I welcome the Minister to the House. May I point out that contributions are limited to ten minutes. The Minister will be called to reply at approximately 5.55 p.m.
Aer Lingus: Statements.
I am glad to have this opportunity to explain to Senators the Government's position in regard to the financial difficulties facing Aer Lingus.
I stated in Dáil Éireann an Tuesday night last that Mr. Bernie Cahill has been given executive responsibility to take whatever action is necessary with immediate effect to restore the company to commercial viability. I also stated that Mr. Cahill has been given absolute discretion in terms of increasing yields, disposing of assets not essential to the core business, and in achieving savings on the company's cost base. However, I indicated to the executive chairman that Aer Lingus is to maintain a significant presence on the transatlantic routes, in the context of the existing policy on the Shannon stopover.
This statement may have been misinterpreted in some quarters. In the first instance, I want to make it clear that there is no question of the Government washing its hands of the situation. The chairman has freedom to develop the new framework to ensure that the company is restored to viability. Obviously, the executive chairman will be subject to the normal board procedures and requirements under the Companies Acts and Aer Lingus' own articles of association. The chairman will, of course, be in touch with me on the progress he is making, particularly with regard to the important strategic issues.
The normal established procedures of liaison with my Department, and the Department of Finance guidelines for semi-State companies, issued in March 1992, will continue to apply. The executive chairman shares my view that a partnership approach is essential in resolving this problem. The whole basis for the Programme for Economic and Social Progress and for the development of the semi-State sector is one of partnership — partnership between Government, management and the trade unions. It is only through dialogue and co-operation between all the parties involved that the future can be planned and progress made in promoting national development. Aer Lingus is no different and I am glad to say that the executive chairman has commenced this process this morning by meeting the unions in the company and management yesterday.
A policy of non-co-operation by any side will only exacerbate the situation, continue the financial haemorrhaging in the company and lead us nowhere. As both I and my colleague, the Minister for Finance, have said, subject to the constraints on the national finances which rule out very large injections of equity in the Aer Lingus Group by the Exchequer, the Government is prepared to support a viable and convincing recovery plan. For its part, the Government will be prepared to support the airline in so far as it can when it is satisfied that the future direction of Aer Lingus has been set and when convincing and visible decisions by the management and workforce are evident.
Apart from Exchequer constraints there is an EC dimension to this. Any proposals for an injection of equity in Aer Lingus will require the approval of the EC Commission. The Commission would have to be satisfied that the equity forms part of a programme to restore the airline's financial health, so that it can, within a reasonably short period, be expected to operate viably without further aid. Equity must be of limited duration. Also, any such aid must be structured so that it is transparent and can be controlled.
As I said before, it is vital, in looking to the future, to recognise the realities of the Single Market in which most Aer Lingus services operate. Airlines must compete in an open market where Governments can no longer intervene to regulate access to routes or pricing. In view of this, it is absolutely essential to Aer Lingus' survival that its costs match those of its competitors.
Recently there have been some selective references to the Boston Consulting Group report done on Aer Lingus in 1991. It is important in the present circumstances of the group to note that the report referred to the need to reduce costs. The report pointed out that, after adjusting for stage length differentials, Aer Lingus' overall cost levels were marginally higher than the average of the Association of European Airlines. In conclusion, in relation to costs the report pointed out that Aer Lingus would need to continue to reduce costs significantly over the succeeding few years just to keep pace with its competitors.
In the present circumstances, there is a heavy onus on Aer Lingus to ensure that its costs are at least as good as, if not better than, best industry practice.
I want to acknowledge the fact that Aer Lingus has been taking action to reduce its costs and has produced significant savings. However, there can be no room for complacency. If costs are not tackled aggressively, the airline will pay the price ultimately. That is the scenario we wish to avoid.
As well as reducing costs, Aer Lingus must ensure that its yields are at sustainable levels. The airline's long term interests are best served not only by competitive but also economically sustainable fares which will provide the necessary resources for long term development.
There have been references in recent days to capital expenditure in relation to the rapid fleet replacement over recent years having been approved by my Department. The Government, for the record, gave its consent to the purchase of these aircraft on the strict understanding that they would be financed by the airline without recourse to the Exchequer either for equity or State guarantee of borrowing. Detailed justifications were provided by Aer Lingus in response to queries raised by the Government. At the end of the day, it is a commercial decision for Aer Lingus to take.
Once more I want to stitch into the record my own and the Government's appreciation of the contribution which Aer Lingus has made to the economy over the years, and particularly in the development of Ireland's trade and tourism. I appreciate the contribution and sacrifices of the employees of the company over the years in enabling the airline to fulfil that role.
As I stated in the Dáil the Government wants to see Aer Lingus' contribution continue into the future. Aer Lingus is at present going through a very difficult period. However, with a partnership approach, we can work together to resolve the problems facing the company. The time for analysis is past. It is now time for resolute action and I am glad to say that has begun immediately.
I welcome the Minister to the House.
The position of Aer Lingus has been of concern to everyone over the past 12 months. The report and accounts of Aer Lingus for the year ended 31 March 1992, show that the company employs 7,600 people in Ireland and 13,631 in the group as a whole. Everyone would like to think that proper action would be taken to deal with the present problems. Three years ago, losses in the core business totalled £40 million and they are heading in 1993 towards £100 million. Yet, the board and the chairman, the newly appointed chief executive, did not do anything about these serious problems over the last three years.
The Tánaiste has compared the scale of the problems facing Aer Lingus to the combined problems of Irish Shipping, the B & I and ICI. The Minister has outlined the seriousness of the problem and has outlined a strategy to solve it within three years. However, many Members of both Houses called for the resignation of the then chairman, the current chief executive of Aer Lingus 12 months ago, because of the way in which the Greencore affair was handled. A year later the Coalition Government have decided to give the job of dismantling Aer Lingus to this man whose resignation was being called for. What has changed in the meantime?
Many Aer Lingus employees are seriously worried. Only three and a half months ago, a commitment was given by members of this Government to the workforce in Aer Lingus that everything would be all right. Two and a half months later the commitments are being left on the sideline. Instead of giving leadership the people who gave those commitments have made a decision — to pass the buck to a hatchet man, with no regard for the many families who are worried about their future in the firm.
The Minister has said that the new chief executive will immediately take whatever action is necessary. This implies that assets can be disposed of. Is it logical to dispose of assets like the hotel chain? While they are not part of the core business of Aer Lingus, they are still making profits. If there is any possibility of getting equity from outside after a restructuring plan under which the most profitable assets are disposed of, the company will be worthless. I cannot understand the discretionary powers that have been given by the Cabinet to the new chief executive to sell these profit-making hotels at a time when there is a downturn in the hotel industry.
What does the Minister mean when he talks about a partnership between the trade unions, the Government and the Aer Lingus board? Only last night, the trade union leaders said that they were being fed manure like mushrooms in the dark. This is the trade union movement who supported at least one major party in this Government because they promised to ensure the protection of the maximum number of jobs in Aer Lingus. How can the Minister tell us that this partnership he has spoken about will ensure the survival of the company when the Minister and the Government have decided to give over the powers for the reorganisation of Aer Lingus to one person? It makes no sense to the 7,600 Aer Lingus workers in Ireland. I am not surprised that the Government backbenchers want to know what is behind the proposals the Minister has made in connection with this partnership. Nobody believes that this partnership will have any say in the matter at the end of the day because the discretionary power will rest with the chief executive. The trade unions and the other groups involved have seen the Government turn their backs on the workers and they have every right to be concerned. The new chief executive has the power to wield the axe in any way he sees fit.
I do not want to take up too much time because there are other Members who wish to contribute on this serious matter. The commitments given by the political parties to the Aer Lingus workers three and a half months ago are being reneged on. The workers would have preferred the Cabinet to have honoured those commitments and not to have given any individual the power to downgrade Aer Lingus. When you consider the importance of Aer Lingus to the development of tourism and employment, the workers have reason to worry. The Government has given the responsibility to work out a solution to one person.
I thank the Minister, Deputy Cowen, for agreeing at short notice to this debate on a very important national issue. It would be remiss of me not to recognise a lifetime of service the former chief executive, Cathal Mullan, gave to Aer Lingus and I wish him well.
This company can become viable again. In the 1970s and 1980s Aer Lingus experienced similar financial crises, for example, during the oil crisis. Good management and the workforce brought the company out of its difficulties. I believe the company will overcome its current difficulties. Last November this House debated the situation in Aer Lingus and I will not go over the issues again. The company needs our support. The unfortunate timing of the election was a disaster for the company because five valuable months were lost while the company waited for a Government to be formed.
At the time I said that the key factor in solving the company's problems would be the coming together of the board, management and staff. The new executive chairman, Mr. Bernie Cahill, has started that process, which should have been initiated months ago. It was disastrous to hear union members say during the week that they were totally unaware of the proposals before the company. The Minister and the Government are right when they talk about partnership. The only way forward for the company is partnership between the workforce, management and the board. The workforce has always played its part in the running of the company. In recent years the workforce has changed its work practices and has not taken pay awards which were due. This must be recognised.
The promise of equity led the company to take its eye off the ball. The main problem of the company is its core business. While equity is badly needed, it will not solve all the problems facing the company. I welcome the commitment of the Minister and the Government, that, subject to a viable plan, equity will be made available to the company. It will be a good investment by the Government on behalf of the taxpayer.
The morale of the workforce could not be lower. Last November I suggested the possibility of allowing the workforce, through an employee shared option scheme, to invest in its own company. This proposal is valid today. The unions at TEAM Aer Lingus are now giving this proposal serious thought. If that proposal is taken up by the workforce, the Government should respond by way of a tax proposal because the workforce will be investing in Aer Lingus to ensure that it remains an Irish company.
Aer Rianta has a role to play in the survival and promotion of Aer Lingus. Aer Lingus is Aer Rianta's biggest customer. Perhaps they may become shareholders in Aer Lingus and at some future time they could sell off their share-holding. Another way Aer Rianta could support Aer Lingus is by offering competitive charges. This is something the Minister should consider. If the workforce is being asked to take a decrease in wages, Aer Rianta should be asked to reduce its charges. Aer Lingus run a successful hotel chain and I would not like to see these hotels go out of Irish hands. Perhaps Aer Rianta would have a role to play in the purchase of these hotels. I am sure that no assets will be sold off in a fire brigade action and I presume that good business management will be exercised in any decisions made by management or by the Government.
I understand that the ludicrous matter of the London air fares is being addressed. The increase in Aer Lingus fares has not affected its market share. In business terms I do not understand how one can continue to lose money by selling seats. It is not sustainable. I hope that some common sense will prevail between Ryanair and Aer Lingus and that Aer Lingus's busiest route will not be its biggest loss maker.
The Minister and the Department are pursuing the possibility of EC funding for Aer Lingus. Since we are an island, off the west coast of Europe, EC funding should be more readily available.
Given the current situation, setting down preconditions will not solve any of the problems. It will result in further losses and further threats to the workforce. I urge all those concerned to take on board the Minister's request for partnership in order to bring about success. It is important that none of us should denigrate this company which has had many successes. It has made considerable profits and it set up TEAM which employs 2,200 people. The Branson company, a leading world airline, advertise that they have their planes maintained by TEAM, the experts in maintenance. Airmotive is another company that was set up by Aer Lingus. Both companies have had some problems but they are problems which can be overcome. TEAM is already overcoming them. I hope that TEAM will go from strength to strength.
The last option on the Minister's agenda should be the shedding of any of the workforce. Some economists are seeking major redundancies but others in the financial world believe that this company, through good sense and management, can trade itself out of difficulty. We must go down that road before we attempt to let go any of the workforce.
As a representative of Dublin North, I am fully aware of the feelings on the ground. People are genuinely scared. While the Minister is correct in demanding that the company become a viable and economic one, we must ensure that we do not talk this company out of business. The workforce and management can get this company operating profitably, as it has done in the past.
I wish the Minister well in a very difficult task. I hope that with our help the right solution will be found for this important national asset which is part and parcel of our economy and essential for tourism, exports, and business generally. I hope this company will return to profit and be a shining light as it has been in the past.
I would like to share time with Senator Wilson.
Is that agreed? Agreed.
I can say what I want to say in five minutes. I welcome the Minister and endorse what the Leader of the House has said in regard to Cathal Mullan, whose dedication and commitment in a lifetime of service is something we should recognise. It is sad that he is no longer there but there is a problem with the airline.
I want to address one aspect of what is clearly a very complex subject. The new executive chairman has been given a mandate to dispose of all Aer Lingus assets that are not core to the airline business. This is a strategic decision of very doubtful validity. The reason Aer Lingus diversified in the first place was to provide a support to the airline business because that is a business which goes through peaks and troughs. The airline business was always recognised as being only slightly profitable. The strategy was that through diversification we could go on having our own national airline by surrounding it with a whole cluster of more profitable businesses which would not only add synergy to the airline business itself and to Aer Lingus, but more importantly, would add profits when the airline business was in one of its downturns. If we sell off the diversified or non-core businesses that would make it more difficult, not less, for the shrunken airline to be viable in future. That would be like selling the family silver or even worse. Remembering the famine in other days, it would be like selling or eating the seed potatoes.
It would make much more sense to sell off the assets that are core to the airline business and then lease them back; in other words, to sell and lease back the aircraft that Aer Lingus at present owns. The airline owns, as far as I know, most of its fleet which is tying up capital that could otherwise be released. If, however, it is decided to sell the non-core assets of the airline, then it is vital that we go about this in a way that preserves as much value as possible for the State and the taxpayer.
The main asset is the hotels. There are 12 in the UK, one in Brussels, two in Paris, one in Germany and one in Tenerife — that is 17 in total. The problem is that the market for hotels is quite depressed, and putting them on the market now would be to sell them for a fraction of their potential worth. How we structure their disposal, if we have to sell them at all, is of prime importance. It has been suggested in the media that Aer Rianta could buy them, as if Aer Rianta had a bottomless pit of money. Last year Aer Rianta made a profit of £22 million or £23 million, and paid a dividend to the State of £18 million. There is no crock of gold in Aer Rianta.
Aer Rianta could be part of the solution however, if we capitalised on the current trend in the international hotel business of separating management from ownership of hotel groups. We could then hold on to the management of the hotels and sell on most of the ownership to a long term investor such as a property company or pension fund. Such an investor would be prepared to take a much longer term view of the potential profit in that business and would take into account the leverage that a well-run management company could add to the investment. I am thinking here of Aer Rianta.
If we have to sell these assets we could firstly transfer the non-core assets to Aer Rianta. We could then tell Aer Rianta to look for a joint venture with a long term investor. Under this arrangement Aer Rianta could hold on to the management contract as well as, perhaps, 25 per cent of the equity in the new joint venture. Aer Rianta would be well placed to do this with its successful track record in hotel management, its international expertise and contacts. It would be better placed to do a good deal than Aer Lingus itself under present conditions. Because Aer Rianta would hold on to the management of the hotels it could enter into a performance related contract that would squeeze the best possible price from those assets. Its 25 per cent of the equity could be sold off in five years' time when the market was better, with the added value of its performance over those years.
There are many ways to arrange those details, but my main point is that how we structure any disposal will determine whether the State and the taxpayer get a good deal or a bad one. If we simply rush in and sell off in a distressed market we would be literally throwing away a very important national asset. I suggest we should take that step with great caution and great care.
I thank Senator Quinn for allowing me to share his time and this House for agreeing that he might do so. I see this problem, as one sees a lot of problems, as a head and heart situation. It has been common knowledge — although I am not privy to any information moneywise about the company — and in every newspaper in the British Isles that for two or three years Aer Lingus has been in real financial trouble and the news has been getting worse rather than better.
I was very pleased when, last July, I stepped on an Aer Lingus plane at Shannon to fly to New York and the jumbo jet, which was one of two that day, was packed to the gills. I said to one of the hostesses, "You are doing well, you have a full plane. Are you back in the money making business?" She said, "We have a full plane but we are losing money on every passenger in the plane." I do not understand how you can pack an aeroplane and still lose money. It seemed to me then that the problem must be very serious indeed. I had hoped that the full plane suggested that Aer Lingus was back in a money making situation.
Aer Lingus is not unique. There is not an airline in the world, with the exception of British Airways, that is not losing big money. It is a tough game and a hard market. My head suggests there is an argument that we should lock the door and walk away, because it is never going to make money. The market is impossible, there are too many competitors. My head even suggests that we should send for Lord King. He pulled British Airways out of real trouble. I say that only half jokingly.
My heart, however, tells me that Aer Lingus must be kept alive and kicking. It is our national flag carrier. When flying with other airlines, because I did not have the choice of using Aer Lingus, I was proud to see the shamrock on the tail of the planes at airports, and saw it as my airline. I know that others did as well. We cannot afford to turn the key and walk away from Aer Lingus in terms of prestige and in terms of one's heart. It is good in terms of what service it offers. It is efficient and above all it is caring.
On the flight back from America last summer, when half way across the Atlantic, the lady in charge of the attendants on the plane came to me and my wife and said: "You are welcome on board Aer Lingus. May I, on behalf of the crew, present you with this little gift in memory of your daughter". That is what caring is all about. I say this to illustrate the caring people who work for Aer Lingus. My heart says Aer Lingus must be kept going but I admit I am not an expert in this area. We must do what we can to ensure that the flag of Aer Lingus is kept flying.
I congratulate the Leader of the House on the work he has done to provide time for this debate and I welcome the Minister to the House.
This is a serious problem which cannot be allowed to drift. The problems of Aer Lingus cannot be looked at in isolation from the aviation scene worldwide. This was mentioned by Senator Wilson. The airline industry is volatile and rapidly changing. There have been many notable casualties, including some of the world's leading companies. In recent times, we have seen mergers and amalgamations of airline companies. There is a worldwide recession which has hit the aviation industry very hard and which, unfortunately, shows little sign of improving.
Given this background, it would be foolish to expect that Aer Lingus could escape undamaged. The company has an excellent record in the transportation of people and materials. It has been a national flagship — or flagplane — in every sense of the word and brought the name and the symbol of the shamrock of Ireland to many parts of the world. The company has been successful in a competitive market and has won for itself the reputation of being a good and safe carrier. Having said that, we cannot bury our heads in the sand and ignore the economic realities facing this company.
At present Aer Lingus owes £500 million and it is speculated that projected losses for the past year are between £50 million and £90 million. Few companies in any industry could afford to survive such losses. However, rather than dwell too long on the company's record and its present problems we must seek a way forward. This is the task facing all of us in this House, in Government and in the company. We must learn from other companies and other countries how to tackle this issue. Despite the recession and the failure of many operators, there are successful companies in the aviation world today. If these can survive there is no reason Aer Lingus cannot do likewise.
The Government, and particularly the Labour Party, is committed to supporting Aer Lingus and its workforce. I want to emphasise that principle clearly. Senator Farrelly's accusations about reneging on commitments and concern for the workers are groundless and unproven. The Government is committed to providing equity for the company, but it is important that the management and workers come together in a spirit of partnership to ensure an efficient, united and common approach to the problems afflicting the company. When this common policy has been achieved, I am confident that equity will be forthcoming from the Government to put the company on a solvent and efficient basis. We will ensure that the workers, through their unions, will play their full role in the decisions to be made. I also support the intention to seek EC funding. Our peripherality in the EC will certainly justify such funding.
This is not a time for pussy-footing or standing on procedure, precedent or point scoring. It is a time for action. This course is the only realistic and viable one for Aer Lingus. I strongly urge all the parties concerned to respond in an enlightened and urgent way.
I welcome the opportunity to contribute to this discussion. I welcome Deputy Cowen in his capacity as Minister for Transport, Energy and Communications and I wish him well. He has been lumbered with a huge problem and has inherited difficulties. The position in which he finds himself is not of his making but was created by his predecessors. We would not have this huge problem in Aer Lingus today if it were not for the indecision and dithering of Deputy Seamus Brennan while Minister for Tourism and Transport. Unfortunately, the Aer Lingus saga is not something that has sprung up overnight; it has gone on for quite a number of years. The current Minister is presented with a very difficult problem. He deserves support, in the national interest, from everybody in this House and in the other House.
It is vital that we retain our national airline. Aer Lingus has a long tradition and a great history. It has provided an excellent service second to none and has been a standard bearer for Ireland right across the world. It is a company of which we are justifiably proud. There are over 7,600 people currently employed in Aer Lingus and 13,000 in the wider group. The main task for the Government is to try to preserve all jobs if possible. One must direct one's mind towards that very difficult task.
Senator Quinn went to great lengths to propose a restructuring programme. He should be complimented for that. While a restructuring programme is commendable, we need a national aviation policy. We need to plan a strategy based on our position in world aviation. To date we lack an aviation policy. The onus is on the Government to present an aviation policy to this House and to the Dáil and to come forward with a specific proposal as to the aviation plans of the Government. It is ludicrous for the Government or the executive chairman to seek redundancies without first having an overall view as to what the future entails for aviation in Ireland. It is very important that this is put on the table by the Government.
We in Fine Gael would support an equity injection for Aer Lingus at this time but it is important that there is an overview taken of the entire situation. It is important that every effort is made, particularly at European Community level. Last October, I raised a number of questions in the Dáil with the previous Minister on this issue. At that stage, funding had been sought and refused. A strong case should be made to Europe because the excuse has been given in the past that we cannot provide funding for mobile assets. We should be in a position, as a peripheral island country, to make a strong case for Structural and Cohesion Funds for air and sea transport. That has been done in the case of other countries. Portugal was given over £14 million, Spain over £60 million, and £36 million has been given to Greece, all from European funding. The precedent has been created at European level. The onus is now on the Government to ensure that a strong case is made for Ireland and money is delivered to rectify this serious situation.
I turn to the current situation and the appointment of the executive chairman, Mr. Cahill. This action is unprecedented. My party is very concerned by the level of power vested in one man in relation to disposing of taxpayers' assets. We need to look seriously at the unprecedented decision that has been taken here. I would like to hear how some of the speakers on the opposite side can now reconcile their position following the appointment of Mr. Bernie Cahill as executive chairman of Aer Lingus with their calls over a year ago for his resignation during the Thurles and Tuam sugar factories crises and the Greencore affair. I would like to know what has changed so dramatically in relation to Mr. Cahill that some Government partners are now confident that he can undertake this daunting task and have invested in him this extraordinary power. The Minister in his speech said that he has indicated to the executive chairman that Aer Lingus is to maintain a significant presence on the transatlantic routes. I welcome the Minister's statement in that regard and his reinforcement of that position. Partnership is becoming the in-word these days; we are expected to operate everything in partnership. We are talking here about partnerships involving the social partners.
It did not work this morning.
That partnership is important but the position of workers needs to be protected and priority must be given to that. I would like the Minister in his reply to elaborate further on what he means by "the Government is prepared to support a viable and convincing recovery plan". I would like some indication from the Minister as to what he would consider a viable and convincing recovery plan and the type of support he would be prepared to give that plan.
Every effort must be made not to diminish the status of our airline. We live in competitive times exacerbated by the open market within Europe. I believe that with goodwill among Aer Lingus staff and with support from the community in general, it will be possible to keep Aer Lingus afloat.
Greater vigilance is required in the operation of semi-State bodies to prevent a rapid move from a profit-making situation to serious loss-making such as we are currently witnessing in Aer Lingus. Greater accountability to this House and to the Oireachtas in general is required also. It is unacceptable that over the years Dáil questions relating to Aer Lingus were refused repeatedly because of the fact that it was a semi-State organisation.
I am extremely critical of this Government and of previous Governments for their offhand approach to this problem. I hope in the national interest this matter can be resolved urgently.
With the permission of the House, I wish to share my time with Senator McGennis.
Is that agreed? Agreed.
It is a great pity the major contributions from the opposite side should be laced with venom and invective and that they should seek to scapegoat and to taunt the Labour Party. I will return to that matter later.
Do not worry about them. They are big lads now.
I am not worried about the Labour Party, but about the paucity of political thought displayed. I have no doubt that Senator Magner will deal with them in due course.
The difficulties facing Aer Lingus are not new. Any Senator who tried to suggest that they are guilty of a series of facile observations on reality or, alternatively, is simply not aware of the realities. The company has been flagging degrees of distress from time to time. The reality is that like so many Irish commercial State sponsored bodies, Aer Lingus has always been grossly under-capitalised. That is the nub of this problem and the nub of many other problems in the State sponsored sector. In terms of capital, Aer Lingus has not only been flying on a wing and a prayer but existing on an aspiration for many years. No Government has actually chosen to address that issue and until we realise that it is not possible to have major companies without equity, the problems will not end with the current crisis.
The current difficulties in Aer Lingus have a number of specific origins. There has been the perennial difficulty of under-capitalisation. Second, the company has suffered because of the lack of a coherent aviation policy. This is not a criticism that can be directed at any specific Government. We have never had an aviation policy in Ireland and it is about time we did. Third, the company has suffered its own internal difficulties. As the Aer Lingus Holidays issue has shown, management control has not always been as tight in Aer Lingus as it should have been. There is £17 million missing in that debacle and people should not overlook that in their contributions.
Historically and internationally, the airline business has been going through an exceedingly bad period. Aer Lingus is not insulated from these difficulties. I am pleased that the Minister has put down a number of specific markers on this issue. He has indicated that rationality will have to prevail and that the Government will be willing to look at the equity issue when a viable working plan has been produced. The Minister has also indicated clearly and unequivocally that there will not be a distress sale of the assets in this company. That is an important principle.
Aer Lingus's ancillary activities, which are mentioned as a way of resolving some of these difficulties, have contributed in a major way to keeping the company in the air for many years. We must look seriously at these activities before any major sale of assets takes place. Aer Rianta has a number of roles to play. One is as a possible recipient of the hotel group. A question arises in relation to its costs structure and Senator Wright mentioned this matter. If Aer Lingus is going to look among its workforce and within the company for major cost savings, then Aer Rianta and the Government should take similar action.
On the basis of a sound regional policy, the Government, quite rightly, made a decision on the Shannon stop-over. That stop-over has a number of financial consequences for Aer Lingus but this point has never been addressed. Aer Lingus must pay a considerable price each time a Jumbo lands and takes off from Shannon. There are also other associated costs which must be taken into account.
International airline linkages must be developed. We all know the days of the small regional airlines are at an end. Efforts must be made to find international airlines, perhaps in Europe or elsewhere, with whom linkages can be pursued.
Ultimately, Aer Lingus requires a major capital input. I am not sure the State will be able to provide all the capital the company needs. If that is the case, we must forget any ideological hang-up we may have and start looking at a solution proposed a long time ago by Aer Lingus management, and in particular by the manager who has been removed from office, that there should be some form of private equity participation.
I would like to record my personal sympathy with Mr. Cathal Mullan and his family. As chairman of the Joint Committee on Commercial State-Sponsored bodies over the past number of years, I met Mr. Mullan and the top management team on a number of occasions. Ultimately the buck must stop at somebody's desk. It is facile to suggest that political inactivity over the past six, eight or ten months is the problem. There is a long series of problems. I feel sympathy for Mr. Mullan and his family that he has had to bear the brunt in this case.
I thank the Minister for coming to the Seanad this afternoon. This is a serious problem, too serious to play politics with. There are no simple solutions. If there were the Minister would not need to come to either House. The case would have been presented and action taken. It is most unhelpful that any member of the House should make personal attacks on Bernard Cahill. That undermines the man's position before he begins.
I would like to run through a few points in the Minister's statement in relation to the responsibility which Mr. Cahill has been given. The Minister has given him authority with immediate effect to take whatever action is necessary to restore the company to commercial viability. I would regard that as possibly excessive power. While I am somewhat heartened by the fact that in the Minister's statement he mentions the safeguards which will be put in place, I hope that it is not the case that responsibility for the future of something as important as a national airline will be handed to one person. I seek the Minister's assurance that this is not the case.
I share Senator Quinn's view in relation to the non-core business of Aer Lingus. We do not have huge amounts of money to give to Aer Lingus, but if the profit-making elements of the company are sold we will have just postponed the day when we will have to find large amounts of money for it. I did not understand all of the points made by Senator Quinn but I share his view that selling the assets of Aer Lingus is not the solution to the problem. However, I admit I do not have instant solutions either.
Senator Roche referred to the Shannon stop-over. What was missing in all of the ballyhoo of the last election was that the Central Representative Council of Aer Lingus fully supported the decision of the then Minister for Tourism, Transport and Communications, Deputy Geoghegan-Quinn, to continue the Shannon stop-over. This has often been used as a weapon to beat various Ministers. It has been said that this is the reason Aer Lingus is in trouble. The Central Representative Council of Aer Lingus fully supported that decision and continue to do so. However, I join with Senator Roche in asking the Minister to take note of the fact that this places an additional cost on Aer Lingus. Perhaps the National Treasury Management Agency should look at Aer Lingus' debt and submit their proposals for dealing with it.
I am heartened the Minister sees partnership as a basis for a solution to the problems of Aer Lingus. However, I am less encouraged by the fact that SIPTU announced this morning that they would not speak to anybody. That is not reasonable. I share the Minister's view that there will be no simple solution to this. It is not acceptable for any of the parties involved to simple walk away and say they are not prepared to talk. Presumably that matter has been resolved since I heard the news this morning.
I am not so naive as to suggest that the Minister should throw £300 million of taxpayers' money at this airline. However, I do not think the Government can wait until Aer Lingus has produced a rescue plan before it makes its own offer of support. The rescue plan must be an integrated package with both the Government and Aer Lingus fully aware of what each is able to contribute. The Government should not sit back and wait for the results of any decision within the company. As the Minister, said, it has to be on a partnership basis.
I also support the call for EC funding. It is not feasible to demand that Aer Lingus should be competitive or viable, even in the Boston Consulting Group. The Minister says their cost levels are low, but the costs which they have to bear are different and the basis on which they have to compete on the London route is completely different. I know the Minister is committed to the future of Aer Lingus and that is what we are talking about today — whether our national airline will survive or will not survive.
With the agreement of the House, I propose to share my time with Senator Sherlock.
An Leas-Chathaoirleach
Is that agreed? Agreed.
I am one of the Members of the House who lives closest to the airport. I live on the perimeter of the airport among people who make their living in the airport. I welcome all the new converts who now have a commitment to Aer Lingus but I wonder where they were when the routes to Munich, Liverpool and Stansted were stolen from the national airline three or four years ago? When Aer Lingus wanted to develop their company some years back, these people were not around.
It sickens me to my teeth to hear this issue being kicked around like a football over and back across the political divide. It is not a political issue. It is pointless blaming the Government for what has happened. This is clearly a question of bad management. The problem is at management level and it does not help the workers to hear it being described as the Government's problem. I wish the Government had intervened three months ago. I believe that opportunity has been lost and that the Government is to blame for that.
The last time we discussed this matter in this House the then Minister, Deputy Geoghegan Quinn, made her views clear. I supported her views at the time and I still support those views. Nevertheless in the past three months every passenger who has travelled from Dublin to London on the national airline has cost the taxpayer money. That is an intolerable situation. It is no way to do business and it must be stopped. Workers'jobs are being played around with; I am not pointing the finger at anybody but all sorts of promises were made. I do not care who was to blame; all I know is that it is creating havoc for those people.
The Government should be allowed to examine the situation and offer whatever help they can. If they do not deliver, then we can ask why that is so. The only thing that has been gained by the delay is the improvement in the property market in the UK which improves the liquidity prospects for the Copthorne hotels if they have to be sold. I have been consistently opposed to selling the hotel group. I was also opposed to selling the US hotel group some years back. However, I recognised the necessity of that sale and I also accept that hard decisions have to be taken now.
I read the Minister's statement but I do not understand what is meant by "equity for a limited duration." It does not make any sense to me. I take it there is a commitment to equity and I welcome that. I think the House deserves to hear from the Minister that he is prepared to put equity into the company. I am not asking the Minister to tell us the amount; I am not asking him at this point to spell out the conditions. I am asking him to put on the record that there will be an equity investment and then we can argue about the amount, the conditions and the duration. The workers need protection.
The Minister has a reputation of being a pragmatic, practical person who cares about people and jobs. This is an investment in our future. It cannot simply be looked at from the point of view of profit and loss. It is a part of our infrastructure. It is a major factor in our marketing, our competitiveness, and any success we will have in the future. We need a national airline. Maintaining the road from Dublin to Galway could not be regarded as a profitable investment but nevertheless we have to invest in it. We have to put money into our roads and railways and, equally, we have to put money into our airline. Let us not look at it purely on the basis of having to be in the black all the time. That is not possible. It is a matter of finding a balance.
I wish the Minister well and I say to him that we all support him in what he is trying to do. However, I must remind him I will be very critical if the eventual arrangement does not work out. I live beside the people involved. I live beside these people. I visited Aer Lingus, last year as I have done regularly, attending briefings with the board on three or four occasions over the last four or five years. Aer Lingus has the potential to be a hugely successful company, there is a huge level of employment involved and the spin-offs in other areas are also important, however its operation needs to be tightened up.
The captains of industry, who others believe should be running the country, formed the board of Aer Lingus and they made a mess of the company. The so-called entrepreneurs are a danger to job creation. They should be got out of the road to let us improve Aer Lingus.
I thank Senator O'Toole for allowing me time to speak. It is very important that I get an opportunity to speak on this issue.
Aer Lingus is one of the success stories of Irish public enterprise. It is, after all, our fourth largest employer — larger than Smurfit and Cement Roadstone — with 14,000 employees, more than 7,600 of them paying tax to the Irish Exchequer. Its contribution to the Irish economy is enormous and it has played a central role in the development of our tourism industry. It would be a great tragedy if all that were allowed to go to waste because the Government would not facilitate its requirement for equity.
We allowed our national shipping carrier to go under in the mid-1980s and we cannot allow a similar fate to befall our national airline in the 1990s. Huge amounts of money were found by the Government to salvage the PMPA in 1983 and a similar rescue operation was mounted to bail out the AIB-owned Insurance Corporation of Ireland in 1985. Surely, Aer Lingus is entitled to at least the same level of Government support?
We have spent billions of pounds on industrial development over the past few decades with relatively poor returns in terms of jobs created. It costs the IDA £17,000 in direct grants to create a single job in the services and engineering sectors. The amount of money Aer Lingus needs is not that substantial compared to the sums spent on industrial development. Providing Aer Lingus with adequate equity makes social and economic sense.
The difficulties now faced by Aer Lingus are not unique. The airline industry generally is in a bad way. Aer Lingus is doing no worse than any other similar airline and is doing a lot better than many. The difficulties of the company have given rise to predictable calls for deregulation and privatisation. Deregulation did not solve the problem of airlines in the United States. As a result of deregulation there, just five airlines now have more than 90 per cent of the business — and many of these five are in trouble.
The inevitable result of deregulation is that the big eat up the small. Aer Lingus is a relatively small carrier by international standards, and if it were to be privatised it would almost inevitably be gobbled up by some other airline. There is scope for some deregulation and improved competition which will benefit passengers, but it must be done in a controlled and orderly manner.
The workforce has already shown a considerable degree of flexibility, but may have to adapt further to the changed conditions. I know that Aer Lingus costs are well below those of many other carriers, but unfortunately this does not compensate for the other difficulties it faces arising from its peripheral location and relative lack of business travel. With an adequate injection of equity and with the continued commitment of the workforce. I am confident that Aer Lingus can have a sound future.
The now absent Senator Taylor-Quinn described the executive chairman in a most derogatory fashion.
An Leas-Chathaoirleach
I remind the Senator that he should not refer to another Senator in his or her absence.
I suppose she should not have referred to the chief executive of Aer Lingus in his absence. Perhaps Senator Doyle would remind her that Bernie Cahill was first appointed to the board of the Sugar Company by Fine Gael and became chairman on his first day.
A PhD in political theory is not required to understand the Minister's speech. He stated:
The chairman will, of course, be in touch with me on the progress he is making, particularly with regard to the important strategic issues. The Minister will not preside over the disappearance of Aer Lingus and the chief executive will not have carte blanche to indulge in a fire salvage sale. That paragraph tells me that there will be many meetings and many joint decisions taken.
Other Senators have spoken about Aer Lingus' workforce which is one of the most educated, professional and highly trained in the country, if not in Europe. You cannot feed the workforce pap, because they know it is not Custer's last stand. I attended a meeting of Aer Lingus staff in Dublin Airport during the election and it was devoid of emotion. These were sensible people who knew they had a major problem, but who also knew that they had to put forward, in conjunction with the management and the board, a recovery programme that would ensure the future viability of the airline. The workforce will reject with contempt the soft solution of throwing money at Aer Lingus and never mind the plans. They know what needs to be done and will do it.
Senator Wilson spoke about his head and his heart, but I believe the two can be synchronised. The national airline is as Irish and as much a part of us as butter. It is part of what we are and how we grew up. RTE, Aer Lingus and Córas Iompair Éireann are all component parts of this nation. Aer Lingus' disappearance as a airline is not even on the cards. A workable package will be produced and it will be put into effect.
The Minister will have gathered from Senator Quinn's thought-provoking contribution that the easy option, the demand for rapid action, will lead to decisions which are not in the best interest of the company. Senator Quinn touched on a most important point, that, in looking at the component parts of Aer Lingus one must assess their viability and how they can contribute to the overall profitability of the group and not look simply with a view to getting rid of them. As Senator Quinn says, there are valleys in the airline business when revenue is down. Aer Lingus have proven, by good management, that revenue can be drawn from outside the core business to help them over valley periods.
I believe that when the plan is produced it will incorporate a lot of what has been said here today and certainly much of Senator Quinn's contribution. No young, ambitious Minister, like Deputy Cowen, will preside over the demise of this airline.
I wish the Minister well in his office and in the task in hand. If he and the others involved can find a solution to the problems of Aer Lingus, he will make a major contribution towards the preservation of employment and the development of the national economy and the regions. In the past, Aer Lingus has made an important contribution to economic development.
It is central to the development of our tourism business that we have a national carrier, and it is central to the development of the regions that carrier operates into places like Shannon in the mid-west. I am glad to avail of this opportunity to put on record my appreciation of the dedication and commitment of Aer Lingus personnel in Shannon and, indeed, nationally and to acknowledge the important contribution the airline has made in terms of employment, economic prosperity and tourism.
I agree with Senator Roche that a basic problem for Aer Lingus has been under-capitalisation. The Government has invested between £73 million and £74 million into Aer Lingus since 1939. Reference was made to the decision on Shannon. Aer Lingus will maintain a significant presence on the transatlantic route in the context of the existing Shannon policy. That is a welcome decision that must be supported. If my memory is correct, that was a firm decision made a number of years ago. There was also a financial commitment to Aer Lingus in the region of £5 million a year over a period of four to six years, but it was not continued for the duration as agreed. Policy decisions of this nature, which have an impact on regions, have to be made as part of Government policy. They have to be paid for because they are not commercial in the strict sense of the word.
Like many others in this House, I fully understand Aer Lingus cannot insulate itself from the shock waves that have been reverberating through the international aviation business for a number of years. Shannon is in my constituency and for the past 20 years I have watched developments in the aviation business. Anyone who has followed these developments would have seen that where decisive action was not taken in cost cutting measures and otherwise, international carriers went out of business, one after the other.
The decisions made by British Airways before that company was put on a firm footing would be too horrific to contemplate. Some people from my constituency who had worked with British Airways in Shannon lost their jobs in one fell swoop in a terminal where 1,000 people were made redundant in the reorganisation. We must avoid that kind of situation. It is possible to do within a new framework indeed, it will have to be a new framework — where sacrifices will have to be made right across the board. The Government will have to play its part and share the burden in putting the airline on a firm financial footing to enable it continue the dominant role it has played in the Irish aviation business since its foundation.
Many Senators have referred to certain policy issues on which the Government has reserved its position. These will, I am sure, be given full consideration before final decisions are made. It is important however, that the dedicated staff of the airline who have worked year in and year out to the best of their ability and who are highly professional in the work and in their training, be fully informed on the developments that are taking place. Nothing can lead to uncertainty and confusion more than to have a workforce who are not aware of what is really going on behind the scenes. I know there is worker participation on the board of Aer Lingus. That must be utilised in the discussions now underway with the unions and the executive chairman, to keep the workers fully informed of developments. I do not think it would be possible to reach a satisfactory outcome to these difficulties unless the people who are directly involved in the company are kept fully informed at every stage.
I am pleased discussions are already taking place between management and the unions. With everybody working in partnership, and with the guidance of the Minister and the Government, we can ensure that Aer Lingus will continue to play a vital part in the aviation business. It is a part that will make, as it has in the past a valuable and worthwhile contribution to the development of the Irish economy and Irish business, for many years to come.
The Progressive Democrats are not opposed, in principle, to a Government injection of equity into Aer Lingus. I do not dispute the need for a national carrier on economic grounds, and on the emotional and other grounds referred to earlier. I and my party, and I am sure all Members of the House, are deeply conscious of the many thousands of jobs that are involved.
Aer Lingus must be well run, it must be commercial and it must be internationally competitive precisely because that is in the best interests of its workforce and the taxpayers, who may be asked to fund an increased Government shareholding in the company. I am confident the Minister will agree that there cannot be any question of giving Aer Lingus a blank cheque on the basis of some ill-defined aspiration to continue flying the shamrock around the world, however worthy that aspiration might be and however much we subscribe to it. We all have wishes but the problem is whether we have the means to fulfil them. That applies to national airlines as much as to individuals.
There must be a plan, it must be in place and it must be implemented. The Minister in his speech referred to a partnership between Government, management and the trade unions and I support that appeal. The Houses of the Oireachtas are part of that partnership and in this House we have a part to play. Indeed, we have a right and a duty on behalf of the shareholders to examine and debate whatever plans emerge. We have already had one plan, I understand, which was apparently not acceptable. We should know what was in that plan and in what way, if any, it was deficient. If openness is to mean anything, if the Oireachtas is to mean anything, the Government's plans for companies and public utilities under its ownership should be subject to the scrutiny of the representatives of the public and of the taxpayers. That is why I ask the Minister to ensure that the Government presents a plan for the company to this House and have it debated in full. This morning the Leader of the House indicated there might be a subsequent debate. He is to be congratulated that there is a debate today because from my experience of the House it is the first time we debated a matter of this gravity before it had been debated in the Dáil.
Senator Roche will be relieved to hear that, having listened to his lecture, I support him. The origins of this crisis go back some years. Once the old cosy world of IATA and the cartels was swept away, the writing was on the wall. The question arises as to what extent we anticipated that and to what extent we reacted in time to it. There was an onus on us and on the company to face the new competitive situation and the opportunities for the huge expansion in tourism which resulted from deregulation. Was that onus acknowledged at the time? To what extent was part of the problem created by an obsession with the activities of Aer Lingus's competitor, Ryanair? Ryanair went to Knock, Aer Lingus went to Knock. Ryanair went to Galway, Aer Lingus went to Galway. Wherever Ryanair went Aer Lingus followed. That is reaction, it is not innovation. It is up to the national carrier to be innovative, not to respond to that type of activity.
The Dublin-London route, carrying 2.5 million people a year, and potentially highly profitable, became a loss maker because of pricing policy, which if it were to take place in Senator Quinn's area of activity would be regarded as illegal, as below cost selling. In 1986 a return ticket to London cost £208; now it is £80. What is the sense of that? The analogy with the grocery trade is not irrelevant. Aer Lingus and airlines in general seem to believe they are somehow different from other businesses, that they are removed from the constraints imposed upon other businesses. They are no different from the butcher, the baker and the candlestick maker. That is not original, it has been said in reports about the airline industry. What we have is a bus with wings, not some super breakfast delivery service on the route to London. It is to get us there efficiently, quickly and safely.
The Minister spoke about the executive chairman's remit, of increasing yield, disposing of non-essential assets and the savings on the company's cost base. Senator Quinn, if I heard him correctly, proposed looking at sale and lease back as an option. That would be an excellent option but there is only one problem about it, that is, finding somebody to buy it in order to lease it back. That would be a genuine difficulty.
The question of the disposal of non-core assets has been mentioned. It would be desirable to retain the non-core assets but I am sure they were acquired as part of a strategy for this type of situation. I do not understand the need to have hotels in Glasgow, Aberdeen and the south of England. I can understand having the Tara Hotel as an adjunct to Aer Lingus' activities but I am not so sure about the others.
I do not intend to launch a personal attack on Mr. Cahill. I do not know the man but I am sure he is an excellent businessman and executive chairman of Aer Lingus. However, given that Greencore is involved in very difficult negotiations in which the Government has a direct interest, is it possible for any one person, however able, to accommodate all these different needs and do the job well? I wish Mr. Cahill well. I hope we will not see a recurrence of the wrangles which took place between the Department and the company about replacing and adding to the fleet and the problems to which that led. Such disputes are not in the interests of producing a good stable business.
We are progressing in aviation, as in other areas, towards the free market. That seems to be the international mood. If aviation were to come within the ambit of GATT, as agriculture is, what would be the future of Aer Lingus? There is food for thought in that. Flying the shamrock may make us feel good domestically but many people who fill Irish aeroplanes internationally do not know that the shamrock is Irish, and it is probably not even necessary for them to know. Why do so many people take Singapore Airlines if they are going to the Far East? Because it is the best. It has that reputation which is why people take that option. We should strive to achieve a similar reputation.
If assets need to be sold well and good. In 1992 the GPA shares had a book value of $17 per share and the company had a 9.9 million share holding in GPA. I read in the newspaper this morning that these shares could be sold for $2 each; I doubt if they could be sold for even $1. There was a court case recently based on the supposition that the shares were worthless. There are reservations about the ability to generate much money from the disposal of the assets.
We have to look back at the election campaign and some of the things which were said. I have not pointed the finger at anybody but I believe some of the promises made during the election campaign were highly irresponsible and did no credit either to the public representatives or their parties.
Action is of the essence. We must move quickly and decisively. By all means let us fly the shamrock but let us fly it well. I can assure the Minister that if he devises a good plan, he will get the co-operation of all sides of this House.
I would like to pay tribute to the board, the management and chief executive of Aer Lingus who have succesfully run the company in bad times and in good times. This is all the more extraordinary when you hear how under-capitalised Aer Lingus has been over the years.
I knew the first chief executive of Aer Lingus, the late Jerry Dempsey. During his time we had a fleet of Dakotas and in 1957-58 Aer Lingus changed to Viscounts. At that time the former chief executive, Mr. Cathal Mullan, joined the company. It was a great achievement to join as a reservations clerk and end up as chief executive. I would like to pay tribute to the work he did and the service he gave the company over 36 years. He deserves that recognition. He was very brave and courteous when he made a statement yesterday asking for full support for the new chief executive. During his time Aer Lingus changed to Viscounts and later the airline made its best decision when it changed to a Boeing fleet. That was very progressive because at that time very few international airlines used Boeing.
On the technical side, Aer Lingus, has achieved a great deal with Airmotive and TEAM Aer Lingus. It is a great tribute to a small nation that we can win service contracts from international airlines. I hope that the well trained and skilled technical people involved in TEAM Aer Lingus and Airmotive will keep their jobs. There should be no redundancies in that area.
The airline has performed very well but unfortunately there has been a tremendous slump in the air industry in recent years. Senator Dardis mentioned the price of GPA shares which is a good example of how bad things are in that industry. Aer Lingus had to contend with that and found it very difficult. Deregulation was another problem with which they had to contend.
If the State wishes a semi-State company to trade profitably, it should not place added restrictions on that company. Unfortunately, that is what the Government did. In 1988 Aer Lingus pioneered a new route to Stansted Airport. I travelled on that route often because I had relatives living in that part of England. It was not a very economic route because there was no rapid rail link between Stansted Airport and London. When a new rapid rail link was established the Government gave exclusive rights on that route to Ryanair which at that time, was trading at a loss. Ryanair now provides a flight to Stansted every hour and trades at a handsome profit. Because of a restriction on Aer Lingus, it lost one of its most profitable lines to its competitor. That was done at the direction of the Government.
The Government is placing a further restriction on Aer Lingus by saying it must keep the Shannon stop-over. If semi-State bodies are to trade profitably we should not place restrictions on them. I hope the Government will be able to provide the equity which Aer Lingus needs. It is a great employer with many skilled workers.
I wish Mr. Bernie Cahill every success in his position as chief executive.
I thank the Leader of the House for arranging this debate at short notice and I also thank the Minister who had to change his schedule to fit it in. I believe more frequent and shorter debates are more useful than long-winded ones where people talk for the sake of it. If talk solved problems there would be very few problems. It is important that we are given an opportunity in the future to discuss this because events are only at the initial stage. I wish Mr. Cahill, the Minister and everyone involved every success in the dialogue that must take place in the weeks ahead.
The problems in Aer Lingus are not new but have never been as serious as they are now. I do not believe in recrimination but I would like to pay tribute to Mr. Mullan who has possibly been made a scapegoat. There are many others who should be carrying the can because of the difficulties in Aer Lingus.
I hope full discussions will take place in the days ahead with the newly appointed executive chairman, the unions, staff and everyone involved to achieve as viable a solution as possible. There is a large workforce in Aer Lingus and many people have long service. I hope every effort will be made to ensure that the majority of those employees are kept in employment. Recently there were difficulties in other industries which resulted in redundancies. We do not want to see the loss of hundreds or thousands of jobs. It is important that all aspects of this problem be looked at. There is no simple solution and I am sure the Minister is aware of that. If it were just a case of throwing money at the problem all we would be doing is putting off the day when decisions would have to be made. This is a very competitive business and many airlines are going through difficulties. Aer Lingus, which has served this country very well, has not escaped.
We should pay tribute to its subsidiary company, TEAM. We were shown around the plant last year and it is encouraging that it is emerging from recent difficulties. I hope the jobs there will be maintained and increased, if possible.
There are difficult days ahead for Aer Lingus but I hope solutions will be found. All those involved should come together to try to resolve the difficulties.
I thank all who contributed to this debate. It was a fine, measured, calm debate that acknowledged the scale of the problem but was not tainted by defeatism or a sense of hopelessness.
The elements of a recovery are available to all the stakeholders in this company if resolute action is taken. As a former Minister for Labour, I am aware of the benefit of a free flow of information. This was referred to by Senator Daly and others. There is a need for everyone to be aware of the problem. Once the problem is identified and every stakeholder in the company sees the scale of the problem, we can then set out the parameters for a solution.
Since I came to this Department, examined the problem and decided to take action, with the full support of the Government in the manner outlined this week, I have always said that once there is evidence of a recovery plan by those whose livelihood depend on Aer Lingus, then as a shareholder with a wider responsibility to the taxpayer, given the limited resources available to it the Government must ensure that any investment is made wisely. As the Taoiseach, the Minister for Finance and I have made clear, large sums of equity are not available. Once the elements of recovery are in place, this Government can then take a decision on the funding which is available to support the company.
That is not to minimise the challenge that faces the company and everyone who works in it. I represent a part of the country which has seen the restructuring of Bord na Móna, although this did not get the same publicity as Aer Lingus. Whatever was necessary to maintain that company was done. The management and the workforce got together, identified the problem and were prepared to take tough decisions necessary to ensure a viable future for that company.
There will always be a challenge in the fiercely competitive environment in which Aer Lingus has to operate. There is a new deregulated, liberalised environment and competition is fierce, but to maintain this excellent company and workforce, we must face up to that competition. We must confront these problems because they will not go away. The question of equity, of the taxpayer making a further investment, will not in itself solve this problem, but it is a component in the solution which will be made available by the Government, subject to evidence on the ground that those involved in this company are prepared to do whatever is necessary, regardless of what happened in the past.
I am not interested in the past, I am not interested in apportioning blame, I do not wish to do so because that would not be beneficial to anybody. What we need is a concentration of minds, and the executive chairman has begun that process. I am convinced — and I have seen evidence of this in many areas and not just the corporate sector — that once the workers are taken into the confidence of management and those responsible for driving a recovery plan, they will get cooperation, determination and resolute action and a decision will be made to ensure this company's survival. Those involved in the company have put in too much work and they have too much pride in their workplace and their company to allow any semblance of defeatism to enter this arrangement.
I am not prepared to contemplate the elimination or the disappearance of this company. I do not think anyone in Irish political life should be prepared to contemplate its disappearance but let us be straight about it. The continued existence of this company will be determined by its ability to meet international standards of aviation within which it will have to compete. That competition will not go away and may well intensify. I understand the problems and the difficulties, but it is for us all to get away from any possibility of confrontation because that will lead to disaster and we do not want to even talk about it. There is goodwill, ability and a determination on behalf of the executive chairman. He will be able to use that latent determination to come forward with realistic proposals that will give this company a viable and constructive future. That is my position and it is the Government's position also.
I thank sincerely all the Members of this House who have made constructive and responsible contributions to this debate. If that is mirrored tomorrow in the Dáil and throughout the company, as I believe it is, and if leadership is provided, we will start to tackle the problems and concentrate minds on the issues that have to be addressed. There are many other issues which will be dealt with tomorrow. I was glad to facilitate this House by coming to listen to the responsible and constructive views expressed, some of which are worthy of consideration.
I set out the parameters within which the executive chairman is to operate. I made that clear in my statement to the House. We must ensure, given the seriousness and magnitude of the issues involved, that commercial freedom is available to the management and the workforce to take necessary decisions. The decisions must be taken quickly; they must be measured, thoughtful, and have a strategic importance and raison d'être. We all understand that. There may be things we have to do which we do not like, but we must do them to secure the future of this company.
I am very heartened by the approach taken by the Senators. The Seanad has performed very well today. It has displayed the sort of gritty determination we all believe is necessary for the recovery of this company. I am certain that once everyone in the company sees the magnitude and significance of what has to be done, the company will respond. Once that response is in place and visible action is being implemented, this Government as far as it can — excluding large sums of equity which are not available at this stage, given the public finances — will play its part. It is for others to play their part and I look forward with relish to a programme and a plan of action being implemented so that we can get this show back on the road.
An Leas-Chathaoirleach
When is it proposed to sit again?
I would not like statements to conclude without making a comment to the Minister. The decision of the Minister to come here today, knowing that a major debate will take place in the other House tomorrow, is unique. I appreciate that he gave that commitment to the House and I am pleased with the debate. I believe that the two hour debate has a sharpness about it that is in the interest of the House. I make that point for future reference. I wish the Minister well in a very difficult situation.
An Leas-Chathaoirleach
When is it proposed to sit again?
It is proposed to sit on 24 March at 2.30 p.m.
It is a mistake for the House not to sit next week. It is giving the wrong signal to people who talk about what politicians do. In normal circumstances I would call a vote on this but it would be misinterpreted. We need to examine our public image. We have been talking about a public company.
An Leas-Chathaoirleach
We cannot have a discussion. Is it agreed that the House will sit again on Wednesday, 24 March at 2.30 p.m.? Agreed.
Sitting suspended at 5.55 p.m. and resumed at 6 p.m.