Dáil Éireann debate -
Tuesday, 2 Dec 2003

Vol. 576 No. 1

Aer Lingus Bill 2003: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. English

The Minister was quick to praise the role of workers in the financial turnaround of the company, and rightly so because without them it could not have been done. There is no such thing as bad workers, only bad management. In politics, when a boss or friends are praising or clapping one on the back, more often than not they are actually measuring one up for the knife.

It is peculiar that the harder Aer Lingus staff work and the more productivity they achieve, the closer they are to being sold off. The company is becoming more of a cherry to pick from the financial tree but that is very wrong. Hard work should result in rewards, not some shoddy deal done behind closed doors, and behind the backs of the staff, to sell it off for the sake of doing so.

Before the script writers of all political parties write me off as some sort of trendy socialist, let me put the record straight. I do not believe State money should be used for, or be involved in, something the private sector can and probably would do better.

Mr. Broughan

Why not be a trendy socialist?

Mr. English

I have to grow into that role. That does mean, however, that I believe in privatisation as an overall policy. Privatisation for the sake of it is a sure way of robbing the State of its jewels – priceless assets that took years of hard work by taxpayers to build up. When a State company is in profit, competing on a level playing field with the private sector, why should it be sold off? This is especially the case if, as my colleague Deputy Naughten explained, the company is in control of valuable landing rights in major airports that are of vital interest to the country. How could they be valued and why would they be sold, unless to fulfil some mad privatisation policy? I hope common sense will prevail on this issue but I fear that this PD-led Government could bring us anywhere.

If Aer Lingus is to be sold off, how can it be valued? It currently pays approximately €80 million to the national Exchequer, but if that figure was multiplied by ten or 20 would it represent the company's true value? Landing fees would add yet more to that total. Let us examine whether there is another way to approach the matter. Could it be that if the company was run properly and if the culture of jobs for the boys was done away with, it would make €100 million to €220 million next year, perhaps increasing its profits every year over the next ten years or longer? If so, would the company not be worth more in real cash terms in ten years' time, in addition to the fact that every year it will pay its profits to the national Exchequer?

Selling Aer Lingus may be like selling the goose that laid the golden eggs. If any Minister is in charge of selling such a goose, I would like to see a written undertaking that when he leaves office he will not be allowed to join the new private company in any capacity, in order to reap the rewards robbed from taxpayers. I am not referring to the Minister, Deputy Brennan, personally, but to a general policy. In other countries people have gained lucrative directorships after leaving politics and I would like to see it in writing that it will not happen here.

Profitable State companies are valuable as we need money to pay for health plans, rather than swelling shareholders' coffers. Even if Aer Lingus is sold for a reasonable price, the way this Government wastes taxpayers' money, it would probably only help to shore up two or three seats the Government may consider to be in danger at the next general election. That seems to be the way money gets spent around here.

The simple story of privatisation is that if something needs State money to sustain it, it should be put out of its misery by cutting the State's losses. If, however, it provides a service or guards a national interest, we should retain State control of it. Privatisation does not always work, however. As was stated recently on the "Dunphy Show", if one takes a train in England and then travels in one in France, and examines the respective safety records, this should explain the situation to the Minister. I would be surprised if it did not. We have already created multi-millionaire tax exiles by selling off other State assets. We should consider the Aer Lingus issue in depth before leaping to the privatisation conclusion again. The hidden agenda behind this Bill is privatisation and I hope everybody will realise what they are voting for when they vote on the legislation.

Earlier, Deputy O'Sullivan mentioned the spatial strategy and other reviews of the transport system. These are important matters that have not been debated in the House. The spatial strategy was launched over a year ago, am I right?

Mr. Broughan

Yes.

Mr. English

The spatial strategy was heralded as the future policy determining all investment in infrastructure, industry, health and transport. The Taoiseach did not launch the strategy in this House, however, which shows how important the Government considers it to be. The Government cites the strategy whenever it suits them, yet we cannot debate it in the House. The spatial strategy is a reasonable document and could lead to positive change but it has been produced seven or eight years too late. A spatial plan was drawn up in the 1996-97 period which could have been followed, but that was put to one side and another plan was produced instead. One year later the plan has still not been debated in the House and very few decisions have been made as a result of it.

The strategic rail review is a very important document on the future of transport but it has not been discussed in this House. I have heard the Minister citing the review on a few occasions, yet his colleagues on the transport committee claim he is disregarding the document and will not use it. I am concerned about it because basically it has ruled out the construction of a rail link to Navan. The Navan rail link was included as one of the last items to be done in approximately 18 years' time, during the last few years of the current State investment plan. According to my calculations, if we have to wait for €8.5 billion at a maximum of €500 million per year we are talking about 18 or 19 years before the Navan rail link can be completed. The spatial strategy states that the economic viability of the greater Dublin region is based on rail, yet Navan is in the greater Dublin region.

One Government document states that rail is of economic importance and should be developed, while another advises us to wait for 20 years. The Minister should read these documents and rethink his policy on the strategic rail review. When I asked the Minister to investigate the Navan rail link in the context of a private-public partnership deal, he wrote to me saying that it had not been earmarked as an important item in the strategic rail review and, therefore, there was no point in proceeding with it. I am not quoting the Minister's letter exactly but he basically ruled out the idea of even appointing one member of his staff to investigate the project. Our local authority and the chamber of commerce are now faced with the task of convincing the Minister that it is worth creating the Navan rail link. To this end, we will have to undertake a feasibility study.

An Leas-Cheann Comhairle

The Deputy is straying somewhat from the subject of the Bill.

Mr. English

I am referring to comments made earlier in the debate concerning rail transport, which were allowed by the Chair. It is very important and I have nearly finished my contribution.

Mr. Perry

It concerns a rail line to the airport.

Mr. English

I am getting to the metro line also. The lack of a rail link to Dublin Airport is causing €650 million in congestion costs around the capital. All these elements are interrelated.

As regards the Navan rail link, we will have to undertake a feasibility study which will cost approximately €1 million. That will not be paid for by the Government which feels it has no involvement in checking whether or not Navan needs such a rail link. The Minister, through the strategic rail review, said that Navan should not have a railway line, but no feasibility study was undertaken to determine the investment figures involved. This goes back to how such decisions are made. If no feasibility study is done, how can one rule out a project? That is not the way to do business. The Government should lead the way with proper facts and figures before making decisions. We have seen the same approach concerning the break up of Aer Rianta, but we have not seen the figures so as to be able to determine whether such a move is good or bad.

As regards the metro line to the airport, Luas should have been built underground for this purpose. Luas was delayed for seven or eight years, although I do not blame the Minister for that. If he had been there five years ago we would probably be travelling in the Luas now instead of waiting for it to start, with the streets in a mess. The plan was ready to be implemented years ago but it was not done. We are now having the metro debate and all kinds of figures are being quoted. We are told it would be cheaper to go to Spain for the project and I believe it. I would welcome any cost reductions the Minister can come up with. I hope he will be able to cut the cost of the Navan rail line from €408 million to my estimate of €200 million.

Has the Minister considered running a monorail link from the airport? We have had no debate on this question. Last week, a crowd of geniuses put forward a plan for a Vegas City theme park in County Dublin. They were talking about building a 25-mile long monorail, which would be the longest in the world. That length of track would reach Navan and a spur track of a few extra miles would reach Dublin Airport. These gentlemen reckoned that the monorail could be constructed much more cheaply. I saw it operating in Sydney in Australia, and it seems to be cheaper there. It may not look perfect because it is up on stilts but if it gets the jobs done more cheaply and quickly we should examine that possibility.

In discussing Aer Lingus, we should examine all the options in order to facilitate a debate in the House on a proper transport system for the country and not just have a love affair with motorways and other roads. I realise I have strayed off the issue slightly but I am sure there are many others who will take it up.

Mr. Perry

I welcome the opportunity to speak on this Bill, which allows for the employees of Aer Lingus to have share ownership of Aer Lingus as agreed by the Government and the unions, but I am also mindful of the broader implications of the Bill.

It is clear that the Bill before the House is intended to mark the first step in the privatisation of Aer Lingus and one can only assume that this is based on the poor financial state of the company in 2001. However, given the Government's current financial deficit perhaps it is trying to capitalise on the massive changes that have taken place. That would be regrettable in light of the fact that €1 billion has been calculated to be the miscalculation on the pre-1953 pensions and €1 billion has been identified as the possible cost of the redress scheme. In terms of Government expenditure, what might be assumed to be a good price could be spent easily on services that are not nearly as essential as the national airline. However, it must be acknowledged by everyone that this is no longer the situation in Aer Lingus and it is to the credit of all involved, including the staff and particularly the management of the company, that they have effected a complete turn-around in the financial circumstances of the company. That was some achievement in a very short period of time. Aer Lingus is now showing a profit and its costs have been reduced by up to 14%. I know from my own business experience of the difficulty of keeping costs down while running a company efficiently. Keeping operational costs down is an example of good management and the profitability of the company clearly indicates its viability.

It would be unfair not to give Aer Lingus a longer tenure of management. We have seen the introduction of competition in the market with Ryanair. Competition is good but it would be a real disincentive to the company, unless there is something we do not know about, if the Minister is considering the possibility of putting the company up for sale, which is clear from the Bill. The future of Aer Lingus looks bright and it continues to reduce costs. That has to be applauded. The company appears to be making every possible effort to pass on these cost cuts to fare paying customers, which is important.

We now see an airline company that is competing with Ryanair. The feeder service with Aer Arann is working well. I am aware the Minister opened the new airport in Sligo and I give credit where it is due. The Minister's support for Sligo Airport has been extraordinary. We had difficulties getting a carrier organised but what the Minister has done in Sligo has been very effective. As regards Aer Arann, which I acknowledge is getting good State subvention, with the level of aviation as an island country and the feeder services from regional airports, it has been very successful.

Aer Lingus is a very good brand. It is like Kerrygold. When I pass through an international airport and I see the Aer Lingus brand I am always proud. It is like a tourism brand and we should not lose that. We are an island nation. We depend on the image of Ireland abroad that we are a progressive country which can run private and State companies and that we have multi-choice in that regard. We all saw the debacle over Eircom, the major advertising, the millions spent on buying shares and the subsequent miscalculation. The Minister may not go down the share option route but in terms of attracting another international airline, the passion for the company on the part of the Aer Lingus employees and the management and the Minister's support is extraordinary. The Minister must be proud that after only two years the State no longer has to give subventions to the company. That is a healthy sign and it is clearly something the Minister will examine from a business perspective.

It has been predicted that Aer Lingus will return a profit of up to €80 million by the end of 2003. That is over €1.5 million per week. That is a significant achievement, particularly when one considers the war in Iraq earlier this year and the outbreak of SARS, both of which did much to turn people away from air travel in 2003 and depress the aviation industry. When one considers that the American possibilities have been brought to a standstill, that is a very good return. Globally, every airline is losing money. In America and throughout Europe section 11 companies have sought support from Governments and the protection of financial losses where airlines were losing money.

Aer Lingus has done well, however, and it appears confident that it can reduce costs even further, with the welcome knock-on effects that will have for customer confidence and satisfaction with the airline. That is important because Ryanair was the brand leader. It is all about brand, being competitive, value for money and encouraging people to spend money. A total of 14 million people go through Dublin Airport. There was a major debate here when the duty free facility was removed from the airport but the spend in the stores in Dublin Airport is extraordinary. It is a huge industry that benefits from partnerships with a competitive airline and people coming here from abroad.

It is evident that section 5 is the critical element of the Bill because it allows for the privatisation of Aer Lingus and gives the Government the wherewithal to attempt to attract an outside private buyer for the national airline. The issue of the future control of Aer Lingus is one which cannot be rushed. It necessitates a definite plan and a need to pinpoint in advance any problems or difficulties, strategic or financial, which could arise further down the road as a result of sale of the State airline. I know the Labour Party will support this position.

Business is about profitability. If we are talking about supporting semi-State bodies and we consider the costs associated with benchmarking in the public sector –€1.3 billion next year – the Minister could get a bad price for the sale of the airline. It would be difficult to put a value on such a sale because he must have regard to future profits, possibilities and the potential future involvement of the Government. Future Ministers will be sitting where the Minister is now and it is important that they have that independence and a stake on the board of the company.

In the not so recent past the rationale for the sale of Aer Lingus was clear. It was a loss maker and a burden on the public finances. The company was inefficient, it did not provide an efficient and effective service. However, as I have outlined, the tide has turned in favour of the company. The company is not only standing on its own feet but it is doing so extremely successfully. This situation leads me to question the rationale behind taking the decision to sell off this valuable asset. Why favour privatisation? We must consider whether that is the best option and the best value for money, particularly when one considers the importance of protecting our national interest in aviation terms.

I have no doubt that because of the profitability and the potential of Aer Lingus, there will be people who will have an interest but it would be wrong to take the easy option, namely, to dispose of the asset, eliminate the risk and hand over control to somebody else. The public service has the capabilities and the competence to run a business and because the tide has turned and the balance sheet looks better it is felt this is the optimum time to sell, but that is not the case. It is crucial that the Minister makes a solid business case for the privatisation of Aer Lingus. We must have a clear, straightforward business plan to justify the company's sale. A business case in favour of sale, however, also makes a case for maintaining a company. There would be nothing wrong in retaining ownership as currently constituted.

Given the recent controversy surrounding the break-up of Aer Rianta, it is hardly surprising that one would question the viability of selling Aer Lingus. A PricewaterhouseCoopers report questioned the viability of the break-up of Aer Rianta, particularly from the perspective of Shannon and Cork airports. It also warned that Aer Rianta's debt levels could rise to €400 million by 2006, while Dublin Airport's profits could fall by 75% if it has to assume the burden of the debts of Cork and Shannon airports. The lesson from the report is that privatisation of Aer Lingus should not be rushed through, as has so often been the style of the Government.

The importance of a logical and workable business plan to privatise Aer Lingus cannot be over-stressed and I call on the Minister to guarantee to the House that one will be produced. Once a decision has been taken on privatisation – the main section of the Bill is an agreement in principle – it is possible the matter will not be discussed again in Dáil Éireann.

Having reduced staff by 2,500, Aer Lingus has an excellent, effective team. Access to the United Kingdom is vital. The security of aviation links between Ireland and Britain, long facilitated by Aer Lingus, must be protected at all costs because they bring immeasurable benefits to sectors such as industry, tourism, trade and financial services, which heavily depend on them.

It has been stated that the most likely future purchaser of Aer Lingus would be British Airways, which, it has been argued, would seek to reallocate or sell for financial gain Aer Lingus's valuable landing slots at Heathrow Airport. These slots, paid for by the State – the taxpayer – in difficult times are a prime asset and their loss would be detrimental to our national, strategic interests. We cannot allow them to be easily whittled away.

I reiterate the call made by my colleague, Deputy Naughten, that the Minister ensure that any decision on the sale of Aer Lingus be made by the House and not solely by the social partners. As an island on the periphery of Europe, we have a unique and heavy dependence on a good quality, reliable air service for access to the rest of the world. As there are no guarantees that new owners would have loyalty to this country and its citizens, it is vital to obtain such guarantees before a sale takes place.

Aer Lingus's links and connectivity with other airlines are critical to the growth of Ireland as a tourism destination and the future viability of our airports. Aer Rianta and Aer Lingus have worked as a partnership. Competition among carriers is good and I welcome the entrance of Ryanair and other carriers to the market. Knock Airport, which has developed a charter business, is performing exceptionally well and has generated significant traffic by offering chartered flights to European holiday destinations and daily direct flights to Manchester and Birmingham. The airport is competitive in bringing people into Ireland.

It is a pity Shannon Airport and other airports in the west are not used more for charter flights. We have heard about difficulties in increasing business in Cork and Shannon airports. There is major potential for Ryanair, which is seeking a second terminal in Dublin Airport, to make greater use of airports in the west. I ask the Minister to encourage the company to use Shannon or Knock airports, with their considerable facilities, to offer cheap flights to the western seaboard, as opposed to Dublin with its traffic chaos.

It would make economic sense to offer incentives to Ryanair to use Shannon Airport as a major international hub. Tourists arriving at Shannon or Knock airports could tour the country from a western base. An increase in passenger numbers at Dublin Airport would cause major difficulties by increasing traffic congestion in the city, whereas bringing increased numbers of people to the western seaboard would deliver major economic benefits which would filter through to the regions. I am disappointed Ryanair refuses to consider this possibility, given the excellent landing facilities available at Knock and Shannon airports.

The sale of Eircom highlights only too well the disastrous outcome which can occur when the sale of State assets is not well thought through by those in power. I am concerned about the temptation to make short-term gains through the sale of Aer Lingus. That must not be allowed to prevail. The unique and important service provided by Aer Lingus must be at the forefront of all considerations of whether to sell Aer Lingus. The Government must lay out the terms under which the company would be sold well in advance of any sale, spell out its objectives and provide guarantees. I would prefer if Aer Lingus were not sold. In the past two years, which were difficult times for the aviation industry, the company has turned losses into profits in excess of €6 million per month. It would be a disaster to consider a sale in light of this fact.

The Minister has not made public the proposals he received from the chief executive of Aer Lingus, nor has he revealed what proposals he intends to bring to Cabinet on any future sale of the company. Instead, he is asking the House to push through legislation which opens the door for privatisation. The Minister has proved effective and decisive since taking on a difficult portfolio and I wish him well with his plans to resolve difficulties he inherited in Dublin. Given his commitment, I have no doubt he will show care in studying the option of privatisation, the implications of which would be disastrous.

To set the record straight, the Minister should issue a White Paper setting out all the issues related to the sale of Aer Lingus. This should go some way towards answering important outstanding questions such as the likely capital needs of Aer Lingus in the coming years, whether a strategic partner for the company is required, whether the State will retain a certain amount of shares and many others.

Section 11 provides for the repayment by Aer Lingus Limited to the Exchequer of moneys amounting to €6,348,690 advanced to Aerlinte, now Santain Developments Limited, under the Air Companies (Amendment) Act 1969. What is involved in that? Has that been repaid from the point of view of the timescale? It seems the date has yet to be agreed. Section 2 provides for the repeal of the provisions in whole or in part and on different days under the Air Companies Acts 1966 to 1993, as detailed in the Schedule to the Bill.

I am happy to speak on the Bill. This is an important debate. I appeal to the Minister not to rush into a sale without first discussing the clear benefits to the State. As I have seen in the Committee of Public Accounts, millions and even billions of euros can be spent unwisely, which means the taxpayers do not get value for money. We have an asset which does not cost the State money. We should consider all the possibilities before we rush to dispose of something which makes money.

Mr. Broughan

I am pleased to have the opportunity to speak on the Bill. I want to raise crucial issues on behalf of my constituents, specifically those who work in Aer Lingus and whose families are deeply concerned about the current course of action. Aer Lingus is the core industry in terms of job provision in the Dublin Airport nexus, which provides jobs for 40,000 to 50,000 people. It is appropriate that the symbol for the Fingal County Council development board includes a pair of wings to show the key role this industry plays on the north side of Dublin.

I am surprised the Minister has introduced the Bill at this time. Deputy Shortall was accurate when she said that the Minister, who is clever in many respects as we have seen in the past year and a half in his use of public relations and in the way he tries to manage the debate on transport policy, pretends to do one thing in terms of the Bill and his policy on Aer Rianta while doing something else. His speech on the Bill concentrated on the employee share ownership plan and the workers' participation of 14.9%. The Labour Party welcomes that. The Bill was designed to create the conditions which allowed him and the Minister for Finance to have an ESOP in Aer Lingus. However, that is not the agenda. The Minister's agenda is to deal with the other 85.1%. He wants to flog it at the earliest possible opportunity to the best bidder, regardless of whether that is in the interest of the country. The Labour Party believes it is not.

The Minister did not come in to the Chamber and tell us honestly that he wants to privatise Aer Lingus. When he came to office, he said he would reconsider the issue following the events of 11 September 2001, his predecessor's role in the 2000 Bill and the ill-fated initial public offering. He did not explain to the House why we should embark on this course of action at this stage. I know it is a subject for another day, but Aer Lingus and Aer Rianta are closely related in our minds and in those of more than 8,000 workers and their families. As in the case of Aer Rianta, the Minister's objective is to have a fully privatised second terminal as soon as possible in Dublin Airport. All the huffing and puffing about the dismemberment of the three airports is a means of achieving that. The Minister knows – a recent PricewaterhouseCoopers report confirmed it – that he is placing the future of Cork and Shannon airports, in particular, in the gravest danger. The Minister cleverly uses public relations to advance a savage privatisation agenda. That is what he wants to achieve.

It is extraordinary that the Minister is seeking to do that now, given that over the past two years the workers in Aer Lingus have heroically and determinedly turned that company around and made it, as he said, a profitable company. As a reward for that, the Minister is seeking to put their futures and the future of our region in jeopardy for a €600 million or €700 million injection to the Exchequer. The workers have achieved much and given up a great deal. The future of our aviation companies has been on the agenda for all the days I have served in this House. I was happy the other day to pass the eleventh anniversary of my first election to this House to serve with you, a Leas-Cheann Comhairle, and others. It was on the agenda the first time the Labour Party served in Government with Fianna Fáil. I remember Deputy Seán Ryan and I walking through the other lobby to vote against the Government because we were afraid that a failure to inject the capital required at that time would endanger the future of the core industry in our region.

Throughout the mid-1990s the workforce took the pain, but they were prepared to invigilate and reorganise their work schedules and disciplines. They were rewarded by a subsequent Government with the 5% workers' shareholding and with cash over the years. I am sure the Minister will agree that management subsequent to that failed to build on the gains of the early reorganisation in the early 1990s. It is extraordinary that after two years of further restructuring, the Minister has decided that it is not possible for a public sector semi-State body to do well. That is the nub of the problem. The Government, which is driven by the Progressive Democrats, hates the idea of an efficient commercial semi-State body.

We had extraordinary nonsense in the newspapers at the weekend, which I presume was planted by the office of the Minister for Communications, Marine and Natural Resources. It was reported that the Minister, Deputy Dermot Ahern, was hopping mad with the ESB. Why was he hopping up and down?

Mr. S. Ryan

He must have got a shock.

Mr. Broughan

He got a shock. He found out that perhaps our most distinguished and valuable semi-State company, the ESB, a multinational publicly owned company, was doing so well that it could afford to get money for its recapitalisation at a lower interest rate than that in the State. It wants to rebuild the network with €5 billion over the next few years. The Minister did not like that. The Government does not want a successful semi-State or State company. The Labour Party believes that semi-State or State companies can be successful. The ESB and its workers have proven that. The workers of Aer Lingus have proven that in the past two years. The policy of the Progressive Democrats driven Government is to try to handicap and abuse them and to turn them into basket cases. They should be rewarded and encouraged to spend their capital. I have not heard that further capital is needed from the Minister for Finance, the shareholder, to buy new equipment for Aer Lingus. It is embarking on all these projects itself as part of its cost cutting plans, as we have seen recently.

The last speaker referred to the brand, which is very closely identified with our nation. As we have said down through the years in Dublin Airport, we are very proud of that company and its related companies and of what they have achieved for the country in Shannon, Cork and Dublin, but in other areas too, as other Deputies have mentioned.

In recent times we have noticed with pride that the chief executive, Willie Walsh, has updated the brand in the form of AerLingus.comand could achieve a €40 million reduction in cost by encouraging people to use the Internet to book flights. It is one of a range of measures the chief executive and his board have introduced which have increased the company's profitability.

It is extraordinary at this time of success, following great sacrifice by the workforce, and where there is no shortage of finance for capitalisation, where the airline can quite easily finance its future needs, that we have this cloak and dagger Bill from this cloak and dagger Minister, to privatise our national airline and to take it away from the Irish people. It is part of the incoherence of this Government and its agenda. As our party leader, Deputy Rabbitte, mentioned a month ago, we were promised a White Paper in which all aspects of aviation policy would be examined, including airports, particularly the regional airports. It was extraordinary, as journalists rightly noted, that when the Pricewaterhouse report came to light people in this Chamber began to realise that the airport in their locality could be in serious trouble because of the recklessness of the Minister's policies on Aer Rianta. It was quite striking. Surely, a responsible Minister would not have put the cart before the horse and would have entered this House with a policy position.

I believe that the whole area of State enterprise needs a coherent approach from Government, including the appointment of directors. As part of the portfolio I hold for my party I have heard the Minister's colleague moaning about the directors of An Post, directors he appointed himself. He says they cannot do their job and demands monthly reports from them and from other companies in the communications portfolio as well.

Perhaps it should be the case that we look at a new model of State company, where directors are not appointed by Ministers. They should be appointed, perhaps, by a competent body, in the same way as we appoint judges. Being a director of an important State company should not be the last refuge for a well-known party hack who can serve out a few years earning several thousand euros a year. We should, rather, appoint experienced people from the industry or from the community where they have made a good contribution. We should also be taking people from the workforce and allowing them to help run the company.

I strongly support the allocation of a 14.9% increase to the workers of Aer Lingus, as they deserve it, in the light of their achievements. However, I am bitterly opposed to the Minister's plans to privatise this national asset at an early date. I praise the achievements of the workforce and their managers over the last two years in the massive turn around that we have seen from the losses of more than €50 million in 2001 to the profits of €64 million last year, and the projected profits of €75 million for this year.

The courage of the airline should be recognised in competing with the low cost model, pioneered by Mr. O'Leary and Ryanair. They are prepared to take on those people in the private sector head to head, in the acquisition of new aircraft, the new airbus fleet, and also in the expansion of destinations. It is good to see that our national airline will operate regular flights next year to other EU capitals like Berlin and Warsaw. This has to be welcomed. The new branding of the airline is dynamic and is something that workers and management at the airline deserve credit for.

The workforce, and SIPTU and IMPACT trade unions, deserve praise for being prepared over the years, in difficult circumstances, to negotiate hard on different types of work practice. In recent times, not just in respect of Aer Lingus, the Minister will know that I have made extensive representations on the new flight limitation times for pilots, as there is grave concern about the safety issues involved. The low cost model could result in work systems for pilots and aircraft staff that would lead to tragedy and casualties. I hope the Minister will continue to represent strongly at European level the concerns felt by workforces in this regard. The achievements of new work structures in recent times have been outstanding.

One of the major concerns about this Bill is the sections on pensions. Over the years, Labour Party Deputies have received strong representations from retired aviation workers on the evolution of their pensions. The State companies, Aer Lingus and Aer Rianta, were singled out, in that the percentage calculation for contributions to the pension fund was reduced to 6.375%. The result has been that the pensions of airline and airport workers have not kept pace with indexation and inflation in the way that pensions paid by other semi-State bodies have.

Late last year the leadership of SIPTU, Mr. Des Geraghty, then president, Mr. Jack O'Connor, vice-president, and Mr. Joe O'Flynn, general secretary, expressed grave concern to the Taoiseach about reports that the Minister was to fundamentally change the ownership status of Aer Lingus. At that stage, a major concern related to the future development of the employees' pension scheme. It is not clear from this Bill to what extent defined benefit contributions and defined benefit rewards can be carried forward.

Is it the case that in this Bill, as in the Minister's previous major exercise in the case of Aer Rianta, he has not thought through the whole issue? He is prepared to create a situation where retired aviation workers may have their future endangered by a reckless rush to privatisation. As a letter in my possession from three senior SIPTU leaders says very clearly, the Taoiseach is no doubt aware that SIPTU believes Aer Lingus can thrive and prosper in public ownership, which is precisely what it has done. We see no reason why that should be challenged at this time.

A series of problems will develop from the privatisation of Aer Lingus because of the role it has played in Irish transport and the fact that in the future our island nation may not be served by a securely based major airline, controlled from Ireland. Until next May, Ireland will be the only EU country without a land link to the rest of the EU. In that sense it is no accident that the aviation industry has become very important to us. It will continue to be a major industry because of the necessity of travelling to and from this island. The Minister should have come forward with a comprehensive view on aviation policy for the future.

We must remember the awful history of the privatisation of Eircom. Citizens, including widows, who put their savings into the shares of that company tragically lost significant amounts of money during subsequent developments which led to the present Valentia ownership. There is another major problem in that this privatised company, which I accept is one-third owned by its workforce – almost 30% is owned by the 8,000 workers, although there were once 18,000 – has not, it is often said, invested enough in the public sector, particularly in terms of the roll-out of broadband. Aer Lingus could be said to be a similar case in the transport area. I once again urge the Minister to rethink this Bill and withdraw it. He could introduce a revised ESOP, but he should abandon his ill thought-out privatisation of this important national company.

Mr. J. Higgins

The Aer Lingus Bill 2003 is nothing more than a Trojan horse from the Minister. In his introduction the Minister emphasised the share ownership arrangements provided for in the Bill for the transfer of a certain segment of shares to Aer Lingus employees. He also emphasised some pension fund provisions. However, these measures are merely a sheath within which is hiding the pointed dagger in which the Minister is really interested – the provision for the privatisation of Aer Lingus, a premier public company which was built up over decades by a dedicated and hard-working workforce in the interests of our society.

Unfortunately, it is entirely appropriate that it is the Minister, Deputy Brennan, who brings this provision before Dáil Éireann. He holds an extreme right-wing philosophy on the economy and he will not be happy until every significant sector of public enterprise in the State is handed over to privateers. He wants to privatise public transport in Dublin, regardless of the disastrous experience of privatisation in Mrs. Thatcher's Britain. The Minister is not deterred. Of course, he is not alone. Sometimes people blame the Progressive Democrats or individual Ministers for foisting particularly right-wing provisions on an allegedly reluctant Government. That is not the case – the Minister is not hoodwinking the Cabinet. The Progressive Democrats are enthusiastic supporters of the privatisation philosophy of the Minister, and as long as the Taoiseach can remain in power he does not care, because he has no philosophy on the public sector, or any other sector for that matter.

The Minister's agenda is incredible. He wants to break up Aer Rianta, although he refuses to tell us why. He provides no plan or anything to show it might be a good idea. Aer Rianta is another premier publicly owned company which is quite close to Aer Lingus. We are left with an understanding that it is the Minister's pro-privatisation mania that leads him to make these decisions, with no firm backing to support them. The reports about certain aspects of Aer Rianta's operation, such as the terminals at Dublin Airport, point in the opposite direction, but the Minister would have us believe he has a hunch that it would be a good idea to privatise these crucial national assets. President Bush had a hunch that it would be a good idea to invade Iraq and he dragged his country with him, but this proved to be a disaster.

We must look behind the hunches. When we do this we see the Minister's determination to hand over crucial public assets to powerful elements in the private sector at any cost. Some of these, no doubt, are speculator friends of Fianna Fáil, who would like to move in on public assets, take over companies that have been founded and funded by the taxpayer and kept going by public sector workers and milk them for whatever profits are possible. In this regard, the key parts of the Bill are sections 3 and 5, which give the Minister the right to sell all or part of the shares in Aer Lingus.

The Government has been in power for six and a half years, during which time it has consistently savaged publicly owned enterprise. Eircom was the most notorious of these privatisations but there were a series of others which have almost been forgotten. Most involved important smaller public companies such as the Irish National Petroleum Corporation. Others were publicly owned financial companies. All were flogged off by the Government, but Eircom's privatisation was the most blatant. During the process a crucial public asset was handed over to privateers while thousands of ordinary working people were burned after being gulled into buying shares by an incredible propaganda campaign released by the Government. It had the effect of misleading people into thinking that speculation in Eircom shares would provide for their old age. Even more seriously, Eircom, a vital national asset, was consumed by sharks in the commercial sector as it was sold to multinational corporations to become the plaything of international financiers and profiteers.

The Government agenda with regard to the aviation industry is clear and needs to be exposed. It wishes to hand over the right to create a private terminal to its friends. It wants to privatise Aer Rianta as a whole. There is no question that this is the downstream agenda from the break-up of Aer Rianta and now it wants to provide for the privatisation of Aer Lingus. It is time we launched a major public debate on the issue of public ownership of crucial assets and services. I was astounded to hear today, for example, that Dublin Corporation, which is supposed to be a servant of the people, is considering getting rid of its housing stock. What we see increasingly in the top management of public services are people who are thoroughly infected with the idea of privatisation and of the capitalist market.

This poses a most serious problem for the future of public enterprise and publicly owned assets in our State. What is the purpose of publicly owned bodies such as local authorities if they are not to administer crucial services such as housing and waste management in the interests of the people? The reality of privatisation is extremely brutal as far as the ordinary workers in these public enterprises are concerned. There is now an all-out effort by Aer Lingus management to privatise the company's catering, for example, a section of the airline that employs close to 300 workers. Aer Lingus management executives are attempting to bludgeon and browbeat the catering workers to accept the most disgusting roll-back of wages and conditions in the company. They are fired up by all the values of companies such as Ryanair and the low-fare merchants in the United States and seek to impose on public service workers conditions that are completely contrary to any company that respects its staff's right to have reasonable pay and conditions. They say Aer Lingus catering is 30% over-staffed and about 50% overpaid and they want to offer a severance package to get rid of the current workforce so that they can bring in "yellow pack" workers, unfortunate people in search of employment, on much reduced wages and conditions.

That is the regime the Minister for Transport, Deputy Brennan, is presiding over. It is a regime that needs to be exposed. This is against the background of the Minister's statement in introducing this debate that in 2002 Aer Lingus had achieved an operating profit of €63.8 million and the projection for 2003 was €78 million. At the same time it wants to batten down the wages and conditions of the Aer Lingus workers. It is all a preparation for privatisation. It wants to have a suitably cowed workforce that it can hand over on a plate and put forward as one of the marketing advantages when the Government sells it to the privateers. I have to question the role of senior management in Aer Lingus and indeed like companies.

The Minister said in his introductory remarks that he had "an opinion from the board and the chairman" that they faced at least part-privatisation if not full privatisation of Aer Lingus. Chief executives and senior management in publicly owned companies should not, in any sense, be allowed to advocate the privatisation of their industries. Their remit should be as custodians of these public assets, to maintain them in public ownership and get the maximum benefit for the taxpayer consistent with proper wages and conditions for the workers. There is a disgraceful conflict of interest here such as we saw in Eircom, where people who were supposed to be looking after a publicly owned asset achieved massive financial gains from the privatisation of that enterprise. This is incredible and should not be allowed in any sense. The mouths of senior management executives probably water at the prospect of what privatisation means in terms of their own selfish interests. That should be anathema. It should not be allowed.

The alternative to what the Minister and some senior management in Aer Lingus envisage is an entirely different approach to the national airline. Aer Lingus should be seen as a national jewel. It should be seen as a vibrant public enterprise which can be consistently developed and which is a crucial national asset in terms of public transport from our island. It is a national asset that can be developed for the benefit of the travelling public, the taxpayer and the Aer Lingus workforce. The workers should be involved in the management of Aer Lingus because it is they who have the best interests of the airline at heart. It is they who know the dots and commas, nuts and bolts of this particular service. If instead of being bullied and browbeaten, which they consistently are, by senior management, with the support of the Government, they were brought to the heart of the management of the company and properly rewarded, there is no doubt they would be instrumental in assisting the continued development of this crucial public asset. That is the alternative to the plans the Minister brings to the Dáil.

The board of Aer Lingus should reflect on this. It is incredible that the "Yes" men and women of the Government are stuffed into the boards of crucial public services for no reason other than they are loyal hacks to one or other of the Government parties. It is incredible after the exposure of cronyism and all that has gone with it in recent years that there is still a Government that carries on this tradition. It is one that should be halted and ended forthwith. Instead of the cronies of Government, if the working people, both in the airline and those depending on the service, are involved in the development of the national airline, it will continue to be a premier company.

Teideal an Bhille seo is ea "Acht a deirtear do dhéanamh socrú maidir leis an Aire Airgeadais do shealbhú, d'aistriú, do dhiúscairt, do mhalartú agus do dhíol scaireanna i nGrúpa Aer Lingus cuideachta phoiblí theoranta, do dhéanamh socrú maidir leis an gCuideachta sin d'éisiúint scaireanna, do dhéanamh socrú maidir le nithe a bhaineann le scéimeanna aoisliúntais de chuid na Cuideachta sin", agus mar sin de.

Níl aon dabht ach go bhfuil dhá fhocal a léimeann amach ar an léitheoir as an Teideal áirithe seo. Is iad san, "díol" agus "scaireanna". Is é atá i gceist leis an mBille seo ná príobháidiú Aer Lingus. Sin an cuspóir is tábhachtaí atá in aigne an Aire agus in aigne an Rialtais. Is mór an náire ag an Rialtas go bhfuil an cuspóir seo aige, maidir le comhlacht poiblí de chuid an Stáit atá chomh tábhachtach mar áis straitéiseach, go mórmhór chomh fada is go bfuilimid ag maireachtaint ar oileán agus go bhfuil an seirbhís seo thar a bheith tábhachtach do dhaoine ag imeacht amach as an oileán, do idirghabháil idir Éirinn agus tíortha eile agus dá leithéid.

Tá an Rialtas agus an t-Aire sásta teacht isteach i nDáil Éireann agus a rá go bhfuil siad sásta an aerlíne seo a thabhairt amach dos na boic móra agus do chomhlachtaí príobháideacha agus idirnáisiúnta, daoine gur cuma an diabhail leo maidir le muintir na hÉireann. Is náire agus is tréigint é. Tá an Rialtas níos measa ná na tiarnaí talún a bhí i gceannas na tíre seo ins an 19ú aois. Ta súil agam go gcuirfidh an Dáil anocht deireadh leis an tréigint seo.

Mr. O'Dowd

Ní feidir liom cuidiú leis an méid adúirt an Teachta Joe Higgins. Fealsúnacht seanaoiseach atá aige agus caithfimid maireachtaint sa saol atá inniu ann. Caithfimid a bheith ag féachaint chuige i gcónaí go mbeidh comhlachtaí cosúl le Aer Lingus in ann oibriú sa tslí is fearr chun a bheith beo go deo nó chomh fada agus is féidir leo.

Mr. J. Higgins

Ta an t-impiriúlachas i bhfad níos seanaoisí ná an sóisialachas.

Mr. O'Dowd

Is ábhar gáire é an sort cainte atá ar siúl ag an Teachta Higgins mar níl an fhírinne ag baint leis ar chor ar bith.

Comhlacht an-thábhachtach is ea Aer Lingus. Is í príomh aidhm an Bhille seo ná Aer Lingus a choimeád mar chomhlacht in Éirinn. Tá sé soiléir, freisin, go mbeidh díol phíobháideach ann. An cóir an comhlucht ar fad a dhíol? Tá argóintí le cur ar an dá thaobh. Níl aon dabht ach go gcaithfidh aistriú an-mhór a theacht ar Aer Lingus de réir an Bhille seo. Díospóireacht an-mhaith is ea an ceann seo chun an cheist go léir a phlé.

Le blianta fada anuas tá an-jab déanta ag Aer Lingus. Roimh theacht Ryanair ba é Aer Lingus an comhlacht ba mhó le rá imeasc comhlachtaí na hÉireann. Comhlacht an-mhaith is ea é, agus neamhspleách ó thaobh polasaí de. Deir gach duine a d'oibrigh do Aer Lingus gur chomhlacht cairdiúil ab ea é agus gur cuireadh suim i gcónaí ins na gnáth daoine a bhí ag taisteal ar eitleáin Aer Lingus. Tá creidiúint an-mhór ag baint le logo Aer Lingus dá bharr sin.

Historically Aer Lingus has probably been the best known Irish company, certainly before Ryanair was set up to compete with it. It has a very proud tradition of service to the people who travel with the airline, directly on the flights and indirectly through the network of workers and support services within the company. It is something of which we are all very proud. I am more proud of Aer Lingus than of Eircom. I suppose I would have less complaints about Aer Lingus because it is a totally different service.

Like other companies in the modern world, Aer Lingus must change and keep up with what is happening in the international market. The company has given very proud service. For many years, Aer Lingus hostesses epitomised everything good about Ireland. Younger people looking at the television liked to see images of an Irish airline, with friendly hostesses providing an efficient and effective service. Aer Lingus has a very safe aviation record, which is why we were always happy to choose it in the past and, I hope, will continue to do in the future.

Aer Lingus employs thousands of people and even though it does not employ so many where I live in County Louth, a number of employees live in the area. The lives of thousands of people in north County Dublin revolve around what happens in Aer Lingus and, in the broader sense, what happens in the airport. The debate on the Bill must take into consideration the interests of people in north County Dublin and elsewhere who work for Aer Lingus. We must fully debate the proposals in the Bill.

Aer Lingus has a fine business record. The company has recovered greatly in the recent past from the negative and adverse impact of 11 September on the aviation industry throughout the world. It has become a very slimmed down company in terms of how it operates flights. In many instances it is discontinuing the business class service. The most important aspect of Aer Lingus is its dot.com service. One can book flights on the Internet at a 50% reduction. It offers flights to New York in January for approximately €120. When one travels with Aer Lingus, one will arrive in the city named on the ticket and not have to travel for three hours by bus or whatever to reach one's destination.

Aer Lingus has a lot to offer. It is an efficient and effective company which is very well run. I listened recently to a radio programme about the chief executive officer, Mr. Walsh. He is a very young and dynamic man. He has made major changes in the company, none of which could be made without the clear and absolute support of the unions and workers involved. There have been difficulties. There was a recent strike because cabin staff were unhappy with issues. However, the company is being run efficiently, with all sides agreeing to the necessary changes being made. One must change to stay in business in the modern world, and Aer Lingus is certainly meeting these requirements.

A number of Deputies addressed the issue of privatisation. There is no point getting caught in a 19th century philosophy for a 21st century business. Some people argue about privatisation as if it were evil, negative or bad. It can be good and bad but in itself it is not an issue. Its impact is important. If a public company needs more capital and the State is in a position to provide it there is no reason it should not approach the private sector for investment income and offer its shares for sale, particularly if is a company in which people wish to invest. I am not hung up on privatisation. Those who are miss the point. They live in a different world, belong to a different generation and a different time.

It does not matter whether Aer Lingus is a private or public company. What matters is that it be a success and that the relationship between the management and staff is effective in achieving that. The question I put to those opposed to privatisation is whether it is good that a worker can invest in and be a shareholder in his own company? Is it not productive for a worker in Aer Lingus to be able to buy with his own money a guaranteed share of the company of upwards of 20%? It is a good thing to be able to do so. Companies in my own town of Drogheda have such schemes. For example, Irish Cement has a useful and modern share participation scheme for all its workers. Every worker has a share in the ownership of the company, ensuring a commitment to the company's success. The ability of workers to buy shares in their company constitutes a form of modern socialism and ownership. It transfers ownership from the boic móra, as Deputy Joe Higgins said, to the ordinary man. It gives the ordinary person a share, a say and a vote in the management of his company, something that would never happen if it is run solely by the Government. I do not have a difficulty with the principal issue here, which is the purchase of shares. I welcome it as a good thing.

Shared ownership can also apply to those who use the company when travelling. This will encourage company loyalty. If I have X amount of shares in Aer Lingus I would be more inclined to travel with Aer Lingus rather than British Airways, SAS or whatever. Although only a small aspect, it will generate its own interest in travelling with the company.

The world-wide aviation industry was in good shape until the events of 11 September 2001, when the international situation changed radically. I commend Aer Lingus on its one world alliance, its enterprise and the change it has made in management and particularly on reducing its prices, becoming more competitive, offering more choice to ordinary people and providing a better service. I do not see the sale of shares in Aer Lingus as right wing or left wing but as the best option. The good thing is that people can take ownership of the company.

A number of Members referred to Eircom and the problems that arose directly as a result of the sale of shares in the company. In many ways the Minister's predecessor, Senator O'Rourke, of whom we can be critical, embarked on a challenge of which we were all in favour. We were all happy to invest. The problem was that many lost money. The less experienced one was in the world of finance, the longer one held onto one's shares and consequently the more one lost. That was a serious problem. People lost confidence in the IPO and the sale of State companies, which probably delayed the introduction of this Bill.

When going to the market one has got to be careful at what price one sells. Eircom employed international consultants. There were different views on what the initial offer would be. The boic móra, as Deputy Joe Higgins would call them, did well out of the shares. They sold early and got out early while the ordinary person did not. When one invests and buys one takes a risk. I hope more thought will go into this issue if and when Aer Lingus shares are offered to the public. Members of the public will be more wary than was the case with the Eircom privatisation, but I hope more thought will be given to those who may be interested in buying only a small amount of shares, if that is possible. The more people who take shares in and ownership of Aer Lingus when offered for sale the better and the more interesting it will be. People will feel part of the company, more so than was the case with Eircom. Eircom left a sour taste in the mouths of many people. Many were unhappy at being forced to sell their shares even if they did not wish to do so. That had a negative impact.

Other issues have been addressed in this debate, one of which is landing rights in other countries, particularly at Heathrow Airport. They are expensive to buy and constitute a national rather than a company asset. The Minister may have already addressed this aspect, but it is important that these rights be properly scrutinised. We should retain ownership of them if possible. There is a need to ensure that they cannot be sold without the consent of the Government.

Some years ago I travelled on an Aer Lingus flight to New York. There was no problem on the outward journey but the return journey was different. I am not the smallest of men. Sitting in front of me was a guy who, as soon as he boarded the aircraft, backed his seat more or less into my face where it remained for the remainder of the flight. I complained to Aer Lingus in writing saying I was concerned about the leg room available on its international flights. I received a wonderful reply to the effect that this was the first such complaint the company had received and inquiring if I was dreaming it up. I was not. Medical research has since proven that on long haul flights, particularly over four or five hours, there is a serious problem if space is restricted. Aer Lingus policy on its international flights, certainly on its flights to New York, is shameful and unacceptable to me and many others to whom I have spoken about travel on the A330 Airbuses. They are wonderful aircraft but there is less room in them in terms of distance between passengers than on a flight to London, France or wherever.

Last summer there was a sudden strike at British Airways. I happened to be in Nice and had hoped to travel back to Ireland that night. While the Aer Lingus staff in Nice were friendly the company had a problem in that it was sharing a flight with British Airways. When the British Airways flight did not turn up we immediately went to the Aer Lingus desk and were told we were travelling with British Airways and not Aer Lingus. When not in Ireland, problems may arise between Aer Lingus and its one world partner. In view of this, it may be useful if the company circulated a printed sheet setting out the procedures and what is normally done and, most important, a contact telephone number.

Events such as this happen in unusual and rare circumstances. From my perspective, the company response was inadequate. I would have liked to have been able to read about the procedure to follow. I understood my contract was with Aer Lingus, the company from whom I bought the ticket, and I considered it was the company's responsibility to deal with it. However, Aer Lingus said it was British Airways. I had a row with the company over the matter. I was unable to return to Ireland and had to stay in France, from where I travelled to New York. Thousands of people were discommoded on that occasion. When I arrived at the Aer Lingus desk in New York the staff were very helpful and gave me the name of a Ramada hotel to which I travelled in a taxi. When I got there I found a half mile queue of people whose transport arrangements for the night had been upset. The hotel was very poor and the staff were unhelpful to everybody. The airline should re-examine where it sends people when unusual circumstances, such as a sudden strike and worldwide commotion, arise.

I travel regularly from Drogheda to Dublin and, since the work began on the port tunnel, I can be delayed for an average of one hour. The arrangements are inadequate and many people travelling from the airport or, like me, from further up the road are delayed unnecessarily. I cannot understand why we are delayed for up to one hour. The Minister is an efficient man in these matters. Could he speak with someone to discover what is the problem? It seems to be the management of the volume of vehicles in the early morning because the problem is not as bad at night. Nobody seems to care; one sits there and nothing happens. Could the Minister call on those responsible to do something about it? Part of the problem is that drivers try to avoid staying on the main road, take an exit to a flyover and prevent the rest of the traffic passing. There are two flows of traffic, one appearing to go faster than the other. It is not fair on people like me who are rushing to get into the Dáil to do their business.

I have problems about selling all the silverware but not in principle with the sale of some of it.

Mr. S. Ryan

I am pleased to have the opportunity to make a contribution on the Bill which is, by and large, an enabling one, although in that context I am disappointed. I want to see a viable and successful Aer Lingus in future. The content of the Bill does not do justice to the important strategic decision being put before us. We need a Green Paper on the future and merits or otherwise of Aer Lingus. I have always been and will remain a supporter of public enterprise because it has played a significant role in the development of the economy since the foundation of the State and can continue to do so in future provided the will exists at political, management and staff levels. However, the public enterprise of which I speak must be just as accountable in terms of management and staff performance as any company in the private sector.

To achieve this, it is imperative that we separate the social and commercial aspects when making decisions. The Bill contains enabling provisions in respect of the establishment of the employee share ownership plan, the issue and sale of new shares by the company, the sale of shares by the Minister for Finance, the appointment of directors and the establishment of new pension schemes.

In respect of existing pensions in the context of the proposals to privatise Aer Lingus, the annual report states:

The group operates several externally funded pension schemes for the majority of its employees. These schemes meet the definition of defined benefit schemes under the terms of the Pensions Act 1990.

The report then refers to surplus:

If an actuarial valuation discloses a surplus, it shall be applied by the Trustees, after consultation with the Actuary, for the purpose of increasing the benefits to members or reducing the rate of contributions by the employers and-or members.

It also refers importantly to deficiency:

If an actuarial valuation discloses a deficiency, the Trustees shall take such measures as they think appropriate, having regard to the recommendations of the Actuary, to remedy any such actual or anticipated deficiency provided that no such measures shall, without the consent of the employers, make provision for payment of any increased contribution by the employers or without the consent of the members make provision for the payment of any increased contribution by the members.

That is a fundamental issue that must be addressed because there is a public perception of a scandal for Aer Lingus and Aer Rianta pensioners.

It is important to note the background to this. Since the 1950s Aer Lingus and Aer Rianta management and staff jointly agreed that the terms and conditions of employment would be kept in line with public service and especially with the major State companies. That pact has been broken. Pension increases are among the worst in the public sector. They are paid at the discretion of the trustees and can be no higher than consumer price index increases.

The staff have worked in the public sector all their lives and, with the possibility of privatisation in future, they are concerned and demand that a proper pension scheme be put in place comparable with those in the Civil Service, local authorities, Army, Garda Síochána, and for nurses, teachers, ESB and CIE salaried staffs. It is important to note that the pensions in these bodies were increased by 63% between 1989 and 2002 while Aer Lingus and Aer Rianta pensions grew by only 32%, creating a gap of 31%.

The pensioners' representatives have met the Minister's predecessors, the Taoiseach and the Minister for Finance but do not seem to be closer to receiving a specific commitment to put in place a pension scheme that is fair, effective and prepares them for the future. There is no reference to pensions in the Bill beyond an outline of what the Minister proposes to do, but that must be addressed. I urge the Minister to make some commitment on that issue when summing up.

Agreement was reached between the unions and Government to increase the employee shareholding in the company from 4.9% to 14.9% as part of the Aer Lingus survival plan. This was not a gesture on the part of the Government, it was a return for the sacrifices made by the staff over the years and, accordingly, I have no difficulty in supporting it. The legal requirements for the implementation of the share increase, however, could have been introduced without including provision for privatisation. The Minister will have the power to implement far-reaching decisions without recourse to the Oireachtas and it is wrong that fundamental decisions on the future of Aer Lingus could be made without detailed analysis in the Houses.

I oppose granting the Minister for Transport and the Minister for Finance the power to sell shares in the company. It is evident that the Minister has deliberately cast aside a fundamental issue – the public interest. Any proposed legislation that provides for a change of status in Aer Lingus must take that interest into account because it is linked to the future viability of the company. The Bill does not refer to strategic issues and we are being asked to enact it without detailed debate. The legislation is flawed as a result.

Aer Lingus has served this country exceptionally well in the past 66 years, giving immense returns on investments and making a vital contribution to industrial policy. I recall coming into the House during the difficult times in the early 1990s when we were talking about the possibility of Aer Lingus collapsing. We had to fight tooth and nail when in government with Fianna Fáil to ensure the then Minister for Transport, Energy and Communications, Deputy Cowen, would give a commitment to the provision of the equity needed to ensure the future viability of the company. At a time when competitors throughout Europe were in receipt of state investment, nothing was forthcoming from successive Governments here. My colleagues and I had to take action because we were not prepared to accept a diktat from the Minister on the future of Aer Lingus.

Following that action, £175 million was invested in the airline and the Cahill plan was implemented. Thousands of jobs were lost but it put the company on a solid footing. People will acknowledge that the limited investment over the years has given real value for money. The Minister is betraying the committed managers and workers who built up the company, particularly the current staff who have made such huge sacrifices to bring about change in Aer Lingus. With support from top to bottom, staff have made substantial changes in the company.

The economy at national, regional and local level depends on Aer Lingus, and Cork, Shannon and Dublin, particularly north County Dublin where thousands of Aer Lingus and Aer Rianta staff live, have benefited from its work. I have reservations, however, about the direction the Minister is taking with the Bill because, like everyone in the House, I want a vibrant and successful Aer Lingus. The tourism industry, which successive Governments have identified as the largest sector of the economy, with huge growth potential, could be affected if we lose our national airline. Where is there reference in the Bill to the significance of tourism?

In the aftermath of 11 September 2001, the then Minister for Public Enterprise said that the strategic importance of the aviation sector to the economic well-being of the country had been well documented, particularly when our island status and position on the periphery of Europe were taken into account. She said that the aviation sector, through the provision of reliable, competitive services to and from our main markets made a major contribution to economic growth across the tourism, manufacturing and services sectors. Referring to the transatlantic service, she said it illustrated the crucial importance of Aer Lingus in supporting the tourism industry and the important and growing trade links with the US. If Aer Lingus is sold off, even to Irish buyers, there is no way to guarantee it will not be sold on to other owners who would have no loyalty to this country, no commitment to the maintenance of routes of strategic value and no consideration of the needs of the tourism industry.

In light of the great success of the past two years, it is disturbing to read in the media that the chief executive of the company, Mr. Willie Walsh, and the chairman, Mr. Tom Mulcahy, have recommended to the Minister the sale of Aer Lingus. The Minister, who has always been in favour of privatisation, is using these recommendations to justify his own proposals, whatever they entail. I hope to have time later to delve into the Minister's proposals regarding the privatisation direction he intends to take.

I admire what the chief executive of Aer Lingus has done and the direction in which he has brought Aer Lingus to date, but he is exceeding his duty in proposing privatisation of the company. What he and the Minister should do is come before an Oireachtas committee, or bring forward a Green Paper, and justify the direction being proposed for this company. Let us all question this seriously to ensure that we will in the end get a policy for Aer Lingus that will be right for the country, the employees and the economy.

It is interesting that the chief executive is reported to have said that the proceeds of the sale of Aer Lingus, which could range from €300 million to €600 million, could go directly to the Minister for Finance to fatten up his campaign for the next general election. This is an utter disgrace. Considering all the negotiations that have taken place over the years and the difficult decisions that have to be taken, it is a disgrace to say it is "interesting" that the sale proceeds might go to the Government's kitty to finance the purchase of the new fleet and further expansions in the future.

There is a further line of thought which I do not disagree with, namely, that Aer Lingus has shown that it is capable of competing in the aviation market and should be allowed get on with the job, rather than be interfered with by this Minister. I have given serious consideration to this Bill. Though it is able legislation, it is defective. It is in the hands of the Minister for Transport, Deputy Brennan, though any Minister could have been involved. Regarding this country's future there is too much at stake for our flagship carrier, Aer Lingus, to be delivered into the hands of one person and a Government to bring in policies for privatisation without being obliged to come before the Oireachtas to present a case for privatisation. That is why this Bill is defective and the reason I will oppose it.

Dr. Cowley

I am very honoured to speak on this Bill, which is extremely important. The main purpose of the Bill is to give effect to the employee share ownership plan, ESOP, agreed by the Government and Aer Lingus unions, and to provide for a legal framework to facilitate a legal process of external investment in the airline in the event that the Government embarks on such a process. It includes an enabling provision for the establishment of new pension schemes by Aer Lingus for general employees and pensioners and for amendments regarding the appointments of directors, including worker-directors.

As noted, the story of Aer Lingus is remarkable. We all have great pride in our national airline. For a country of four million people it flies and has flown the flag. It is obvious there have been major changes at the airline and, as airlines go, it is unusual for both Ryanair and Aer Lingus to be in profit. We all recall the events of 11 September 2001 and the terrible effect on airlines. Aer Lingus has turned a loss of €52 million in 2001 into a profit of €63.8 million in 2002, and is already planning further changes such as new routes and the transformation of the fleet into one of Airbuses, which will allow more savings. The airline is the bridge which allows tourists to come to this country. Aer Lingus has done very well and has moved into profit. This legislation is very much connected with its future. There are big changes occurring. Airlines are very important, with airports necessary to support the airlines and vice versa.I will talk briefly of how Knock Airport has also done very well. It is another success story, with passenger numbers this year up 25%. This shows how Knock International Airport has developed as the major infrastructure in the BMW area of the west. A recent survey showed that 70% of people surveyed in the whole BMW area preferred Knock International Airport to Aer Rianta airports. The views of the people cannot be ignored.

There is a 180-acre business park in the airport area which has major growth potential if it gets the support it needs. An air freight apron is also being developed. The wish would be that this wonderful investment by the very dynamic Knock Airport board would be matched by the Government.

There are empty roads in my area – it took me five and a half hours to get to Dublin today. If I were going in the other direction, for example, from the midlands to Knock Airport it would have taken me no time. I wonder why major resources would be put into bringing more people into Dublin, which is already over-congested and lacks the infrastructure around the airport. Tax incentive schemes and manufacturing opportunities are needed at Knock International Airport. The story of Aer Lingus has been remarkable, but so too has that of Knock International Airport.

This is the single greatest opportunity to divert traffic which is congesting the entire Dublin area. Second terminals and the like are necessary, but where is the infrastructure to allow cars in and out? How are the people to get in and out? Already the M50 is jam-packed. What will happen with more development at Dublin Airport? Is it not time to divert people to the uncongested Knock Airport? The Government must provide greater financial incentives to match the hundreds of millions that have been put into other international airports and turn a black hole of underdevelopment into a shining beacon of major potential for the whole area.

The Minister will agree that the Knock Airport board is very dynamic and is competing very successfully with other international airports. The number of passengers will reach a quarter of a million this year. Knock is the fastest growing airport, with a 25% increase in passenger numbers this year. Some €400 million has been allocated for marketing, safety and security, but that is very little for an airport with major potential. If we are talking about balanced regional development, this is a wake-up call. The Dublin area is bursting at the seams and if we were afloat, this whole area would be under the Irish Sea.

Considering the cost of maintaining people in Dublin compared to maintaining them in the west, it would be much more cost effective to invest in balanced regional development rather than paying lip service. I know the Minister will agree with that and I hope he will take appropriate action. My area of the west is the most socio-economically deprived part of the country, a fact shown by the national census figures, yet the funds are going into the over-developed area in Dublin. As I said, it took me five and a half hours to get to Dublin from the west. It would make a lot more sense to direct people towards Knock Airport.

The Bill is extremely important. It raises many questions. A major partnership effort has been made and it is extremely important that workers are benefiting by having a share in the company. This gives everyone an input into the situation.

Debate adjourned.