Skip to main content
Normal View

State Airports.

Dáil Éireann Debate, Wednesday - 29 September 2004

Wednesday, 29 September 2004

Questions (787, 788, 789, 790, 791)

Finian McGrath

Question:

970 Mr. F. McGrath asked the Minister for Transport if he will give an update on Aer Lingus particularly in relation to job loses, pensions for staff and the future of the company. [21370/04]

View answer

Finian McGrath

Question:

978 Mr. F. McGrath asked the Minister for Transport the current situation at Aer Lingus; and if he will make a statement on the matter. [21596/04]

View answer

Finian McGrath

Question:

979 Mr. F. McGrath asked the Minister for Transport his concerns about the loss of 1,300 jobs at Aer Lingus; and if he will seriously review the business strategy at the company in order to save our aviation industry. [21597/04]

View answer

Bernard J. Durkan

Question:

1000 Mr. Durkan asked the Minister for Transport the extent to which he has had recent discussions with Aer Lingus with reference to the future of air transport; and if he will make a statement on the matter. [22267/04]

View answer

Seán Haughey

Question:

1016 Mr. Haughey asked the Minister for Transport his views on the new Aer Lingus three year plan from management; his views on whether this is in the national interest; if it is necessary at all in view of the profitability of the company at this time; and if he will make a statement on the matter. [22668/04]

View answer

Written answers

I propose to take Questions Nos. 970, 978, 979, 1000 and 1016 together.

The board of Aer Lingus approved the Aer Lingus business plan for the period 2004-07 at its meeting on 26 July 2004 and it is now in the process of implementation.

This business plan is seen as an essential follow-on to the survival plan taking account of the overall business environment and the particular vulnerability of the aviation sector. The ongoing financial difficulties of many airlines across Europe and the US, coupled with experience domestically over the years, demonstrate the highly competitive and constantly challenging nature of the aviation sector. The sector's problems are compounded at the present time by the increased capacity coming on stream, particularly in the low cost sector and by increasing fuel costs.

In this turbulent climate, Aer Lingus cannot be complacent about its future performance and must remain constantly vigilant to changing market conditions in order to maintain competitiveness. Experience over the years has shown that it is not sufficient merely to react to events — the airline must anticipate and plan for difficulties and challenges.

While Aer Lingus is currently profitable, the best judgment of the board and management is that it can only sustain this performance by becoming operationally more efficient and more flexible. This is the aim of the business plan. Its implementation is seen as crucial so that the airline can position itself to respond in a timely manner to changing market conditions and can take advantage of future growth opportunities. Moreover, management must also seek to ensure that Aer Lingus is strong enough financially to weather market downturns, including those caused by external shocks such as the impact of terrorist attacks, wars, etc. and has funds to replace and expand its fleet. Failure to take account of these matters in planning for the future would inevitably lead to another crisis scenario and, indeed, would be reckless given the history of the sector.

The plan involves redundancies of around 1,300 over the next three years. To achieve this target, the company recently announced details of a voluntary severance scheme comprising attractive options for staff of all ages, service and salary categories in the airline. I hope the redundancies will be achieved voluntarily. I welcome the recent agreement by management and staff to engage in discussions with the assistance of an independent facilitator on staff related issues arising from implementation of the business plan. Those discussions are to conclude by mid-October 2004.

On the future of Aer Lingus, at the end of June 2004 senior management in Aer Lingus requested permission to develop an investment proposal for the company. Consent was not given. Following the request, I briefed the Government fully on the matter at its meeting on 6 July 2004 and as a result the Government decided to establish a Cabinet sub-committee to examine all the issues relating to the future of Aer Lingus and report back to Government as soon as possible. Goldman Sachs has been engaged to provide advice and assistance to my Department regarding this issue. The Goldman Sachs report, which is due shortly, will form an input into my deliberations and those of the Cabinet sub-committee prior to any decision by Government on the future of Aer Lingus. It may be complemented by further advice on the strategic and policy issues as deemed necessary by the Government.

In accordance with the terms of Sustaining Progress, there will be engagement between the Department and the social partners on the future of Aer Lingus before the Government finalises its consideration of this matter.

Top
Share