I have no doubt that the Bill will get a speedy passage through the House because it will be guillotined next Tuesday after one hour. It is rushed legislation as we only got the Bill last Tuesday and we are debating it on Thursday. This is the eighth rushed Bill to go through the House this year.
This Bill is a botched attempt by the Government to deal with the aviation sector. Following the demise of the Government in the local and European elections, I would award Oscars to the Fianna Fáil backbenchers for their public soul-searching last week, particularly when they declared that the Progressive Democrats had a huge influence on Government policies. Very few of them have spoken out today on this legislation. On the Order of Business this morning, when the Opposition leaders objected to this rushed legislation, the same backbenchers voted with the Government, including my colleagues in Clare. Everyone knows that the Tánaiste intervened last week in the pay talk to ensure that this legislation on the break-up of Aer Rianta would take place before the summer recess. Who is wagging the dog's tail now? This is a Government decision that has been introduced to the House by the Minister for Transport, Deputy Brennan, with the blessing of the Tánaiste. The Minister for Finance has such faith in the Minister for Transport that he is willing to overrule a decision at the end of the day.
Earlier this afternoon, Deputy Ring complimented Aer Rianta and said that it did a good job in its day. I agree with his comments. Aer Rianta is responsible for the operation and management of our three national airports. In 2003, the company employed 2,353 full-time staff at its airports, 684 staff in its hotels and 351 staff in its international activities. The semantics of the Government, the uncertainty and the indecision are destroying confidence in the airports and have destroyed this profitable company.
The Aer Rianta annual report for 2003 shows that all is not well, with group profits for the financial year down €20.3 million after tax, from €36.2 million. That represents a 44% drop. This has been caused by the complete uncertainty in the aviation sector. We saw that €7 million was wasted on pier D, which was never built. Why was that money spent? Aer Rianta International had a turnover of just over €47 million in 2002. It manages the airports and duty business overseas, as well as investing in other airports. The profit from the Great Southern Hotel group was also down considerably. However, Aer Rianta paid a dividend to the Government in 2003 of €6.1 million, which is a large sum of money.
The Bill provides little solace on what lies ahead for the airport in my area, Shannon Airport. Since its establishment, Shannon Airport has been one of the great models and success stories of how national policy can support and promote balanced regional development. The development of Shannon as a tourism gateway has brought maximum benefits to the west coast of Ireland. The distribution flow of Ireland's tourism within the country is influenced by its access. Hence we have the spread of American visitors to Killarney, Connemara, Westport and all over the west coast. Forty-four per cent of the traffic from Shannon Airport is made up of American business, and that is a significant amount.
The Minister said that we should be taking the low-cost route, and I have no problem with that, since it is important that we have it. I would welcome Ryanair or any other low-cost airline increasing its business out of Shannon Airport. However, it is important that we do not put all our eggs in one basket and that we have a mixture of American and low-cost European flights. We all know that most Americans who come here wish to come to Ireland but not through Dublin, so the American market has great potential still to be tapped by Shannon.
We see overseas industrial investment, particularly from American firms, attracted to the region. Fifty per cent of the companies in the Shannon free zone are American and depend on direct transatlantic services coming to Shannon from the United States. As a result, the airport has a direct impact on 46,000 jobs on the west coast of Ireland. In the mid-1990s, Shannon Airport expanded with the development of a new, state-of-the-art terminal building. As most other speakers said, the airport can handle up to 5.5 million passengers yet currently handles only about 2.4 million. It therefore has the capability of taking more.
Aer Rianta Shannon has been a good employer in the region and a major contributor to its economic success. From the date that this Bill is enacted, Aer Rianta Shannon will cease to exist, and the new Dublin Airport Authority will assume control. The Bill provides for the establishment of the Shannon Airport Authority plc. The Minister has noted that the establishment of that authority will pave the way for competition between airports. I would like to know how that competition will be improved and how Shannon Airport will have more control over its own destiny if it is to be controlled by its competitor, the Dublin Airport Authority.
Aer Rianta Shannon is represented in the group structure but, as a result of the Bill, the company's employees become employees of the new Dublin Airport Authority. As I read the Bill, members of the Shannon board will not be represented on the new authority, something Deputy Naughten has pointed out. I do not know what is to happen but, if there is nobody representing Shannon Airport on the new Dublin Airport Authority board, which has already been appointed, what will happen?
Immediately after its establishment, the Shannon Airport Authority plc will be charged with drawing up a business plan which will require the approval of the Minister for Transport and the Minister for Finance. We all know that the Minister for Finance has serious concerns about the break-up which he has expressed quite publicly. The reason is obviously that he has read the PricewaterhouseCoopers report. I assume that the Minister for Transport has read the report, but he seems to be ignoring it and taking a gung-ho approach to policy change. I would like to know whether the business plan will address the real issues or whether the board will again be requested to produce more fudge. The PWC report commissioned by the Government indicates that Shannon Airport would have to produce earnings of €7 million by 2008. It states that some €36 million of capital expenditure will be incurred between 2005 and 2008 at Shannon.
The report also highlights the intention of the Government to break up Shannon Development by indicating that Shannon Airport will be able to draw on resources of €6 million annually from its rental income. Now we want the new airport authority to be a property manager as well. The Government is not content merely to break up one semi-State company in the process, it proposes to destroy the flagship of regional development in the mid-west, Shannon Development, which has created more than 1,000 jobs in the past five years and brought 35 new companies to the region.
I am seriously concerned at the lack of a clear business plan for Shannon Airport before the break-up of Aer Rianta. It is scandalous that no appraisal has been undertaken of the future of a stand-alone Shannon Airport before introducing this legislation. There has been a lack of clear information on how future capital projects will be financed in Shannon. Aer Rianta estimates that in the ten-year plan €75 million capital investment will be required for Shannon Airport. As we all know, the runway needs a new underlay, and many other improvements are needed. I would like to know who will finance the €75 million capital investment.
No information is available on the financial projections, cash and debt management or the nature of ongoing relationships with existing Aer Rianta operations. What is proposed for Aer Rianta International? Will it remain at Shannon? What about the Great Southern Hotel group, of which the Great Southern Hotel in Shannon is a part? Those questions must be answered. Is the Great Southern Hotel group to be sold off to finance further investment in our airports?
The Bill also indicates that the vesting day for transfer of assets to the Shannon Airport Authority plc will proceed following the approval of its business plan after 30 April 2005. However, I have serious reservations about how those assets could be transferred. Have the legal difficulties been overcome? The law forbids the distribution of a company's assets where their value exceeds the amount of its reserves. Aer Rianta airports are valued at €400 million, while the reserves are valued at only half that. According to the report by Farrell Grant Sparks and Mazars, the value of Shannon Airport will be reduced by €65 million if this plan goes ahead. That is because, they claim, the assets will be valued at their fair value rather than their carrying value. Naturally, we all know that a whole loaf of bread is more valuable than half a loaf, not to mention if one divides it into three.
The PWC report points out that an immediate distribution of the assets of Shannon and Cork is not possible. It suggests that Cork Airport be leased from Dublin rather than completely spun off. Is that policy geared to put Shannon Airport out on its own or down the road to be sold off to the highest bidder? The Farrell Grant Sparks and Mazars report warns that the reduction in the value of Shannon Airport places it in a more precarious state. They further warn that a deeper analysis of Shannon should be undertaken before any break-up. Once again, I ask the Minister why the PWC report was not published. The report also strongly suggests that those matters be considered by the Minister for Finance before any decision to proceed. It urges that the full legal and accounting clearances be obtained with regard to the proposed transactions and a basis for market value be determined, as they are central to the proposed restructuring.
Section 12 of the Bill deals with the appointment of staff, their remuneration and transfer to the new Shannon Airport Authority. This is where the Minister really surpasses himself. He has been party to the discussions on the future of the bilateral agreement and the consequences that such a change will have not only on the airport but on the entire west coast of Ireland. No analysis has been carried out of how the change or the introduction of open skies will affect Shannon.
How can the Minister expect the people of the west, especially the workers, to have confidence in the security of their employment when this change is hanging over their heads? The recent report commissioned by the unions questioned that. It has been said that Shannon can switch over to a new low-cost model and manage to increase passenger numbers by 50% by 2008. The report says that detailed projections have not been produced to support that view. I have highlighted on several occasions in the House the importance of the dual gateway to Shannon and the entire western region. If there is a change in the current bilateral, it is estimated that Shannon will only break even. If there is a change to a "two for one", €4 million will be wiped off Shannon Airport's bottom line. I repeat that no analysis has been undertaken, bearing in mind the potential losses to Shannon Airport if there is even a minimal change to the current status.
Yesterday we read in the newspapers about the ten-year plan which Aer Rianta has proposed. That suggests that there should be 281 redundancies in catering and general clerical areas at Shannon Airport. While the report accepts that any redundancies would have to be voluntary, it also suggests that there would be a cost factor in the pay-off of between €20 million and €25 million. Who is going to finance that cost? It also points out that the ending of the dual gateway will make this position even worse.
In recent years Aer Rianta has consolidated its financial services in Shannon Airport. I would like to bring to the Minister's attention section 12(5) of the Bill which refers to the transfer of staff working in shared services to new entities. I want the position of staff in this area clarified. Will the staff in shared services at Shannon Airport continue to be employed by the new Dublin Airport Authority? This section appears to intimate that staff may be transferred to the company which continues to provide such shared services or it may be designated by Ministers to supply such services. Does this mean the area will be commissioned to a third party?
Then there is the question of pension funds relating to Aer Rianta employees. The PricewaterhouseCoopers report does not take into account any potential shortfall in Aer Rianta pension funds. There is an urgent need for the Minister to review all these implications arising from his proposed restructuring. Overall, in spite of the fact that this Government and Minister have been in the process of introducing legislation to break up Aer Rianta for over a year — prior to the Dáil recess in 2003 — we are no closer to knowing the exact implications for Shannon Airport of this legislation. Deputy Naughten referred to that this morning. We have witnessed a series of varying indicators from different Ministers. Deputy Brennan, the Minister for Transport, indicated on 31 May that he was battling with Deputy McCreevy, the Minister for Finance, over financial aspects of the break-up. The Taoiseach has intervened at various stages but at this point nobody is sure what guarantees he has given to the unions and their members.
We have to look at everything that is happening. Yesterday we heard the Leader of the Seanad, Senator O'Rourke, calling for the immediate disclosure of donations to political parties from business interests. Last night we witnessed on television the chairman of Aer Rianta, Mr. Noel O'Hanlon, raising similar concerns. This weekend Shannon Airport will be the focus of attention from all over the world as the visit by President Bush for the EU-US summit takes place on Friday and Saturday. I hope the Government will pay the same level of attention to Shannon Airport and its future that it is attributing to security this weekend.
We saw in the local elections that the Minister's own party had lost control of Clare County Council. The Progressive Democrats lost its only seat in Clare. We also saw that a number of candidates lost their seats in the Shannon area. This is an very important issue in Clare and is of great concern to the whole west of Ireland. The Minister should bear in mind in making his decision the jobs that are at stake. He should also consider the families concerned. What is to happen, given the uncertainty these people must face over the next nine months not alone in Aer Rianta, but also in Aer Lingus with its proposal to cut staff numbers at Shannon by 50%?
This business plan should have been put in place before any proposed break-up. In the short period between now and next April, the new board will find it hard to put a viable business plan into place. We all know that the aviation sector is currently in difficulty. We know how hard it is to attract new airlines to a region whether by Aer Rianta or an independent board. Airlines have gone into liquidation before they have started business. That was the situation in Cork and Shannon where Jetmagic collapsed. There was also the liquidation of the company in England which Aer Rianta had commissioned to run cross-channel services. A new service, EU Jet, will hopefully take off in September, but it was announced before the local and European elections. There is an urgent need for the Minister to act now in the future interests of the people of Shannon.