Billy Timmins
Question:6 Mr. Timmins asked the Minister for Transport the conditions under which the State will dispose of all or part of its share in Aer Lingus; and if he will make a statement on the matter. [27708/03]
Other Questions. - Aer Lingus Privatisation.
Paul Nicholas Gogarty
Question:44 Mr. Gogarty asked the Minister for Transport if the Government has plans to sell part of its shareholding in Aer Lingus; if so, the timetable for such a sale; if it will involve a public offering of the shares; and if he prefers to sell part of the company in a trade sale to another carrier or other investor. [27807/03]
I propose to answer Questions Nos. 6 and 44 together. As I said in the Dáil on 9 October last, no decision on any type of sale transaction for Aer Lingus, or on the timing of a transaction, has been taken by Government. It is now over six years since the Government first decided to explore the ownership issue which led to the decision in 1999 to embark on an IPO of the airline. Since the cancellation of that planned IPO, the necessary focus by the board and staff of Aer Lingus has been, first, on the implementation of the survival plan and, more recently, on building on the progress made. I have taken the view since coming into office that the company needed to continue that focus on positioning the airline so that it can compete successfully and grow profitably. This it has done and is continuing to do.
It was in this context and taking account of progress in the repositioning of the airline that last July, I asked the chairman to examine and report back to me on future options for the company. The chairman recently supplied me with his report. The company's view is that a private sector investment process should be initiated without delay. I am currently giving careful consideration to the report and I will be bringing the Aer Lingus views, together with my own position, to Cabinet in the coming weeks.
The Minister does not seem to have thought out any of this matter. He speaks of private sector involvement. Does this mean a minority or majority stake or the complete sale of the company? Could the Minister give an outline of his thinking on this?
Was any mention made in the report the Minister received from the company of the critical slots at Heathrow Airport, which are an economic asset to the country and not just to the company and which have been purchased by the Irish taxpayers over a number of years of subvention?
The report which the chairman has given me goes through a number of the options open to the company. These include whether the company should stay in public or private ownership, possible private placements to institutions, IPOs and trade sales. The Deputy will be aware that an Aer Lingus Bill is before the House at present, which will authorise the Government to proceed with taking private sector investment in the airline.
I agree that the slots at Heathrow would be a critical part of any consideration to change the status of the airline from public to private. I take the view that change is probably inevitable. The ESOP now provides the employee shareholders with a 14.9% stake in the company. It is necessary to look at the strategic future of the airline and how we can provide it with equity injections and capital funding in the future and at where it is best placed so that it can grow. I take a very pragmatic view of the future of Aer Lingus and I will come to a conclusion on that question shortly.
We are at the end of the line.
When the Minister says change is inevitable, he is effectively saying the sale of part or all of the company is inevitable. If this is not the case, why was 14.9% of the shareholding offered to employees under the employee share ownership plan? In his speech on the Bill, the Minister stated that such a shareholding would be offered only where the company, or part thereof, was for sale or in other exceptional circumstances. Maybe there is another exceptional circumstance that led him to offer 14.9% to employees. If so, what is it?
I was interested in the Minister's key comment that change is inevitable. He proceeded to refer to strategic issues regarding the raising of capital. Is he saying it is inevitable that a Government could not invest in Aer Lingus and that it must be sold to raise capital?
The offer of 14.9% has nothing to do with the sale, or otherwise, of the airline. It is being awarded to the employees based on their commitment to the—
The Minister said in his speech on the Bill that he would only offer up to 14.9% of the shareholding in the company to employees in exceptional circumstances, such as the sale of the company. Unless there was another exceptional circumstance, why was the 14.9% offered?
The employee share ownership plan increased the employees' shareholding from 4.7% to 14.9%. This was done in turn for their commitment to the rescue procedure of Aer Lingus, the recent changes thereto and the changed management programme. It was negotiated some time ago. I believe the Deputy is referring to my statement that if we were to move the airline into the private sector or accept private sector funding, we could not offer more than 14.9%. I am fairly sure my script dealt with this point.
Can I take it from the Minister's response that he has not got a clue how he will raise capital for Aer Lingus and that he is still dithering and considering all the options? In light of this, does he not think it strange that he is introducing legislation allowing for the privatisation of Aer Lingus without his having given any thought to the matter? From where does he believe the necessary capital will be obtained?
I do not make any apologies for considering options. Aer Lingus is a major national asset and has served the nation well for many generations. It is incumbent on all of us to work out its future properly. The options are that the company will stay in State ownership or take in private sector investment. The chairman has indicated to me in his report that it is the company's view that a private sector investment process should be started without delay. If this is the view of the company, it is therefore incumbent on me to consider it seriously.
I am not sure who voted for what six years ago, but at the time we commenced an IPO process in regard to Aer Lingus, which had to be—
It was losing money at the time. It is now making money and therefore the context is different.
—abandoned because of market conditions. It is incumbent on me—
Following the disaster of Eircom.
The Deputy can make up her own mind on State companies and I will not change it for her. It is a matter for each party to have its own policy on the future of State companies and to decide on which side of the fence it wants to sit. I am considering what is best for Aer Lingus and the flying public, and therefore I am seriously considering the company's view that private sector investment should be taken in.
I disagree with the Minister's interpretation in respect of the Aer Lingus Bill but we will leave this until another day. However, it was clear from backbenchers on the Government side that they did not believe change was inevitable. Rather, they believed it was inadvisable. Does the Minister believe the position he is adopting will have the support of his Government colleagues and his party?
I have not adopted that position. I have made it clear that I will consider what the chairman said on behalf of the company in the report and the current position of the airline. I will discuss these issues with my Cabinet colleagues and come to a view on the best route forward for the airline. We could have a big debate on this subject today but I know the Leas-Cheann Comhairle would not permit it.
This is the best time for the airline to consider its future role because it is now doing well. It has turned the corner and is performing solidly. This is the time for us to consider, with the airline's senior and very talented management, the future of the airline and its shareholders, including the worker shareholders.
Is it not the case that the proposals of the employee share ownership plan were only used as a cloak to give the Minister and the Minister for Finance a free hand to do with the company whatever they wished? We are concerned about the Minister's statement that he has not adopted a position on this matter. As has been the case in respect of so many announcements he has made, he does not have a view and leaves matters in free-fall. Given the budgetary pressures that resulted from the Government's mismanagement of the economy in recent years, the Minister expects us to approve giving him a free hand to sell off Aer Lingus completely or to sell off the family silver to help the Minister for Finance bolster the financial and budgetary position.
On the basis of the Minister's discussions with senior management, what does he regard to be best for Aer Lingus? He has not told us anything about his views on that aspect. We know senior management is putting on pressure to privatise, for obvious reasons. Given the strategic role Aer Lingus plays in industry and tourism and in terms of our being an island nation, what is the Minister's view on the role Aer Lingus should be playing?
There is a strong case for taking in outside funds into the airline.
What does that mean?
If the Deputy lets me finish, she will understand. It means I am of the view that there is a strong case for permitting private sector investment in the airline. I have not come to a final decision.
We are flogging it off.
I have not come to a final decision on the matter.
Does the Minister not consider it would be a good idea to think about it before bringing legislation through the House?
No. The Deputy has accused me of being a cloak—
The Minister has had 18 months to think about it.
An Leas-Cheann Comhairle
Please allow the Minister to conclude.
If Deputy Shortall's party had its way, it would have every State company in State ownership forever.
You are the Minister and you should have the ideas and make your mind up, based on sound facts—
An Leas-Cheann Comhairle
Order, please. Members should speak through the Chair.
—instead of flying kites and having to back down, as he has done in respect of so many other projects.
Like what?
An example is the placing of the Luas light rail track on stilts. Where did you get that notion?
An Leas-Cheann Comhairle
I ask Deputy Shortall and the Minister—
We have not yet finished dealing with that issue.
An Leas-Cheann Comhairle
—to transact their proceedings through the Chair.
The Minister will be—
As I recall, Deputy Shortall supported that idea.
He knows that right well.
Deputy Shortall supported that idea.
An Leas-Cheann Comhairle
Order, please.
No. I never supported it. The Minister will be burying that idea—
An Leas-Cheann Comhairle
Order, please.
—and hoping people will forget about it because it is so ridiculous.
The old socialists are still alive.
An Leas-Cheann Comhairle
I call on Deputy Naughten to ask a question, after which the Minister will make his final reply.
The Minister should not spoof.
Is it not hypocritical of the Minister to ask Deputy Shortall to make up her mind on Aer Lingus when he has not done so himself?
Has Deputy Naughten made up his mind?
The Minister should provide us with some facts if he wants us to make up our minds on the matter. He has not done so. He has not given us one specific detail or answered the question regarding his plans for Aer Lingus. Does he agree with bringing legislation before the House without having any plan for the company? Does he think it acceptable for any Opposition to approve legislation allowing for the sale of a company without the Minister in charge having any plans for it?
I have made it clear that, in my view, there is a strong case for private sector investment in Aer Lingus.
What does that mean?
I have also made it clear that I have taken no decision on the matter. It is a ultimately a matter for the Cabinet.
It is about time the Minister started making decisions.
I have the chairman's report, which we are considering. Other issues have to be considered, including that of having the legislation tidied up in respect of the employee share ownership plan.
That is a separate matter.
Other assessments have also to be made. As soon as these are made we will be able to bring a proposition before the House.
Will the Minister furnish the chairman's report to the House so we can make a decision on the matter?
The Minister has not a clue.