Disposal of Shares in Aer Lingus Group plc: Motion.

Ms O. Mitchell

On a point of order, I wish to draw the attention of the House to a serious flaw in the motion before us. On reading the motion yesterday, I noticed what seemed to be a disparity between the terms of the motion and what is required under the primary legislation. I have now received three separate sets of legal advice confirming that the motion is seriously flawed and does not comply with what is required under the primary legislation, which states: "The Minister for Finance may not dispose of any shares in the Company without the general principles of the disposal being laid before and approved by Dáil Éireann." The motion calls for our approval of the disposal of the shares and, therefore, any sale that might proceed on the basis of this flawed motion would be unlawful. I ask the Minister to withdraw his motion.

I had submitted an amendment on behalf of Fine Gael yesterday. In view of this flaw in the motion, I now wish to submit another amendment, which corrects that flaw. I hope the Acting Chairman will be willing to accept this amendment. While I realise it is not normal procedure to accept amendments on the hoof like this, it is an unusual situation. This is the last slot on the last day of the Dáil session.

Acting Chairman

The order has been agreed and I intend to proceed with the debate. However, I will seek clarification on the issue and the Deputy will receive a response during the debate.

Ms O. Mitchell

May I lay the amended amendment with the Chair now?

Acting Chairman

I would prefer if that were done later when we come back to the Deputy and the Chair will advise her on procedure.

Ms O. Mitchell

I thank the Acting Chairman. Perhaps the Minister might like to respond to the matter.

Minister for Transport (Mr. Cullen)

My response to the Deputy is very straightforward. What I have before me was drafted by all the legal teams involved in the matter. I have no reason to believe that there is any defect in the Government motion, which is fully in accordance with the legislation.

Ms O. Mitchell

Even a non-expert can realise that the Minister is not doing what is required in the legislation. I find it astonishing that he has had such eminent legal advice and could not come up with a motion in line with the terms of the primary legislation.

Mr. Cullen

What I have before me is the legal opinion drafted by the legal experts. I am in their hands regarding that interpretation.

I move:

That Dáil Éireann, pursuant to section 3(5) of the Aer Lingus Act 2004, approves the disposal of shares in Aer Lingus Group plc by the Minister for Finance in accordance with section 3(2) of the Aer Lingus Act 2004, the general principles of which were laid before Dáil Éireann on 4 July 2006.

The motion seeks the approval of the House for the general principles of the disposal of shares in Aer Lingus. The Aer Lingus Act 2004 contains a provision requiring the approval of the Dáil for the general principles of any proposed disposal of shares in Aer Lingus. A document setting out the general principles was therefore laid before the House earlier this week.

Before addressing the general principles, I would like to trace some of the background to the proposed public offering of shares. Aer Lingus was founded by the Government in April 1936 to provide air services to and from Ireland. From a modest beginning with a single aircraft, the fledgling airline grew steadily over the following decades. A significant milestone in 1958 was the inauguration of transatlantic services to New York using a fleet of three leased Lockheed aircraft. The 1960s saw the airline take delivery of a fleet of Boeing aircraft and, in the early 1970s, the iconic Boeing 747 was introduced and, throughout the 1980s, continued to service the north Atlantic. By the early 1980s, Aer Lingus had diversified significantly. Its subsidiaries included hotels, a computer processing company, personnel and project management services, a helicopter operation, airframe maintenance and engine overhaul companies, and other business.

However, the company was adversely affected by the economic downturn of the early 1990s resulting in serious financial losses. A restructuring plan, Strategy for the Future, subsequently referred to as the Cahill plan, was introduced by management in 1993 to return the group to profitability. The plan entailed an injection of €222.2 million of new equity by the Government over a three year period and covered all the commercial and operational areas of the business. In subsequent years, the company was able to take advantage of the upturn in the industry and performed strongly. In the period from 1994 to 1999, Aer Lingus implemented a major disposal of its non-core assets, including CARA, Aer Turas, PARC and TEAM.

The tragic events of 11 September 2001 acted as the catalyst for a further financial crisis. Faced with major threats to its viability, Aer Lingus implemented a radical survival plan which included the reduction of over 2,000 staff, extensive work practice changes, a pay freeze and the sale of non-essential assets and remaining non-core subsidiaries. In addition to cutting costs, the company also implemented a new low fare strategy and expanded its network within existing resources. As a result of the implementation of this plan and the commitment of management and employees, the company turned around its financial performance. Since then, the company has continued to perform well in a particularly challenging operating environment and has posted good results for 2005.

Aer Lingus has a proud record of success in serving the economic interests of the State. The airline's history, which has been punctuated by the need for radical rationalisation measures, most notably in the 1990s and in the aftermath of the 2001 terrorist attacks in the US, demonstrates the need for the airline to be able to access equity to fund growth.

Repeated calls have been made for the State to invest in Aer Lingus. It is true that a State investment in a State company made in accordance with the so-called market economy investor principle is capable of surviving a challenge under the European Union's state aid rules. In practice, however, the application of the principle is not straightforward and investments in Aer Lingus cannot be guaranteed to accord with it. The guidelines published by the Commission in 1994 on the application of the EU treaty provisions concerning state aids in the aviation sector states the following in the conclusion of its introduction:

An important element in the Commission's judgement will be the fact that the company has already been granted State aid. Therefore the Commission will not allow further aid unless under exceptional circumstances, unforeseeable and external to the company. Moreover, given the fact that Article 222 of the Treaty is neutral with regard to property ownership, the Commission cannot impose the privatization of an airline as a condition of the State aid. However, the participation of private risk sharing capital will be taken into account in the Commission's analysis.

It will be recalled that the capital injection of €222.2 million, which was made by the State in the company as part of the 1993 Cahill plan, had to be approved in advance by the European Commission and this approval was given on the understanding that the investment would not be repeated. Any further State investment in Aer Lingus could therefore be expected to be the subject of a critical appraisal by the European Commission. Challenges could also be brought before the European Court of Justice by other member states, airlines or even ferry companies.

In the aftermath of the terrorist attacks of 2001 and the ensuing aviation industry downturn, it was clear from contacts with the European Commission that the prospect of approval for a Government investment to support the survival plan was remote, even though it was argued that there was compelling evidence that an investment would satisfy the market economy investor principle. The rules pertaining to state aid are complex and give rise to issues, such as approval and susceptibility to legal challenge, which do not apply to private sector investments. Even if an investment by the Government in Aer Lingus withstood scrutiny, there could be no guarantee that this would always be the case. This absence of certainty in regard to the access to funds hinders the ability of Aer Lingus to prepare effective business plans and puts it at a disadvantage in a very competitive industry.

In these circumstances, even if competing priorities facilitated Exchequer investment in Aer Lingus, the possibility of an investment being made by the Government as and when needed without raising state aid concerns would be far less certain than would be the case if the company could access investment through the international capital markets.

The company's potential to expand in existing and new markets improved markedly as a direct result of its turnaround and improvement in competitiveness. The company has identified a range of new and exciting opportunities for expansion and has launched a large number of new European routes over the past few years. More recently, it inaugurated its first ever east bound long-haul service to Dubai. The potential for growth has brought sharply into focus the need for new funding to finance business expansion.

Recent history has shown that the airline business is becoming increasingly competitive and some well-known airlines have gone to the wall. The emergence of a significant number of low cost carriers has brought new challenges to traditional industry structures and assumptions. Against this backdrop, the Government's strategic aim for Aer Lingus is to ensure the company has access to sufficient resources over the long term to enable it to compete successfully and develop its business as market opportunities emerge and to give it the strength in its balance sheet to withstand industry downturns and external shocks, both of which are recognised features of the airline industry.

To provide the company with this certainty, I brought proposals to Government last May on its investment requirements and future ownership structure. These proposals took account of consultations with the trade unions in line with the terms of Sustaining Progress. In its decision, the Government agreed to a reduction in the State's shareholding in Aer Lingus, while retaining a significant stake of at least 25.1% to protect key strategic interests, provided that the Minister for Finance and I are satisfied that this level of reduction is warranted on foot of the analysis prepared by our advisers for the IPO.

Following the Government's decision, the Minister for Finance and I appointed financial and legal advisers to advise us on the most appropriate investment transaction mechanism for Aer Lingus and the scale and timing of the proposed transaction. The advisers reported to us at the end of last year. On the basis of the advice we received, we brought proposals to Government on 4 April for the implementation of an investment transaction for Aer Lingus. Arising from that meeting, we are proceeding on the following basis. In line with the Government's decision of May 2005, the Government intends to reduce its shareholding in Aer Lingus while retaining a significant stake. The company will also issue new shares to fund business development through an initial public offering of the company's shares on the Stock Exchange. The Government will retain a minimum stake of 25.1% in the company to protect the State's key strategic interests. The transaction is to be implemented as soon as possible, subject to Stock Exchange rules and market conditions. This will provide the company with ongoing access to capital on the same basis as its main competitors and give it the means to develop and grow in coming years to the benefit of the airline's consumers and staff and the economy as a whole.

Throughout the process, the importance of securing the support of Aer Lingus workers has been to the forefront of our minds. I met the trade unions on a number of occasions over the past year with regard to the future of Aer Lingus and met them twice in the month before I finalised the proposals for a transaction. I am aware of the concerns of many staff in Aer Lingus with regard to the proposed IPO, particularly in respect of issues such as job security and pensions. However, I am confident these issues can best be secured in the context of a strong, growing and competitive company.

Arising from my consultations with the trade unions, Aer Lingus management was mandated to engage with the trade unions with a view to addressing the issues identified by the unions. There has been an intensive process of engagement and a range of proposals have been tabled and discussed to address the concerns expressed. The proposals include measures pertaining to job security, pensions and the ESOT shareholding. There is now a basis for bringing these matters to a satisfactory conclusion in the near future.

I will now discuss the general principles of the IPO. For legal reasons, I am restricted in what I can say about Aer Lingus and its business at this stage in the privatisation process. Accordingly, as required by the Act, I am seeking the approval of the House for the general principles of the sale. I have clearly indicated in the general principles laid before the House that the Minister for Finance intends to dispose of a number of shares in Aer Lingus by way of an initial public offering. At the same time the company intends to issue new shares to raise fresh equity for the business to fund development. The shares will be listed on the Irish and UK stock exchanges. As a practical matter in flotations of this nature, many of the details will not be decided until much closer to the IPO date and some issues such as the definitive offer price range and the exact structure of the offer will not be decided upon until closer to the marketing process.

The primary objective of the share offer is to allow Aer Lingus to raise funds to ensure that it has the financial strength to fund business development and to withstand the external shocks and industry downturns that are a recognised feature of the aviation industry. The possibility of raising new equity also affords the company the opportunity to address the concerns of the Aer Lingus trade unions and workers arising from the funding of the company's main pension scheme.

The Government is committed to selling shares so that a majority of the shares in Aer Lingus will be held by institutional and private investors after the transaction is completed. Without a commitment to ensuring that a majority share of the company will be held by the private sector it would be more difficult for the company to raise equity through the issue of shares. The Minister for Finance and I will decide on the actual number of shares to be sold at a date much closer to the IPO itself and this decision will take account of considerations such as market conditions and the level of demand. The State will retain a shareholding of at least 25.1% with a view to protecting strategic interests.

The offer structure will be an institutional offer to both domestic and international institutions, including institutions in Europe and the United States. In addition, there will be an offer through financial intermediaries in Ireland. A minimum application amount of €10,000 will be set for retail investors in Aer Lingus which will facilitate participation by members of the public in the share offer. The allocations of shares to institutional and retail investors will be decided on the basis of the demand for the shares established by the underwriters for the IPO.

The process of offering shares for sale will commence with the issue of a prospectus. The prospectus will include a price range for the shares, although the IPO share price could ultimately be above or below this range. Following the launch of the offer, the underwriters will market shares to institutional investors in Ireland, the rest of Europe and the United States and to Irish stockbrokers acting as intermediaries for retail investors. These institutions then submit competing bids to buy shares. Following this marketing or bookbuilding process the Minister for Finance, in consultation with me and the company, will agree the IPO share price with the underwriters.

The proceeds to the Government will depend entirely on the number of shares disposed of and the price per share. The proceeds will be paid into the Central Fund of the Exchequer. The company's equity requirements, including requirements for pension agreements, will be met through the issue of new shares as distinct from the sale of the Government's shares. The exact amount of new equity to be raised by the company will be decided just before the IPO, having regard to its anticipated requirements and market demand for the shares.

A shareholding of over 25% is significant under the provisions in company law, notably in enabling such a shareholder to prevent a compulsory takeover of 100% of a company and in denying the remaining shareholders the ability to pass special resolutions. Examples of such resolutions are making changes to the memorandum and articles of association. As a major shareholder, the State will also have representation on the board and thereby the opportunity to influence key decisions subject to the fiduciary duties of directors.

Consideration has been given to the possible need for further safeguards over strategic interests in the context of the disposal of a majority shareholding in the company. London Heathrow Airport currently serves an important role in ensuring connectivity to and from Ireland. The scarcity value of slots at Heathrow could give rise to the possibility of decisions being taken in the commercial interest of Aer Lingus that are not in Ireland's strategic interest. On the other hand it must be acknowledged that the importance of Heathrow as an international hub for Ireland is expected to decline as other hubs such as Amsterdam, Paris and Dubai gain in importance. It will also become less relevant as the range of destinations to which direct services from Ireland are available increases and as Dublin evolves as a hub airport in its own right. The Government has mandated the Dublin Airport Authority to proceed with a significant capital investment programme, including in particular the development of terminal 2 for this purpose.

I am optimistic about the potential for new long-haul services both to the east and west and I am in discussions with Singapore and Thailand on new bilateral agreements. Aer Lingus is not subject to any obligation to provide services to Heathrow Airport. It is doing so on a purely commercial basis, as is the privately owned British Midland. This speaks volumes about the commercial value of such services.

Nevertheless, measures must be taken to ensure that sufficient slots are available for services between Ireland and Heathrow to preserve access to the global network of connections available at Heathrow. New articles of association, adopted by the company as part of the IPO process, will, for the purpose of providing the required safeguard, provide that sales of slots at London Heathrow would be subject to a shareholder's resolution. In accordance with company law, these provisions of the articles of association could not subsequently be changed if opposed by the State as a 25.1% shareholder in the company.

It is intended to provide that a resolution relating to the sale of slots may not be adopted if it is opposed by a defined percentage of shareholders. This percentage will be set at a level some 5% or so in excess of the Government's retained shareholding. In effect this mechanism will enable the State with the support of other shareholders, or of a significant shareholder such as the employee share ownership trust, ESOT, to block a slot sale that is against Ireland's strategic interests.

It will also be necessary to set out the criteria that will be applied in considering any resolution relating to the sale of slots. The criteria will ensure sufficient services between the State airports and Heathrow to allow passengers connect throughout the course of the day with key long-haul destination flights to and from Heathrow. The connectivity requirements in each case would take account of services provided on the relevant routes by other carriers and would also take account of the evolution of connectivity to and from Ireland from other hubs, particularly Paris, Amsterdam and Dubai. Exceptions to this would be allowed in the case of services that are loss-making and not expected to return to profitability and in respect of short-term leasing arrangements for slots.

There is no proposal to have a golden share, namely, a provision for a Government veto over company decisions that is not based on the Government's shareholding and the associated voting rights under company law. Golden share arrangements have been found to run counter to EU law. The proposed approach to safeguarding slots has been developed following consultations with the European Commission concerning the treaty rules relating to free movement of capital. It is evident from these consultations that a protection mechanism for Heathrow slots that could be exercised solely by the Government would be regarded by the Commission as a special right that would be challenged before the European Court of Justice. This is the reasonable and balanced approach to providing safeguards for Heathrow services while respecting the legal constraints of the treaty rules and the need for the company to protect its financial welfare.

The final decisions with regard to the implementation of the transaction will be sensitive to market considerations. The draft prospectus relating to the company and the IPO will be lodged as soon as possible this month. The necessary regulatory approvals under the prospectus rules will be completed over the summer period. The offer period will commence once the prospectus is issued and is expected to last a number of weeks. This will depend on market conditions and the level of demand. I expect this transaction to be completed before the end of September.

Certain issues have been identified by the trade unions as the key concerns of staff in Aer Lingus regarding the IPO. As well as engaging with the trade unions under the terms of Sustaining Progress prior to the Government decision last year to proceed with an investment transaction for Aer Lingus, I met with the trade unions on a number of occasions earlier this year. The trade unions identified the key concerns of staff as pensions, job security and dilution of the employee shareholding with new shares being issued in the company. I then mandated the company to engage with the trade unions to address these concerns. Discussions between the company and the trade unions on these issues are continuing and I am confident that these can be brought to a satisfactory conclusion soon.

While pension issues are primarily a matter for the company and the staff, the Minister for Finance and I stated that we were open to the company using part of the proceeds from issuing new shares in the IPO to supplement the funding position in the company's pension scheme as an element of an overall solution on funding involving increased employer and employee contributions. The position of pensioners will also be addressed in any solution that is agreed. The final figure will be reached in measures to address the concerns of workers. The potential to raise funds through the IPO process presents an opportunity for both the company and staff to supplement the funding of the company's main pension scheme and in this way create a far healthier position which is in the best interests of both the company and staff.

I will now turn to the issue of the level of the employees' shareholding in Aer Lingus and the potential impact of the IPO on that shareholding. The employee share ownership trust, ESOT, in Aer Lingus currently holds approximately 12.4% of the shares in the company while existing and former employees hold approximately 2.5% of the shares. The issue of new shares by the company in the IPO process will have the effect of reducing the proportionate shareholding in the company by the ESOT and employees. This reduction in proportional shareholding will not, of itself, dilute the value of this shareholding. Rather, the value is likely to be enhanced as a result of the IPO both because of the provision of new equity to the company and the increase in the liquidity of the company's shares.

The terms of the existing ESOT agreement which was negotiated a short number of years ago in view of a potential third party investment, provide for substantial safeguards against dilution of the ESOT's shareholding. The company is currently consulting with trade unions and the ESOT on further measures to counter potential dilution. This process does not entail, as speculated upon in some sectors of the media, the granting of free shares to the ESOT. I understand there has been active dialogue on all of these issues and that a considerable level of progress has been made to date. The company is making every effort to bring the outstanding matters to a satisfactory conclusion in a timely manner.

I wish to set out briefly the position on the negotiations between the EU and the US on an aviation agreement.

Ms Shortall

On a point of order, how long is the Minister's speaking slot?

I accept that.

Ms Shortall

The Minister insisted on the guillotine at 4 p.m. If he is prepared to allow the debate to run on later, that is fine but it is unfair of the Minister to take an undue amount of time.

Mr. Cullen

In November 2005 EU and US negotiators concluded work on the text of a first phase EU-US open skies agreement. The text was unanimously endorsed at the December 2005 Transport Council subject to sufficient progress by the US side on opening up ownership and control of US airlines to EU investors. The formal US process of changing its ownership and control rules was expected to be concluded early in 2006 so that a final decision could be taken at the June Transport Council. However, the rule-making process has been extended and is now expected to be concluded in August and the matter will be considered by the October Transport Council.

As part of the EU-US deal I met with US Secretary for Transportation, Mr. Norman Mineta, on 9 November 2005 to negotiate transitional arrangements for Shannon which were included in the EU-US text. This provided that the 1:1 Shannon stop requirement, that is, one stop at Shannon for every stop at Dublin, would change to 1:3 for the period November 2006 to end March 2008, after which the Shannon stop requirement would end. During the transitional period access to three additional US destinations would be allowed.

It has been agreed that these transitional measures will take effect at the end of October if the necessary political agreement is reached at the Transport Council earlier that month. The opportunities that an open skies agreement will present will complement the possibilities for expansion of services from Ireland in an east bound direction as well.

The legal framework for the IPO and sale of shares in Aer Lingus and related matters is provided for in the Aer Lingus Act 2004. Some parts of the Act have already been commenced. I propose to make arrangements for commencement of the appropriate parts of the Act as and when required to implement the IPO. Most of the provisions will only need to be commenced immediately before implementation of the IPO.

Legal advisers to the Minister for Finance and I have made clear that financial securities laws restrict the release of important information about Aer Lingus. Failure to observe the publicity restrictions could require postponement of the offering or result in civil or criminal penalties. I am advised that no opinions or speculation should be given concerning the success of the flotation or about the business, financial condition or future prospects of Aer Lingus. The prospectus to be issued of the transaction will set out comprehensively its investment case for shares in Aer Lingus.

I commend the motion to Dáil Éireann.

Ms O. Mitchell

I move amendment No. 1:

In the last line after "2006" to insert the following:

", and furthermore, Dáil Éireann resolves that—

—the Minister for Finance shall gain the approval of Dáil Éireann before allowing any reduction of the State's shareholding in Aer Lingus Group plc below the 25.1% referred to in the general principles;

—any approval granted by Dáil Éireann for the general principles of the disposal of shares in Aer Lingus Group plc shall, if not acted upon, expire within four months of the passing of this resolution; and

—all shares in Aer Lingus Group plc to be issued or placed in the initial public offering shall be valued and sold at an equal unit price per share to all investors and there shall be no price differential or distinction made between those shares, the proceeds of the sale of which go to the central fund of the Exchequer, and those shares, the proceeds of the sale of which go to Aer Lingus Group plc."

I had hoped to withdraw this amendment and submit a new amendment based on the flaw I identified earlier but I understand that is not permissible. I ask the Minister to consider what I say before 4 p.m. and not to proceed with the motion as published.

Fine Gael has always believed that Aer Lingus's best interests are served by allowing it access to private capital and the commercial freedom to respond quickly and appropriately to the often volatile market conditions in the aviation sector. This is not an ideological position or decision, it is purely practical. We are aware of the extremely competitive, volatile and difficult environment in which any airline now operates, subject to external shocks, local and global political conditions, natural disasters and fuel price fluctuations, over none of which any airline has control regardless of whether it is in the public or private sector.

We do not believe private ownership is the panacea for a successful airline. There are no guarantees but we believe that Aer Lingus's best chance to survive and prosper lies in private ownership. It is already competing with airlines that have access to private capital and that can respond to rapidly changing market conditions without reference to a lethargic, ponderous and cautious political system. We should not spancel or disadvantage Aer Lingus vis-à-vis the other airlines with which it must compete.

However, from a position of support in principle we are now asking, as are many members of the public, if this sale makes any sense and whether it is, in fact, a sale or just a giveaway. It is difficult to conceive of a less propitious preparation for an IPO. Time and again, indecision, lethargy and procrastination postponed a decision until the timing, the most crucial variable in a flotation, was no longer in the Government's control. Foot and mouth disease, the events of 11 September 2001, a general election, a fuel crisis and, finally, sheer petulance, when the Taoiseach refused to be pushed into a sale by a management increasingly desperate for a decision, took the initiative from a Government simply unwilling or unable to make a decision.

The Government lost the best airline management team in Europe. It was forced into another year long delay while new management was found and got established. In the meantime, market conditions deteriorated, the price of airplanes escalated, the price of fuel went through the roof, other competing airlines positioned themselves on the best routes to the best destinations, restructuring at Aer Lingus stalled and the cost base of the airline grew to 50% more than that of the average European airline.

Desperation set in and the Taoiseach, who will do anything for a quiet life, sent word to the management that it was to buy peace at any price. That is precisely what the management did, with a generosity with the taxpayers' asset that leaves us reeling. I am not the only one questioning if it makes sense to pay €250 million to employees for permission to raise €400 million. It certainly devalues the airline in the eyes of a potential investor and even the employees must be wondering if this package, with all its hostages to fortune, is really in their long-term interests.

Given that introduction, we can be forgiven for being a little wary of giving our unmitigated support to the sale. With considerable prescience, we were wary in 2004 when the Aer Lingus Act was passed. At that time Fine Gael requested that what would amount to a White Paper in all but name be presented to the House for detailed debate and that this debate would take place early enough in the process to allow an input into the decision-making process. It was envisaged that there would be a comprehensive analysis of the potential gains and losses of a sale, if the gains would outweigh the losses or vice versa, identification of the extent of the losses, for instance, in terms of the country's strategic interests, and how those interests could be protected. The Minister of the day thought this condition entirely reasonable, saying:

I will produce a paper laying out the Government's position and the position of the company in good time to allow for discussion on it before finalisation of proposals for change of ownership . . . It is appropriate that any such paper be published in time to make a difference as opposed to it being published when the die is cast . . . There are serious issues, and it is my intention to address them in the position paper about which I am talking. I will produce it in good time for members to consider it and make a serious input into the process.

That never materialised, no strategic analysis was ever produced of why we were selling Aer Lingus or how we would go about it while protecting our strategic interests. The Dáil has had no input into the nature of the sale. To compound that breach of faith, the general principles document, which the Minister agreed would be the basis for giving us all the information, is an insult to the Dáil and to the taxpayers who own this company.

The principles outlined here are nothing more than an outline of the procedure to be followed by any company in the placing and issuing of shares. We could get this information from any text book or website. It adds nothing to our knowledge and makes it impossible for us to play our role as a watchdog for the public.

It is even worse than that. Not alone does the Minister tell us nothing, he cannot even get the procedure right. The legislation requires that he gets approval for the principles of disposal. They must be laid before the House and approved by the Dáil, but the motion calls for the approval of the disposal of the shares. Legally the Dáil cannot do that. The motion is not what is required by the legislation and we are bound by that.

In the sorry saga of the sale of Aer Lingus this is just another monumental mess — gross incompetence, gross indifference or gross carelessness. Worse, it is yet another example of the arrogance of this Government, reflecting the view that the Dáil does not really matter and anything is really good enough. It is not even necessary to have regard for primary legislation.

This is a dud motion. If the Minister pursues it and clings to belief in its validity, any sale following this flawed approval will be unlawful. The Minister should consider that before we vote on this at 4 p.m. It will put PPARS and electronic voting machines in the ha'penny place in terms of the cost to the taxpayers. If he has faith in his legal advisers, the Minister should go to his underwriters and ask them if they are willing to expose themselves to the loss of huge sums on behalf of the taxpayer. This will be challenged and, at the very least, a judicial review will be granted.

If the Minister wants approval today for a September sale, he must accept my amendment or introduce one of his own before he goes home this evening or he will have egg on his face, the sale will be further delayed and the airline will be in jeopardy and further exposed to swings in the notoriously volatile market for airlines.

To say that the principles are vague is to understate it. There is simply no information on which the Opposition or Government backbenchers can make an informed decision. We are acting on behalf of the real owners of Aer Lingus, the citizens of Ireland. If this were a plc sale of shares, all information about the sale would have to be made available to shareholders at a general meeting so that they could give their approval. We, however, get nothing. In a few weeks the prospectus will give all relevant information to the buyers but, bizarrely, the seller cannot even be told how much is to be sold. We do not know how much is to be raised for Aer Lingus or how much is to be raised for the Exchequer. That is basic information.

The share price will be determined by the amount needed to be raised by the new share issue. Raising the required capital for Aer Lingus is naturally a vital concern, but concern for Aer Lingus should not cloud the Government's judgment about the timing of the issue and about what would be an acceptable yield to the taxpayer. I have said before that the Government must have a predetermined floor price below which the sale becomes untenable.

It is my job to defend and the taxpayers. In doing that, I do not want their share of the proceeds to become the residual, perhaps offered at a lower price than the issue price to ensure the success of the new issue in raising the target funds for the airline. That is not acceptable to me or to Fine Gael. We will not tolerate a giveaway or a fire sale of a national asset which has been invested in and supported for more than 70 years by the people. We will support a sale, but not a sell out or giveaway.

The only control the Dáil can exercise to prevent a knock-down price for the taxpayer, a tactic which could be pursued by the Minister to ensure a successful new issue for the airline, is to establish some kind of floor price below which it becomes unacceptable. The Dáil cannot let the Minister sell at any price.

On the other hand, we cannot nominate a floor price without jeopardising maximising its value. We can, however, demand that the price per share to the taxpayer would be no lower than the price per share to the airline. It may be that the shares will face a buoyant demand and I hope that is the case, but I cannot depend on it and my job is to be the watchdog of public assets on behalf of the citizens of Ireland of whose asset we are now disposing.

That is one amendment I have submitted. The second amendment also seeks to maximise the value for the taxpayer by ensuring that the sale occurs at the optimum time. Voting for disposal by the Dáil is not voting for disposal at any price and, as the Minister is aware, the price may vary dramatically over time. Therefore, it is reasonable to place a time limit on the approval and so avoid the pitfall of giving carte blanche to a Government which may become desperate to sell, even at the bottom of the market and at a price unacceptable to the shareholders. Therefore, if the Government fails to sell within four months of today, the motion would require fresh Dáil approval for disposal.

My final amendment clarifies and leaves outside any doubt the requirement to seek Dáil approval should the Government, of whatever hue, wish to allow the dilution of the State's 25.1% shareholding. This percentage, we are told, is the minimum required to protect our national strategic interest. If that is the case and the Government thinks it can guarantee that, it is reasonable to require a vote of the Dáil if we are to abandon that objective.

The Minister has indicated an intention to change the articles of association to prevent the disposal of the Heathrow slots. I am not sure to what extent this attempt would be successful in the longer term, but it is not the disposal of the slots we should be worried about — the Minister has missed the point. Aer Lingus does not own the slots and we are not really concerned about their disposal. We are concerned about the transfer of the use of the slots from the base in Dublin to some other base which might be more valuable in future. The Minister should be honest and admit this is a real danger and that in the longer term, there is probably little we can do to prevent it.

The Minister has come to us with a flawed motion during the last Dáil slot on the last day of the session. It may now be inconvenient for the Government to accept that its motion is simply not what the legislation calls for and that on an important issue like this, on the disposal of something to which every citizen feels some sort of attachment, the Opposition must be allowed to speak and offer some protections for the public.

We are not being irresponsible. We want a successful sale and a thriving airline. We understand that sentiment in the market can change overnight and we appreciate commercial sensitivity. We comprehend that the price will be set by market demand at the time of offer and we do not want to do anything that would jeopardise attaining the optimum price. However, the public is entitled, before any sale, to know how much it is intended to sell, how much it is expected to raise and to be reassured that in no circumstances will its airline be given away.

The amendments I have submitted should go a long way to ensuring that the public can be reassured. I ask the Minister to support the amendments and, more significantly, not to allow the House to adjourn without considering the nature of the flawed motion put before us. The Minister has until 4 p.m. to consult his legal advisers. Otherwise he will be going home with serious problems. The Minister will expose the taxpayer to huge potential losses. The sale of the airline will be jeopardised and the Minister will certainly have egg on his face.

Ms Shortall

In the years to come, today will be seen as a bad day for the country and for Aer Lingus. Today, the Government is asking the House to approve the sell-off of our national airline. We all accept Aer Lingus has played a critical role in the economy. As an island nation, we are all heavily dependent on air travel for trade and tourism. We are fortunate in the services that Aer Lingus has built up so that, as travellers and traders, we have direct access to many destinations. In addition, we have access to almost anywhere in the world, via Heathrow. It is critical for our economy that those services are maintained. The only sure way of doing that is by retaining the company in Irish public ownership.

The Government's justification for the sale of Aer Lingus is that the airline needs investment so it can continue to grow. No one denies that the company needs access to capital and we all certainly want to see the company expand. It is important to note that the capital needs of the company have never been accurately quantified. Various figures have been tossed about, but at no stage have we seen any business plan setting out the investment needs over, say, the next ten years.

It has been suggested that under the open skies policy, Aer Lingus will need significant numbers of new aircraft. We hope that will be the case but the reality is that the open skies issue is far from being resolved and has recently been set back by resolutions passed by the US Congress.

We all accept that over the coming years the company will need a certain amount of capital. If that is the case, however, one must ask why the Government is proposing to remove itself as a source of capital from the company. That is exactly what it is proposing to do. If Aer Lingus needs capital, it has a number of options. It could easily borrow, based on its own performance. It could enter into long-term leases, which is what airlines generally do. Alternatively, the Government could invest in the company. We know there is no obstacle to the Government doing this, despite the erroneous impression that some Government representatives have been trying to give to the contrary.

If this is a good investment for the private sector, then it is also a good investment for the public sector. The Labour Party, as well as the Irish Congress of Trade Unions, have put forward proposals for a State holding company, a vehicle through which investment could take place while also ensuring critical commercial freedom for the company.

The traditional argument for flogging State assets has always been that there was a need to raise funds for the Exchequer, but that argument does not hold up anymore because the Government coffers are overflowing. The reality is that this right-wing Government is fundamentally opposed to a commercial semi-State sector, and its motivation in doing this is entirely ideological.

So what of the proceeds of this proposed sale? What about the promises to invest in the pension fund and new aircraft? We are not getting any of that. The Government proposes to sell off up to 60% of Aer Lingus to raise between €300 million and €400 million. It will take the money and run. In the process there will be a buy-in by private investors who will undoubtedly use the company for their own interests. Private investors will act as private investors always do — they will seek to get the best possible return on their investment. In other words, they will try to make as much money as they possibly can, as quickly as they can, and to hell with the consequences. The consequences could, indeed, be very damaging for the company and for all of us who depend on good air transport links. It is quite possible that, as a nation, we will lose control of our air travel services, as Aer Lingus becomes merely a vehicle for profiteering, just like Eircom.

In the general principles, the Minister makes vague references to our strategic interests. He says that "sales or transfers of slots at Heathrow will be subject to a shareholder's resolution" and that "provision will be made that the resolution will not be passed, if opposed by a defined percentage of shareholders". The Minister goes on to say that "this will enable the State, along with other shareholders, to prevent the disposal of slots against Ireland's strategic interests". This is patent nonsense.

Apart from the fact the Minister does not even define the percentage he is talking about, there are three other pertinent points. First, the EU is likely to rule against such a so-called controlling share. It is also interesting to note that the Government has made no formal approach whatsoever to the European Commission on this issue.

Second, while the State may retain a minimum of 25.1% on the initial public offering, there are no proposals whatsoever to protect that shareholding from dilution on the proposed new share issue.

Third, if a mechanism was found to retain that kind of influence, it would so devalue the company share price as to render this whole exercise worthless. There is no doubt we would end up in a position where the taxpayer was getting bad value. This is a figleaf and the Minister should be honest enough to admit it.

As regards the importance of the Heathrow slots, in recent weeks the Minister has spoken about the importance of Dubai becoming a hub, but that does not wash in an Irish context. Who will be travelling via Dubai? It is nonsense when one thinks about it.

Aer Lingus is too important to the economy and to the country generally to subject it to the kind of incompetence we have become used to from the Minister and his Cabinet colleagues. We note that the Joint Committee on Transport is in the process of preparing a report on the implications of the proposed sale and it is entirely premature for the House to second-guess those deliberations.

The Labour Party has maintained from the beginning that the proposal to privatise Aer Lingus was ill-considered and ill-judged. This move would serve neither the national interest nor the interests of the travelling public. However, it is clear the Government has not been honest with either the public or the Aer Lingus workers. This motion must, therefore, be defeated.

Mr. Broughan

Today is a day of shame and betrayal by the Fianna Fáil Party, especially the Fianna Fáil representatives of Dublin's north side, and the Progressive Democrats Party. We north side representatives in the Labour Party are used to those empty seats in Dublin Airport at various meetings that have been called when none of the Fianna Fáil north side Deputies has had the courage to come and explain why they believed in selling the workforce of Aer Lingus down the river into a privatised, ruthless world of capitalism and ensuring, perhaps, that the great economic driver of the region may well be sacrificed in the future and become a regional airport served by regional airlines to a hub at London.

Those Deputies' names should be noted at the outset — we have one in the House at least, Deputy Glennon; Deputy Wright, Dublin North; Minister of State, Deputy Noel Ahern and Deputy Carey, Dublin North-West; Deputies Haughey and Callely, Dublin North-Central; Deputies Martin Brady and Woods, Dublin North-East, my own constituency; Minister of State, Deputy Brian Lenihan, Dublin West; and the 11th member of this shameful team, the Taoiseach, Dublin Central. Those 11 Members have refused to stand up for the economic interests of our region and have betrayed it. I hope the workforce of Aer Lingus, the former Aer Rianta and now the Dublin Airport Authority, and the 40,000 or 50,000 workers who depend on that region will remember this eight or nine months hence and will ensure those seats are filled by representatives who will truly represent the people.

The three page document with which we were presented, which is uninformed and hides behind the scam of "we cannot talk", or "we cannot give you this or that information because of the legal requirements of security", and this disgraceful speech leave us no wiser on the future of our great company, Aer Lingus, and its workforce. In some ways, this contribution by the Minister for Transport, Deputy Cullen, is laughable and ludicrous in regard to the slots. It appears we will have to seek a new hub airport outside of Heathrow. This is the Minister's solution. Effectively we are going to leave Heathrow. The Minister has admitted we are going to Dubai and, perhaps, we will have the Fianna Fáil tent at the Nations Cup in the years ahead. There is no solution to the possible loss of these slots. There is no reference to slot busting which is an important issue for airlines at every airport throughout the world.

There is nothing for workers in this. There is nothing in terms of their pension entitlements. They are being sold a pig in a poke and are being told that, down the road, there will be negotiations and that something will be done. There is nothing on dilution.

We are aware that following the privatisation of Eircom there have been five sales. Eircom workers and its trade union, the Communication Workers Union, have desperately had to retrench, weave and bob in the financial markets to try to hold on to their percentage, as they have done successfully in the latest sale. There have been five sales and Eircom workers have had a very uncertain future.

The major turnaround in recent years in Aer Lingus, which came about because of the ferocious hard work and commitment of the workforce, which was halved in size from what it was a few years ago, is what has created a bright future for our State airline. Since I became a Member in 1992, it has been their work and sacrifices that have created a platform and now the Minister has the cheek to come into the House and present this nonsense and lack of detail.

I am delighted to have the opportunity to reiterate my bitter opposition to the privatisation of our national airline, which I enunciated on the second day after I became a Member. As an island people, a key part of our infrastructure must be at least one airline that will service the national strategic interest. We have before us the recent history of many state airlines that have been privatised. There have been the remarkable cases of countries similar to Ireland, in particular, New Zealand, which had to buy back the company, Air New Zealand, many years after privatisation. We have also had the experience of the Eircom privatisation. Throughout the history of the Government there has been the disastrous handling of the sale of strategic national assets to the private sector.

I commend and salute the Aer Lingus workforce. It has been promised a pay increase of3%, lump sum payments of up to €4,400 and a 7.5% profit sharing scheme to be transferred to the employee share ownership trust. That is supposed to prevent their share being diluted from 14.9%. According to the Minister's speech and his perspective, the workforce members are being sold a pig in a poke. Privatisation of state airlines was a device concocted by right-wing parties, such as the Minister's and the party from which he was sprung, the Progressive Democrats Party. It is a device to which the Minister has always adhered——

Mr. P. Power

It is all about electioneering. The Deputy's position has nothing to do with privatisation.

Mr. Broughan

——for privatising our national airline and for attacking our strategic economic asset at Dublin Airport.

Mr. J. Breen

I wish to share time with Deputies Finian McGrath, Sargent and Crowe.

The emergence of the mid-west as an advanced industrial area has been aided greatly by the emergence and continued development of Shannon Airport. The importance of the airport to companies choosing to base themselves in and around Shannon cannot be overstated. In Clare, many companies, in particular American-owned ones, have warned about their long-term future in Ireland in the event of Shannon losing or reducing its transatlantic services. I would go so far as to say that the future of the mid-west, from Limerick to Ennis to Galway, is dependent on an increase of air routes at Shannon Airport and the continued improvement of the infrastructure in the area.

I am proud of the improvements made in the road network in the mid-west in the past decade. This must continue and I look forward to the completion of the Ennis bypass in the near future. Allied to this, the rail link from Limerick to Galway with a spur link to Shannon must now become a priority. There is no point in having an excellent infrastructure in place unless Shannon Airport continues to hold its prominent position in the air traffic industry.

It is a source of shame that the staff who helped to turn Aer Lingus from a loss-making company in 2001 to the strong position it is in now should suffer. It is their hard work that has made the company an attractive option to privatise. I hope that the mistakes made in the privatisation of Eircom are not repeated.

Similarly, I hope the situation at An Post is not repeated where staff and pensioners still have not received the increases due to them under Sustaining Progress despite An Post recently announcing profits of €40 million. Workers at Aer Lingus deserve a guarantee that something similar will not happen to them.

The Government has stated it intends to hold on to a 25.1% share of Aer Lingus in any flotation. I would like the Minister to give a commitment to maintaining that share in the event of a new share issue and guarantee that the Government will buy new shares in such an event and not allow its shareholding to diminish slowly. To facilitate regional development, Shannon Airport in the past lost money by deliberately setting prices too low in an attempt to attract investment, knowing that the loss could be absorbed by the high profits made on Dublin based routes. Dublin Airport has now been boosted by the impending construction of a second terminal, whereas it would appear Shannon is to be simply cut adrift.

An investment plan to secure the future of Shannon should be put in place immediately before any privatisation or disposal. Shannon Airport had revenue of approximately €95 million in 2004. To help increase this, the catchment area needs to be made more attractive to industry. Along with the Ennis bypass, the rail link needs to be fast-tracked and a river crossing should be constructed to open up south Limerick and Kerry to the airport.

The Minister is selling the workers of Aer Lingus, but I plead with him not to do it. We want Aer Lingus and Shannon and want viable airports. The Minister is also trying to sell the airline by the abolition of the bilateral agreement. There is no demand on him to do this from America or Europe, but he wants to do it because he wants to pander to the Dublin lobby as the Government has done over the years.

We had just one friend in Government, Charlie Haughey, who protected Shannon against privatisation. He would not allow a change to the bilateral agreement. The Government, however, has sold us out and continues to do so. I plead with the Minister to withdraw this foolish proposal.

Mr. F. McGrath

I thank the Chair for the opportunity of speaking on the important issue of the general principles of the disposal of shares in the Aer Lingus group. I am 100% behind the staff and pensioners of Aer Lingus. I gave a commitment to support them on this important issue and today I stand by that commitment. Unlike other Deputies, I will not duck or dodge on this important matter. I commend and pay tribute to all Aer Lingus pensioners. They are part of the team that built up the airline and should be looked after in a fair and decent way.

According to management and the Minister, the effect of the flotation will be to raise only €400 million out of the €2 billion required for capital investment and development. That being the case, the Government would have to match a relatively small amount of money as an investment, particularly given that it has committed a significantly larger sum of €34.4 billion to road and rail infrastructure under Transport 21. As is well established by virtue of EU competition rules since at least 1984, and subsequently recently further clarified on foot of queries by a number of MEPs, the State is well capable of making such an investment on the market investor principle within EU rules.

An alternative, which I support, was offered by the ICTU in the State holding company proposal, but it has been effectively brushed aside without discussion by the Department of Finance. Nevertheless, to date, no detail has been offered by the Government as to the size of the retained shareholding — conversely the amount to be divested — other than a commitment to retain a minimum of 25.1%.

I am opposed to the sale of our national airline, Aer Lingus. It would be bad for workers, the economy and damaging to the national interest. I urge all Deputies to support the Aer Lingus staff and come out against privatisation.

Mr. Sargent

The Green Party has already stated its position on the privatisation of Aer Lingus. We believe the Government should invest in the company as a vital national asset. This would be in the best interests of the airline, the workers and the economy. Aer Lingus has proved that a publicly owned company can be both profitable and innovative. The Government should consider this before selling off an asset so vital to the economic security of the State.

The regularly repeated view that the European Union would prevent the State from making such investment is incorrect. EU rules only prevent state investment in loss making state enterprises and would not bar us from investing substantially in Aer Lingus. We see no reason the Government could not provide the necessary capital by investing directly in the company.

There is great uncertainty about how much the sale will raise, perhaps only €400 million. The amount raised will certainly fall far short of the €2 billion capital requirement for fleet renewal outlined by Dermot Mannion. With no investment return to the Exchequer and no clear gain in the form of better management of the company resulting from the flotation, it is difficult to see the advantages of selling Aer Lingus. If the Government pushes ahead with the flotation, as it seems determined to do, it must not fail. A failed flotation, added to the insecurity the Government is bringing to Ireland's position in the world economy, would be a disaster.

I understand the reason many workers are concerned about their futures and the future of the airline. There is an air of great uncertainty about the flotation. If the Government could not make a success of floating Eircom, around which there was an air of certainty, it cannot creditably claim that it will make a success of this flotation. Several factors exist that create uncertainty and they seem to indicate that a flotation now is a reckless decision.

In September 2005, Senator Mary O'Rourke said: "I have a gut feeling it won't go ahead at the end of next year because we'll be within three to four months of a general election". I doubt the Government's commitment to a successful flotation, as do many workers and potential investors. The Government's priority is to cover its own backside.

The Taoiseach's attempt to ride two horses at the same time by pushing for the flotation behind the doors of the Cabinet room and publicly criticising those who were planning a similar fate for the airline is disingenuous. While trying to hedge his bets politically, he is undermining the chances of a successful flotation. Following two years of prevarication, the Government's lack of commitment to its policy is creating further uncertainty.

Major industrial relations issues, including the pensions' fund deficit, which affects many people who built up the airline during a period of high taxation — 60% in many cases, pay and staffing levels and the retention of employees' shares have yet to be settled. How are workers expected to support a flotation with these issues still up in the air? Why should investors feel any confidence before they are settled? It is unreasonable to ask me as a representative of many Aer Lingus workers in north Dublin to support the flotation before these issues are resolved.

As I said yesterday during the debate on social partnership, energy is the economy. There has already been speculation among stockbrokers and investors that rising oil prices may scupper the flotation. Some have said that if oil prices even approach $80 a barrel, the flotation will be in danger. Oil prices are currently above $72 a barrel.

The recent difficulties with the Air Berlin flotation demonstrate the power of oil prices. It had to go to the market with a reduced IPO and its value has fallen 12% since its flotation last month. Ryanair is down 13% since the beginning of the year. In the past two months, Lufthansa is down 7.5%, SAS is down 30% and Iberia is down 12%. Aer Lingus has only hedged 51% of its oil exposure until the end of the year. Therefore, it is exposed, as is the country.

Other factors will influence the success of the flotation. The US Department of Justice's investigation into alleged cartel activity by the airlines, including Aer Lingus, is yet to conclude. There has been a delay in agreeing a new open skies agreement and there is increasing competition coming down the line for Aer Lingus on long haul routes.

It is not only about the success of the airline that we must be concerned. This is a matter of national economic security. Ireland is an island nation and a globalised nation and transport is critical for our economic security. We have yet to receive a guarantee that the Government can secure the airline's slots in Heathrow. With a minority shareholding the Government will not be able to give such guarantees, but there have been plenty of attempts to obfuscate this fact.

How will the Government address in its aviation policy the peak in oil production? How does surrendering its ambitions for Aer Lingus contribute to this? A strategic approach to Ireland's medium term transport and economic needs is vital. I have suggested to the Taoiseach that he should establish a Cabinet sub-committee on peak oil to consider the impact of peak oil on the economy, including the aviation sector and aviation dependent industries. I repeat that suggestion now.

I urge the Government to look at the experience of another island nation. New Zealand's national airline was privatised, went bankrupt and was bought back by the state within a decade at twice the price. It is now a successful publicly owned airline.

The Government does not have a mandate for the sale of Aer Lingus.

Mr. Cullen

It is a heavily subsidised airline.

Mr. S. Ryan

When did the Government ever give it any money or put any equity into it?

Mr. Sargent

The Minister should know that all public transport is subsidised. I urge the Government to pay heed to the current conditions and to re-examine the retention of Aer Lingus as a strategic asset. If the Government is to close Aer Lingus, I urge it not to jeopardise its prospect further for its own political purposes and to be honest about the amount of control over Ireland's economic well-being that the Government is surrendering on behalf of the taxpayer. I ask Members to oppose the motion.

Mr. J. Breen

I will oppose it.

Mr. Crowe

This is both an historic and a sad day. I have had telephone calls today from some very upset Aer Lingus workers. It is a disgrace that we were informed of the sell-off by means of a leak to the newspapers. The feelings of the workers were not taken into account, many of whom have given the best part of their lives to trying to make a successful airline of Aer Lingus. They have made many sacrifices over the years. This Government in its wisdom leaked a story to a newspaper. This is how the workers found out about their future. It is a scandal and a disgrace. Sinn Féin has been consistent in its opposition to the privatisation of our national airline. I express Sinn Féin's solidarity with those Aer Lingus workers who are justifiably concerned about the future of their jobs.

The Government has arrogantly pushed ahead with its privatisation ideology. I have not heard any business plan and no real argument about the sale of the national airline. Rumblings of opposition to the sale have been heard. Many Fianna Fáil councillors in Dublin and beyond have supported motions at council level against the sale of our national airline and some members of Fine Gael have also been supportive.

This issue highlights the unworkable coalition of Fine Gael and the Labour Party, with the Labour Party against privatisation and Fine Gael in favour of it. Many workers are wondering what they will do in coalition.

Mr. S. Ryan

The Deputy need not worry about us. Sinn Féin should look after itself.

Mr. Crowe

This privatisation will only work for the benefit of a few. The general travelling public and Aer Lingus workers will undoubtedly lose out. The country and the taxpayers who have invested in the company over the years will also lose out. Aer Lingus is the property of the Irish people and it should remain so. It is a profitable State asset, not a liability. It was valued this week at €1.1 billion. Aer Lingus is not a burden on the State and it can continue to make money for the people. Despite the negative media and Government spin, the future of Aer Lingus should not be bleak. It has a lower cost base than many of its competitors and made an operating profit last year of more than €70 million. It has continued to open up new routes and increase passenger numbers. It has an exceptional workforce who care dearly about their company and its future.

As an Irish republican, I believe that companies such as Aer Lingus should remain in public ownership and be administered effectively in the interests of the people. It should be used for the benefit of the people, not sold off to a few investors whose main interest will be profit and who may well ride roughshod over the rights of the workers. Unknown to themselves, taxpayers have already invested €27 million in airlines all over the globe, including British Airways and Ryanair, yet the current Government refuses to invest in Aer Lingus. The decision to sell off Aer Lingus is a political and not an economic decision. No concrete plans exist on how the pensions shortfall of more than €250 million will be resolved. This will affect the current workforce of 3,600 and the 8,000 retired employees.

This is an island nation and our economy depends on the national airline. How will our goods be delivered to their markets? Irish Shipping was sold off and it is now proposed to sell off the national carrier. Nobody should be fooled. This Government is pushing the privatised agenda to enrich their high flying friends at the expense of the common good. It is a sell-off but it is also a sell-out of workers and Irish taxpayers.

Mr. P. Power

I compliment all those who appeared before the Joint Committee on Transport, including the unions, management, workers, retired aviation staff and individuals.

Mr. S. Ryan

It was a waste of time. Where is the report?

Mr. P. Power

They were invited in and we listened carefully to the divergent and opposing views. The debate was constructive, even though there would never be agreement on this matter. People made their contributions and there was a good discussion at the meeting. I refer in particular to the pensioners. All Members will share a common view that irrespective of the Government's proposal, the pensioners who built up the company over many years and decades should be taken care of. This has not been the case because of the unfortunate set-up of their pension scheme.

The long-term interests of Aer Lingus, the country and the workers, are served by today's historic decision. We have a choice to make. Do we recognise what has been recognised by every other country and airline, that a completely new aviation environment exists? It is an ultra-competitive and difficult environment, an environment where ready access to capital, to aircraft and to quick decision making are more essential than anything else in the aviation industry.

Some would have us stay in the safety of the past. Aer Lingus management and workers have served the country well for many years. The old model of giant carriers, slow decision making and lack of competitiveness may have worked in the past but to stay there would be to abdicateour responsibilities and ignore new aviation practices.

The aviation business is governed by its cyclical nature and by competitiveness. I refer to Ryanair, which is a home-grown airline. Like may others I have had difficulties and problems with Ryanair. However, the people of this country have voted with their tickets and with their e-mails in ever increasing numbers. They subscribe to an airline that is extremely competitive even though it might cut a few corners here and there which people may not like. It is an airline that makes quick decisions about buying aircraft when the market conditions are right. If Aer Lingus was in a position to make the kind of decisions that it will now be able to make, it could be able to purchase aircraft and save at least €500 milliont.

The ability to survive in modern aviation is inextricably linked to the access to ready capital and flexible decision making. I would be the first to admit that the words "prevarication" and "delay" were used. This is the greatest argument in favour of what the Government is doing. If the Government takes five years to make a relatively simple decision about which people have different views, or if it takes the Government two years to tell Aer Lingus to buy a new fleet, it might not be possible to buy the aircraft or the prices might be inflated. There may be a waiting list to acquire those aircraft. It is the inability to make quick decisions that characterises State ownership. I have much faith not just in the management, but in staff, to recognise the new environment, embrace it and make the necessary decision to bring Aer Lingus forward.

On the general principles the Minister has set out, I welcome that a strategic share of at least 25.1% is being retained in the airline. We have all listened carefully to the very important arguments made on the Heathrow slots. Deputy Broughan made a passionate case arguing that we are abdicating these slots. Significant protections remain, arising from the 25.1% share and the inability to change the articles of association of the company by way of special resolution.

Even if it were possible to sell off the slots willy nilly, does anybody believe it makes sense for a commercial airline, which has seen increased commercial movement in recent years, to sell the slots? Would it make sense for Aer Lingus to do so, as the slots are among the most profitable in the company? The opposite would be true also. We should face up to the reality that if those slots were not making money tomorrow morning, even though hundreds of thousands of people are being transported from Dublin to Heathrow on them, the company would part with them quickly. If the slots caused a loss, the company would not subscribe to them.

Ms Shortall

If the price is right they will be sold. They will not be protected.

Mr. P. Power

To ignore that fact is to ignore the reality of the way an aviation company works.

I welcome the plans to expand routes both eastwards and westwards. I compliment everybody involved in doing so. In Dermot Mannion we have a chief executive who recognises the realities of world aviation. He is the person to bring Aer Lingus forward in the new market.

Deputy Broughan spoke passionately of his bitter opposition to this. Deputy Shortall expressed her opposition at the Joint Committee on Transport. On the other hand, Deputy Olivia Mitchell generally subscribed to the idea of the Government's proposal.

Deputy Peter Power will have a long summer to decide on what will happen.

Mr. P. Power

The people would not have a notion of what would come down the line. That will ultimately focus people's mind in the next election when they reject the Mullingar discord rather than accord that is evident across the floor.

Mr. S. Ryan

The Deputy could have done better than that.

Mr. P. Breen

I welcome the opportunity to speak on the motion this afternoon. It is an important motion for any Deputy in the mid-west region. In recent months Shannon Airport and its future have been to the fore in radio interviews and newspaper reports. The issue does not just concern the future sale of Aer Lingus, but military flights etc.

The focus on the airport is sometimes very wrong. Deputy Peter Power knows that Shannon Airport is the second-largest airport in the country, and it is the key economic driver for business and tourism in the mid-west region. It is a counterbalance to the immense growth in the eastern region.

Aer Lingus, our national carrier, has served Shannon well down through the years. It has been very much a part of the success story of Shannon Airport. This is partly because there is a bilateral agreement in place which protects the transatlantic services going through Shannon Airport.

The airline business has changed dramatically in recent years, and particularly since 9/11 and the Iraq war. Shannon Airport was the main loser when Aer Lingus decided to cut its services in the reaction to 9/11. We lost in the region of 64 flights in Shannon Airport. Since then there has been a continual erosion of services.

One only has to look at the Cara magazine produced monthly by Aer Lingus. I looked at last month’s copy, and the route map in the magazine shows no European route for the airport, and there is only one cross-channel route to England. The rest of the services go to America, but even that service has been cut back in recent years. This year we have only four direct flights a week from Shannon to the US. The rest of the services originate in Dublin and go onwards to Shannon. That cuts back capacity for people coming in through our airport.

There has been great change in airlines, not alone in Ireland but internationally. Boeing and Airbus are facing troubles, and two of the Airbus chiefs resigned last week over delays in production of the A380, the new flagship of the company. That is causing untold problems for the company. Boeing has also had severe problems in competing with Airbus. It now seems to be coming back on the market with a new airliner, the 787, which is very fuel-efficient.

I listened to an airline analyst recently who told people that they should travel the world now, as in a few years they will not be able to because of the price of fuel and other charges which will be imposed, including environmental charges. This is the future we are facing in the airline business.

People wish to travel, and the success of Ryanair in recent years can be considered in this regard, along with Southwest Air in America. They have been the exceptions to the rule with regard to the success of airlines. However, although Ryanair had its highest profits ever this year, the share price is down approximately 15% since the beginning of the year. The share price has been flat over the past three years. One might question if this is the correct time to have an IPO in the airline.

Naturally, Aer Lingus is on a sound footing at the moment. It must spend much money if services are to be expanded into the US and if it is to open 20 new routes, as the Minister, Deputy Cullen, has indicated. I do not believe that will happen. When the Minister went to the US last year to negotiate the bilateral agreement, he made a fatal mistake in negotiating the three-for-one rule.

The effects of this have already been seen in Ireland, not just in Shannon Airport but in Dublin Airport. Four US airlines now serve Ireland. They are Continental, US Air, Delta and American Airlines. I can only speak for Shannon because I represent the constituency, but there were queues out the door last year at the Aer Lingus check-in desk at the airport. Those queues are not there anymore. The other airlines are gobbling up business. As a result of Aer Lingus being so small, in a post open skies scenario the company could be swallowed by the big carriers, such as British Airways and Lufthansa. That will be a problem.

I wish to comment on the services provided by Aer Lingus at Shannon Airport. The company has not operated any new services from the airport in recent years. At the same time, it has opened many new services from Dublin and Cork. I worry about the future of the workers in Shannon Airport. These are the people who protected the airport through the years and they will be the victims of what will happen in Aer Lingus in the future. I worry about the future of those working in the Airbus A330 hangar at Shannon Airport. With a privatised Aer Lingus these jobs could be at stake and could be transferred elsewhere. In a privatised Aer Lingus, the jobs of workers at check-in desks at Shannon Airport could be at stake because a new owner could decide to sub-contract this work. These are my worries as a public representative in the Shannon area.

Last week saw the withdrawal of World Airways from Shannon Airport. It will have a devastating effect on the region and in particular on the catering workers in Shannon Airport. Where 3,000 meals a day were being prepared by them, the figure has now been reduced to 800.

Another example of what happens in Shannon with Aer Lingus occurred last Wednesday. Once a year Aer Lingus operates a charitable flight to America for Northern Ireland children with disabilities, and I have no difficulty with that. However, the company cancelled this flight EI111 and there was no scheduled flight from Shannon on Wednesday. There were three flights from Dublin to New York but we had no direct service. As my colleague, Deputy James Breen, pointed out, Aer Lingus's direct daily flights to the US are strategically important for industry in the region. One of the three flights from Dublin last Wednesday could have been routed through Shannon, but once again we were the victims of the policy of Aer Lingus and Mr. Mannion to operate a hub out of Dublin.

Mr. Mannion, in an interview in the monthly Cara magazine celebrating the 70th anniversary of Aer Lingus, stated that he wanted Dublin to become a hub. There was no mention whatsoever of Shannon Airport in that interview. I protested in writing to Mr. Mannion a month ago asking what was Aer Lingus’s plan for the future of Shannon Airport but I have not heard a word in reply. I believe Aer Lingus has no plan for the future of Shannon Airport. Its plan is to leave the airport with just a feeder service in winter and to cherry pick the routes in the summer when there is business.

Shannon must be protected in the interests of balanced regional development. The Government has refused to commission an economic impact study. The report by Sorensen and the former Minister, Mr. Dukes, on the impact of open skies concluded that Shannon would be the biggest loser and Aer Lingus and the Dublin lobby would gain in this.

We in Shannon have much to fear. The workers fear for their future. That is why I am here today, to try to protect the workers in Shannon whom I represent. They must have job security, which is so important. Their pension rights must be settled.

Aer Lingus does not have a manager at Shannon Airport. The man who manages Shannon Airport is the manager from Cork. Do they call that commitment to Shannon, to the mid-west and to balanced regional development? Whereas four American airlines are servicing Shannon Airport and have faith in the airport's future, at the same time Aer Lingus is eroding services.

There are other issues I wished to raise, particularly the commitment which the Minister for Transport, Deputy Cullen, received that Aer Lingus would put 400,000 passengers through Shannon each year. I do not believe he got that commitment in writing. Transatlantic business is worth €25 million a year to Shannon. Whatever happens, that must be protected. The Minister of State, Deputy Gallagher, must look at the Government's policy on balanced regional development.

Mr. Glennon

I will be relatively brief and try to focus on the issues at hand. Aer Lingus is obviously an issue which gives rise to much passion on all sides. It is a company which, since its foundation 70 years ago, has held a special place in the hearts of all Irish people. I say so, not in the usual clichéd way but genuinely. Aer Lingus means different things to different people.

As someone born and reared in north County Dublin like generations of my family before me, I have strong memories of the development of Dublin Airport on the back of Aer Lingus.

Ms Shortall

Why did Deputy Glennon not turn up to the meeting?

Mr. Glennon

The development of Dublin Airport happened on the back of the company that is Aer Lingus. Over many years the workforce has shown remarkable loyalty and attachment to the company——

Ms Shortall

Unlike Deputy Glennon and his colleagues.

Mr. Glennon

——and a commitment far above and beyond the call of duty. That has been manifest in the way in which direct financial sacrifices have been made by staff at various times of difficulty within the company, and particularly in what has now proved to be one of the major issues as we deal with the proposed investment in the company, that is, pensions.

In a way, today is a sad day but it is also a proud one. What decides whether it is a sad or proud day depends really on where one is coming from in this discussion and on whether one sees the glass as half empty or half full. It is sad that we are debating the probability of Aer Lingus moving out of State ownership at all. State ownership has served Aer Lingus well for a long number of years.

Equally, it is a proud day in that it is one on which a major step will be taken for Aer Lingus to take its place among the airlines of the world with its own financial foundation in place, regardless of state aid. I wonder how the founders of Aer Lingus 70 years ago would look on it. I believe they would look on it as a proud day, from which the airline can go forward with pride, building on the tradition and on the brand recognition generated over the years and building also on the loyalty of the workforce which is in no way diluted since the early days.

Today is a difficult one for many of the individual issues of the proposed transaction, the considerable detail of which, unfortunately, we are of necessity lacking. It is by no means over the line yet. There are several issues remaining and I believe these will be dealt with. As I stated, the staff have made significant sacrifices over the years and, equally, have shown remarkable commitment in the work ethic. We need not look too far into the past. In recent years, post 9/11, when Aer Lingus, with many other airlines, was looking over the precipice, it was the staff, with good management, strong ideals and a strong ethic, who rescued the airline. In addition, the Cahill plan was implemented approximately ten years ago. On each occasion Aer Lingus was rescued by the commitment of the staff and those who were prepared to make sacrifices. Ten years ago the company had a staff of 7,000 and 3,500 pensioners, while the reverse is the case today.

The major issue in this transaction is the deficit in the company's pension fund. It has been suggested that the deficit has been introduced as an opportunistic lever to secure the flotation but that is untrue. The first meeting I attended as an Oireachtas Member six years ago concerned the pension deficits faced by Aer Lingus, the Dublin Airport Authority and SR Techniques. The issues are complex but it is fundamental to this transaction that the deficit should be resolved satisfactorily before it proceeds.

Ms Shortall

There is no guarantee that will happen.

Mr. Glennon

I did not say there was a guarantee but the issue must be dealt with equitably to the satisfaction of the pensioners and the current employees.

Ms Shortall

If not, what will the Deputy do?

Mr. Glennon

I will proceed with my contribution. Job security is another issue of major concern to employees. The simplest way to guarantee jobs and, hopefully, create jobs on the long haul and transatlantic routes is to procure the necessary funding to enable the company to move forward. The new business generated by long haul routes should result in additional jobs and such expansion will be funded by the flotation.

The stock required to generate the funds required for the expansion should not be at the levels mentioned earlier. The Government has the power to sell up to 60% of the stock but I hope sufficient funds can be generated from the sale of a lower volume of stock to implement the ambitious business plan of Aer Lingus management. It is important not only that the 25% share is retained, which is fundamental to the entire transaction, but that a sufficient cushion is provided for options in the future.

Deputies James Breen, Pat Breen and Peter Power made passionate contributions about Shannon Airport. Passion has never been monopolised on the football fields by one province or county. People have a different way of expressing their passion for particular institutions. The people of Clare and the mid-west are passionate about Shannon Airport but the airport's survival is not dependent on the development of Dublin Airport. Since the abolition of the Shannon stopover, Dublin Airport has experienced what it was missing during the years Shannon Airport was protected. Shannon Airport should stand on its own two feet and go for it in the same way as Dublin Airport.

Mr. Connaughton

I wish to share time with Deputy Deenihan.

Ireland and Aer Lingus have come a long way since 1936 when the Government decided to establish a national airline. The company instilled pride and confidence in a fledgling State which, as with most new democracies, had to stumble before it walked. For many years, the only visible international symbol of Ireland was the famous shamrock on the company's airplanes as millions of people were transported to and from the State. Most people like to think that Aer Lingus will maintain a connection with the public, irrespective of what happens when the company is partly privatised.

As Deputy Olivia Mitchell outlined, because it will be difficult for the company to attract investment in future years and for the Government to make the necessary investment, we can only hope that the Minister's proposal pays off. I salute the men and women who kept the company going down through the years. Great pain was experienced during the various redundancy schemes but I hope the Minister will protect the pensions people believe they are entitled to as of right. Can he ensure the pensions will be guaranteed following the flotation?

Many issues arise. Deputy Olivia Mitchell referred to the validity of the motion and I hope the Minister will clarify the legal position. The Deputy has put in a great deal of effort into researching the procedures and the Minister would do her a great disservice if the procedures he is following were wrong. There has been enough messing over Aer Lingus over the past ten years and it would be nothing short of a disaster if the Minister started out on the wrong road on the first day of the flotation procedure.

Like other Members, I would like the Minister to guarantee the slots at Heathrow Airport. He cannot do so but they are critically important for the future. The people have a connection with Aer Lingus and they would like the aircraft to be based in Ireland. The flotation could lead to the company setting up a hub on the Continent, with Dublin being used as a remote location. I hope that does not happen. The flotation of Air Berlin a couple of months ago caused many headaches. I can only hope the Minister has his homework done on this issue. It took him and his predecessors a long time to do it and had the long unnecessary five-year delay in taking action on Aer Lingus not happened we would now be in a different position.

I ask the Minister not to turn Shannon Airport into a helicopter pad. We will not accept that from a regional development point of view. If I had enough time I would spend an hour on that subject. It would not look good and we will not allow the Minister or Aer Lingus to do it.

Mr. Deenihan

I am glad to have the opportunity to speak on this motion. Aer Lingus is synonymous with this country. It is a well-known brand throughout Europe and other parts of the world. It has been the flag-carrier for Irish tourism for years. It is important to recognise that the high standards of hospitality of Aer Lingus and the friendliness of its air hostesses are the reason so many people prefer to travel to and from Ireland with it rather than other airlines. It also has a great safety record and the pilots it trains are of a high standard. It must be recognised that Aer Lingus has become respected throughout the world.

Despite the fact that Aer Lingus was in trouble in recent years, it has turned around. Recently, I read in the newspapers that it will make a profit of approximately €85 million this year. Willie Walsh and those who came after him deserve great credit for that turnaround.

It is important for the economic future of this country, particularly tourism which is my area of responsibility, that Aer Lingus is strong. Many parts of the country are dependent on tourism, especially the west, and Aer Lingus has a critical role to play. The airline must expand, buy more aircraft and service more cities not only in Europe but also in the United States. I understand 21 cities in the United States seek an Aer Lingus service. I am familiar with San José——

Mr. Cullen

As is the Taoiseach.

Mr. Deenihan

A delegation is here from San José at present, seeking Aer Lingus flights to that city. It is in the middle of Silicon Valley, which has contributed so much to Ireland. Major IT companies based here want a dedicated service to San José airport. That is the demand which exists and the company needs money to meet that demand.

From where will the money come? It will come from either State investment, which we do not have, or private investment. It is important that we make this an attractive package in which people will invest. I hope for as much Irish investment as possible because there must be a sense of ownership here. The concern is that it could be owned by international investment companies and banks. We could lose the connection with the country. The UK is concerned at present because British Airways will no longer be owned by British people. Similar concerns will be raised about Aer Lingus.

I agree with previous speakers that we should have had a White Paper on the flotation of Aer Lingus. The matter should have had more consideration in this House. More discussion should have taken place. It should have been discussed at the Joint Committee on Arts, Sport, Tourism, Community, Rural and Gaeltacht Affairs on which I sit. We discussed many issues, but not this. Neither the discussion on this matter nor the preparations are acceptable. Now we have confusion on whether we should agree the principles of the motion rather than the sale of Aer Lingus. That is a critical issue.

How much time do I have remaining?

Acting Chairman (Dr. Cowley)

Six seconds.

Mr. Deenihan

This is indicative that we do not have enough time to discuss the matter. The efforts of the employees of Aer Lingus in bringing about this change must be recognised. Their concerns regarding pensions and so on must be addressed, and I mean that sincerely.

I share Deputy Pat Breen's concerns about Shannon Airport. This has nothing to do with the Minister, but with the future policy of Aer Lingus on Shannon Airport. I hope a new Aer Lingus will see Shannon Airport as a critical catalyst in the development of regional Ireland. We have a major disparity between east and west.

Ms Lynch

I wish to share time with Deputies O'Sullivan and Costello.

Acting Chairman

Is that agreed? Agreed.

Ms Lynch

We must bring this issue back to basics, as many people have done during this debate. Last Monday morning, I attended a meeting in Cork Airport. Sometimes the regional airports get forgotten in this debate. It was a worthwhile meeting with the south west regional authority. It boiled down to the fact that Aer Rianta did not ask to be broken up. It did not make that request, nor is that what it wanted. It was a political, ideological decision forced upon the company. As part of that decision the then Minister, Deputy Brennan, stated Cork Airport would be left debt-free to allow it the capacity and ability to develop. Development at Cork Airport is badly needed.

We now have a terminal about to be opened and the debt issue is unclear. The current Minister appears to be claiming that making it debt-free could not possibly be done under the Companies Act. This House legislates and we can do it under the Companies Act. That Act may need to be changed, but the Government has changed enough Acts to allow us to do it again.

Mr. Cullen

We would discredit the entire Irish financial sector if we were to change our company law to suit public companies.

Ms Lynch

As a member of Fianna Fáil, the Minister knows a lot about discrediting financial institutions. Let us not go there. That is not what I came here to debate.

Mr. Cullen

It would undermine every company, public and private.

Ms Lynch

If the Minister wants to discuss discrediting people in terms of financial implications we can have that debate another day.

This is a company which, if it has to expand, has two ways of doing so. It could borrow or the Government could invest in it. There is nothing stopping the Government investing in it but the only argument that is accepted is that it has to be sold. This is the only time a profitable, well run, slimmed down State sector company has had to be sold, and we all know what will happen. The carpetbaggers will come in and stop it.

As for the poor pensioners, they are being sold a pup. When they realise that the profits from this venture are going into the general coffers, with none of them being directed towards solving their pension problem, I hope Deputy Glennon will be knocking on doors to explain it to them.

Mr. Glennon

That is not true.

Mr. Cullen

That is nonsense. What debate is Deputy Lynch listening to?

Ms O’Sullivan

I agree with my colleagues that this is a sad day for the country. We are selling off a strategic asset, Aer Lingus, for the price of four planes.

Mr. Cullen

The Deputy should go back to primary school and learn to add.

Ms O’Sullivan

That money will not be put into buying planes, nor does the Minister intend to fulfil his commitment to the pensioners. We are an island nation yet we are selling our airline. When New Zealand sold its airline it had to buy it back because it could not flourish as a private company. We have the example of Eircom also yet the Government is gung ho on selling off this asset. It makes no economic sense and it makes no regional sense from the point of view of my area. It is interesting that so few Government representatives have come into the House to speak on the motion and defend their regions. It appears only the Opposition Members, particularly those from the Shannon region, with the exception of Deputy Power, have any interest in the Shannon region. There is no doubt that Aer Lingus in State ownership is a crucial factor for Shannon, as it is for the entire country, but I am concerned for Shannon in particular.

I agree with both Deputies Breen who spoke earlier that Aer Lingus has not shown much concern for Shannon and does not even have a manager in Shannon. At the same time, the fact it is a national airline means it must have national interests at heart and give some service to Shannon, as it has done in recent years. When it is no longer a national airline, however, it will not have any obligation. We know there is no guarantee the so-called golden share the State is supposed to be retaining will last in perpetuity and, as Deputy Lynch said, the carpetbaggers will have their way. That is what we face with a national airline that we have been so proud of, that turned around its economic position and that is profitable. There is no need to sell it off. The case for not selling it was well made by my colleague, Deputy Shortall, but on the last day of the Dáil session we are providing for it to be sold. That is very sad.

The strategic and regional interests of Shannon Airport are crucial to our half of the country. This provision to allow a sell off is just one element of what the Government is doing; the open skies deal is another but I do not have time to develop that point.

Mr. Costello

This is a very bad day for Aer Lingus and the country. It is strange that Fianna Fáil could only bring in one backbencher from the northside to speak in the debate. Only one of the 11 backbenchers has turned up. There is a Government slot after we speak going a begging but where are all the Government backbenchers? It is obvious they are not too happy to stand behind what the Minister, Deputy Cullen, is doing.

This proposal is not out of character when one considers what has been done in the past nine years. The Fianna Fáil-Progressive Democrats Government is privatisation mad. The PD tail has been wagging the Fianna Fáil poodle for over nine years. The Tánaiste, Deputy Harney, has done an inventory of all lands in the Department of Health and Children with a view to selling them for a private sector tax incentive development. The Minister for Justice, Equality and Law Reform, Deputy McDowell, sold his offices in St. Stephen's Green for €52 million and now he is a wandering Minister getting temporary accommodation down the street. The Minister of State, Deputy Parlon, in the key Office of Public Works, is busily engaged in selling all the State properties he can lay his hands on and buying property throughout the country at exorbitant prices for his so-called programme of decentralisation. We have the ex officio fourth PD Minister, Deputy Cullen, engaged in the sale of the century but Aer Lingus is very different. This sale is an issue of the utmost national importance and it is disingenuous of the Government to say it will retain 25.1% of the shares to protect key strategic interests.

When the Irish Sugar Company was privatised some years ago the State retained 30.4% of the shares. However, it had to dispose of all of those shares within two years. If it was not able to protect its own shareholding it had little chance of protecting the strategic interest of the Irish sugar industry, its employees and the sugar beet farmers. The entire industry has gone to the wall.

There is scarcely any need to rehearse the more recent debacle of Eircom when the citizens of this country were induced into purchasing worthless shares and venture capitalists, or vulture capitalists, took control, fragmented the company and instead of injecting the promised equity, starved it of funds and left the telecommunications industry here in a shambles.

This is a real scandal of privatisation. This Government is on its last legs. Next year, with a little luck, we will be burying it and a suitable epitaph would be, "In a time of plenty it sold all the family silver it could get its greedy hands on".

Ms C. Murphy

I wish to share time with Deputies Boyle and Morgan.

Acting Chairman

Is that agreed? Agreed.

Ms C. Murphy

The Irish Independent headline this morning read: “Aer Lingus for sale: public can buy stake”. If we rowed back to 1999 and substituted “Eircom” for “Aer Lingus”, that headline would not look out of place. Less than a year after Eircom was floated, the headline read: “Eircom stock price dives on share dump”. Not only were small investors stung badly, there was a failure to invest in broadband and the State had to shore up the industry, which meant a doubling of the cost. Given the experience with Eircom, I expect the public will be rightly sceptical in this case.

Aer Lingus was set up in 1936 and 70 years later it is strategically more important than it was at its inception, with air traffic at an all-time high. There have been very few events in the past 70 years that the public has been proud of and while this sale impacts on Aer Lingus staff and pensioners, many of them living in north Dublin, the decision has a national impact also.

The proposal before the House is a disgrace. The fact we are an island nation is critical in terms of its strategic importance. The company is in profit, largely because the workers made it profitable, and the public has confidence in the services it provides. The staff have every reason to be sceptical also because while it appears a good deal on paper, the experience of workers seconded to TEAM Aer Lingus tells a very different tale. For some workers it has been a 16 year court battle, which is not over. The Supreme Court issued a judgment in King and ors v. Aer Lingus PLC on 22 March this year. The question of damages and back pay was referred back to the High Court by the Supreme Court but Aer Lingus is repudiating the Supreme Court order that those engineers be paid the same as engineers who did not second. Months later, however, that has not occurred. Highly trained engineering staff seconded to TEAM Aer Lingus, who returned to Aer Lingus, have been deployed since 1998 in baggage handling and wash-up duties, and have had their pay withheld. The Supreme Court judgment states:

I conclude therefore on this issue that on returning to Aer Lingus in 1998, the claimants were at that point entitled to do so as if Team had never existed, that they were then entitled to be paid the same levels of remuneration as mechanical engineers employed by Aer Lingus who had not been seconded. They were further entitled, in my view, to have their seniority fully recognised and be placed on the appropriate incremental scale as though they had never left Aer Lingus.

That clearly has not happened. What possible commitments can be given by the Government when that has been the practice of the company? I heard Deputy Glennon say that this was one of the matters that needed to be resolved. It also shows the shameful practice of the company in terms of a commitment that was given. The commitment was not just given by the company to the workers. It was made here in the Dáil in a reply to a parliamentary question by the then Minister for Public Enterprise, Senator O'Rourke. It is a disgraceful decision and a disgraceful practice in terms of how the workers were treated. While this issue in its own right needs to be resolved, it also sends a very strong message to the pensioners and workers of Aer Lingus, who need to consider the matter very carefully.

Mr. Morgan

The motion brought forward by the Government regarding the privatisation of Aer Lingus is an absolute insult not only to the general public but also and especially to the Aer Lingus staff who have been invaluable in building up the company. They have been internationally commended for building up the airline as one of the foremost airlines globally and for their major contribution in returning the company to record profitability. Many of the Aer Lingus staff will justifiably view the proposed sale as a betrayal of all their sacrifices and success in rescuing the airline and restoring it to a healthy position, and we in Sinn Féin absolutely supported them in their industrial action this morning.

Privatisation of Aer Lingus will benefit no one, apart from those who have fat wallets anyway. The public will suffer and the workers will suffer. My party has continually opposed the privatisation of Aer Lingus and wholeheartedly supported the opinions of the trade unionists, the workers, the local authorities and even the Fianna Fáil councillors who were willing to voice their concern regarding this ridiculous manoeuvre by the Government. Those Fianna Fáil councillors are in stark contrast to that party's Deputies from the area who have not come out in support of the workers.

Privatisation in itself threatens job security; it costs only the taxpayer and will inevitably lead to the same "race to the bottom" scenario we witnessed with Irish Ferries. The Government would have us believe that the objective of privatising Aer Lingus would be to save a floundering company, when in fact the only objective in privatising this semi-State body is to profit a few at the expense of many. Aer Lingus should remain in the hands of Irish people and this valuable asset should not be so wantonly distributed to those who care not for the public Aer Lingus serves or the workers it employs, but only for those who want to make a quick buck. It is an absolute scandal that the Government would even utter such an idea and then try and fool us into believing that it is of great benefit for not only the company, but also the State as a whole. It is not working.

Regardless of the Government's idea that privatisation will somehow magically raise the amount of money that is required for capital investment and development, which it will not, it remains a mystery to my colleagues and me that if Aer Lingus is good enough for a private investor to invest in, then what is the problem with the State investing?

Acting Chairman (Mr. Sherlock)

Only three minutes remain in the slot and Deputies Joe Higgins and Cowley wish to speak.

Mr. Morgan

The Aer Lingus pensioners also need to be looked after. They paid through the nose in huge taxation throughout their working lives and now at the time when they most need some financial support the Government is letting them down and it should not be tolerated.

Mr. J. Higgins

Is this not a new slot of ten minutes before the Minister replies?

Acting Chairman

No. The Deputy has three minutes left in this slot.

Mr. J. Higgins

Is the Minister speaking after that?

Acting Chairman

No. If no Member from the Government side offers it crosses to Fine Gael.

Mr. J. Higgins

I come here in haste, as we are very engrossed in the Committee of Public Accounts today. The privatisation of Aer Lingus is an act of gross treachery by the Government against the people, the Aer Lingus workers and the communities that depend on the national airline. This privatisation is not driven by the interest of the welfare of the workers or the national airline but by the right wing neo-liberal agenda of the Government representing capitalists' interests. The normal fraud is repeated again today with the front page of the Irish Independent giving the impression that ordinary working people can invest in Aer Lingus. The people will not be fooled this time as some of them were with the Telecom Éireann privatisation when they were badly burned. The proprietor of Independent News and Media was one of those who handsomely gained from that privatisation, sweating that national asset of the people for huge profits and with very detrimental effects on the investment that was necessary in broadband and in other aspects of that industry. Privatisation is detrimental to workers’ interests. All we need to do is consider Irish Sugar here which was once a thriving industry and is now completely wiped out in favour of sweated sugar from Brazil. That is the logic of capitalist privatisation. It benefits only the sharks.

I commend the workers of Aer Lingus, who did not want to discommode passengers this morning, but had no option except to show in a small way the huge power they carry and the extremely important role they play in the transport infrastructure. The workers of Aer Lingus can only rely on their own power. I urge them to carry on and to go forward with more developed industrial action to stop the Government carrying on in this completely undemocratic way. The Government has no mandate for this action. In the last general election campaign neither of the Government parties proposed the privatisation of Aer Lingus if the people returned them to power.

Acting Chairman

I call Deputy Bruton.

Mr. Morgan

In light of the switch that has taken place, can the Acting Chairman confirm that the Government is so ashamed of this grubby deal that it is not putting up speakers to fill its slots?

Ms O. Mitchell

Exactly.

Mr. S. Ryan

The Government was never given a mandate for the sale. Why does it not put the matter to the electorate next June?

Minister for Transport (Mr. Cullen)

I thank Members for their contributions to this debate, in particular those who made constructive comments. I was saddened by the Deputies who offered nothing but political slogans, jargon and cliches to the workers of Aer Lingus. I have seen many instances of companies which could have been saved but for politicians who played populist politics.

My decision is in the interests of the airline, its staff and the people of this country. My career will not be characterised by the old political slogans and jargon of this debate.

I thank Deputy Olivia Mitchell for raising an important legal point. As a result I sought further legal advice and it has been considered by the Attorney General's office. The approval sought in the motion, pursuant to section 3(5) of the Act, clearly refers to approval of the general principle of the transaction. I am not proposing an amendment to the motion. I commend the motion to the House.

Acting Chairman

Is that acceptable to Deputy Olivia Mitchell?

Ms O. Mitchell

It certainly is not. It makes no reference to the general principles.

Amendment put.

The Dáil divided: Tá, 57; Níl, 67.

Tá

Allen, Bernard.
Boyle, Dan.
Breen, James.
Breen, Pat.
Broughan, Thomas P.
Bruton, Richard.
Burton, Joan.
Connaughton, Paul.
Connolly, Paudge.
Costello, Joe.
Cowley, Jerry.
Crowe, Seán.
Cuffe, Ciarán.
Deasy, John.
Deenihan, Jimmy.
Durkan, Bernard J.
English, Damien.
Enright, Olwyn.
Gogarty, Paul.
Gregory, Tony.
Hayes, Tom.
Healy, Seamus.
Higgins, Joe.
Higgins, Michael D.
Hogan, Phil.
Howlin, Brendan.
Kehoe, Paul.
Kenny, Enda.
Lynch, Kathleen.
McCormack, Pádraic.
McGrath, Finian.
McGrath, Paul.
McHugh, Paddy.
McManus, Liz.
Mitchell, Olivia.
Morgan, Arthur.
Murphy, Catherine.
Naughten, Denis.
Neville, Dan.
Ó Caoláin, Caoimhghín.
O’Dowd, Fergus.
O’Shea, Brian.
O’Sullivan, Jan.
Pattison, Seamus.
Penrose, Willie.
Perry, John.
Quinn, Ruairí.
Rabbitte, Pat.
Ryan, Seán.
Sargent, Trevor.
Sherlock, Joe.
Shortall, Róisín.
Stagg, Emmet.
Stanton, David.
Timmins, Billy.
Twomey, Liam.
Upton, Mary.

Níl

Ahern, Michael.
Andrews, Barry.
Ardagh, Seán.
Brady, Johnny.
Brady, Martin.
Browne, John.
Callanan, Joe.
Callely, Ivor.
Carey, Pat.
Carty, John.
Coughlan, Mary.
Cowen, Brian.
Cregan, John.
Cullen, Martin.
Curran, John.
Davern, Noel.
de Valera, Síle.
Dempsey, Tony.
Dennehy, John.
Devins, Jimmy.
Ellis, John.
Fahey, Frank.
Finneran, Michael.
Fitzpatrick, Dermot.
Fleming, Seán.
Fox, Mildred.
Glennon, Jim.
Hanafin, Mary.
Haughey, Seán.
Healy-Rae, Jackie.
Hoctor, Máire.
Jacob, Joe.
Keaveney, Cecilia.
Kelleher, Billy.
Kelly, Peter.
Kirk, Seamus.
Kitt, Tom.
Lenihan, Brian.
Lenihan, Conor.
McDowell, Michael.
McEllistrim, Thomas.
McGuinness, John.
Moynihan, Donal.
Moynihan, Michael.
Mulcahy, Michael.
Nolan, M. J.
Ó Cuív, Éamon.
Ó Fearghaíl, Seán.
O’Connor, Charlie.
O’Dea, Willie.
O’Donnell, Liz.
O’Donoghue, John.
O’Flynn, Noel.
O’Keeffe, Batt.
O’Keeffe, Ned.
O’Malley, Fiona.
O’Malley, Tim.
Parlon, Tom.
Power, Peter.
Roche, Dick.
Sexton, Mae.
Smith, Brendan.
Smith, Michael.
Treacy, Noel.
Walsh, Joe.
Woods, Michael.
Wright, G. V.

Tellers: Tá, Deputies Kehoe and Stagg; Níl, Deputies Kitt and Kelleher.

Amendment declared lost.

Question put: "That the motion be agreed to."

The Dáil divided by electronic means.

Mr. Stagg

Conscious of the fact that there was an important meeting at Dublin Airport on 27 April and no Fianna Fáil TD was capable of turning up, and conscious that today there were two Government speaking slots and no Government or Fianna Fáil Members offered and only two backbench Members spoke, we are anxious to ensure that even if the Fianna Fáil Members run they cannot hide. We are giving them an opportunity to walk up to be seen. As a teller, I call for a vote other than by electronic means.

Question again put: "That the motion be agreed to."

The Dáil divided: Tá, 68; Níl, 54.

Tá

Ahern, Michael.
Andrews, Barry.
Ardagh, Seán.
Brady, Johnny.
Brady, Martin.
Browne, John.
Callanan, Joe.
Callely, Ivor.
Carey, Pat.
Carty, John.
Coughlan, Mary.
Cowen, Brian.
Cregan, John.
Cullen, Martin.
Curran, John.
Davern, Noel.
de Valera, Síle.
Dempsey, Tony.
Dennehy, John.
Devins, Jimmy.
Ellis, John.
Fahey, Frank.
Finneran, Michael.
Fitzpatrick, Dermot.
Fleming, Seán.
Fox, Mildred.
Glennon, Jim.
Hanafin, Mary.
Haughey, Seán.
Healy-Rae, Jackie.
Hoctor, Máire.
Jacob, Joe.
Keaveney, Cecilia.
Kelleher, Billy.
Kelly, Peter.
Kirk, Seamus.
Kitt, Tom.
Lenihan, Brian.
Lenihan, Conor.
McDowell, Michael.
McEllistrim, Thomas.
McGrath, Finian.
McGuinness, John.
Moynihan, Donal.
Moynihan, Michael.
Mulcahy, Michael.
Nolan, M. J.
Ó Cuív, Éamon.
Ó Fearghaíl, Seán.
O’Connor, Charlie.
O’Dea, Willie.
O’Donnell, Liz.
O’Donoghue, John.
O’Flynn, Noel.
O’Keeffe, Batt.
O’Keeffe, Ned.
O’Malley, Fiona.
O’Malley, Tim.
Parlon, Tom.
Power, Peter.
Roche, Dick.
Sexton, Mae.
Smith, Brendan.
Smith, Michael.
Treacy, Noel.
Walsh, Joe.
Woods, Michael.
Wright, G. V.

Níl

Allen, Bernard.
Breen, James.
Breen, Pat.
Broughan, Thomas P.
Bruton, Richard.
Burton, Joan.
Connaughton, Paul.
Connolly, Paudge.
Costello, Joe.
Cowley, Jerry.
Crowe, Seán.
Cuffe, Ciarán.
Deasy, John.
Deenihan, Jimmy.
Durkan, Bernard J.
English, Damien.
Enright, Olwyn.
Gogarty, Paul.
Gregory, Tony.
Hayes, Tom.
Healy, Seamus.
Higgins, Joe.
Higgins, Michael D.
Hogan, Phil.
Howlin, Brendan.
Kehoe, Paul.
Kenny, Enda.
Lynch, Kathleen.
McCormack, Pádraic.
McGrath, Finian.
McGrath, Paul.
Mitchell, Olivia.
Morgan, Arthur.
Murphy, Catherine.
Naughten, Denis.
Neville, Dan.
Ó Caoláin, Caoimhghín.
O’Dowd, Fergus.
O’Shea, Brian.
O’Sullivan, Jan.
Pattison, Seamus.
Penrose, Willie.
Perry, John.
Quinn, Ruairí.
Rabbitte, Pat.
Ryan, Seán.
Sargent, Trevor.
Sherlock, Joe.
Shortall, Róisín.
Stagg, Emmet.
Stanton, David.
Timmins, Billy.
Twomey, Liam.
Upton, Mary.

Tellers: Tá, Deputies Kitt and Kelleher; Níl, Deputies Kehoe and Stagg.

Question declared carried.

Dáil Éireann debate - Thursday, 6 Jul 2006

Disposal of Shares in Aer Lingus Group plc: Motion.

Dáil Éireann debate -
Thursday, 6 Jul 2006