes performance is poor. On the other hand, notwithstanding the current difficulties, Aer Lingus continues to monitor opportunities for new and more profitable services within the constraints of existing resources. It was in this context that the company recently decided to introduce new services to Malaga, Barcelona and Nice through the re-deployment of aircraft from other European routes where the number of daily services had been reduced due to poor performance.
While significant progress has been made in relation to the survival plan and a degree of stability has emerged, the company is still in a very vulnerable position due to its strained cash position and weak balance sheet. Considerable management action and initiative will be required in 2002, both to fully implement the very significant changes envisaged in the survival plan in the timescale required and also to continue to meet revenue and operating targets. External investment is necessary to support the future development of the company and the Government decision in this regard still stands. However, arrangements to give effect to this decision will not be activated pending resolution of the pilots dispute. Considerable progress has been made on the increased staff shareholding in the company and I expect talks to resume on this matter shortly.
In relation to the EU, I should point out that €6,668,770 was paid by the Irish Exchequer to Aer Lingus in December in relation to the four-day compensation measures agreed for all EU airlines in respect of the events of 11 September 2001. Claims for compensation were also received from three other Irish airlines, one of which has received payment. My Department formally notified the Commission on 14 December last that we have asked Aer Lingus to provide the relevant figures to the end of December, which we are now awaiting from the company. On receipt of that information, I will submit a case to the Commission for an extension of the compensation measure under the provision agreed at the October Transport Council.