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Sale of State Assets

Dáil Éireann Debate, Tuesday - 3 July 2012

Tuesday, 3 July 2012

Questions (1)

Timmy Dooley


84Deputy Timmy Dooley asked the Minister for Transport; Tourism and Sport when he expects to make a decision on the Government shareholding in Aer Lingus in view of the recent Ryanair bid; the factors that will be considered when reaching a decision; and if he will make a statement on the matter. [32390/12]

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Oral answers (9 contributions) (Question to Minister for Transport, Tourism and Sport)

In an announcement to the Irish Stock Exchange on 19 June, the board of Ryanair announced its intention to make an all-cash offer for 100% of the share capital of Aer Lingus.  Under the takeover panel rules, Ryanair must issue its formal offer document to Aer Lingus shareholders by 17 July, setting out in detail the terms of its offer.  As the Government is a minority shareholder in Aer Lingus, under Irish takeover panel rules, there are restrictions on what any member of the Government can say about the proposed offer at this time.  For the moment, like all shareholders, the Government will await the formal offer from Ryanair and also the response of the board of Aer Lingus. The European Commission will also have to consider the proposal when it receives formal notification of the offer from Ryanair.

In considering the formal offer, when it is made, the Government will take account of four factors: what is best for passengers in terms of connectivity and air fares; what is best for taxpayers in terms of the price we can get for the stake; what is best for the economy overall in terms of competitive access to services in and out of Ireland; and the views of the regulatory authorities on any bid.

I welcome the Minister's statement of fact to the House. I accept that to an extent he is restricted in what he can say on the decision the Government will ultimately make. He has outlined the four areas it will consider. On three, if not four, headings it will find it impossible to accept the proposed offer by Ryanair. The first is a potential reduction in competition if the two airlines were to be owned by the one entity. That would represent bad value for the taxpayer in terms of the impact it would have on the capacity of the State to continue to offer low fares to the wider tourism and business sectors. From a regulatory point of view, the ensuing domination by one entity in controlling such a large volume of activity, across the Irish Sea in particular and into near European markets, would cause serious concern. This is an island nation which depends heavily on access not just to continental Europe but also to the wider world.

Will the Deputy ask a question, please?

In addition to what the Minister has said, given that the Government has decided to dispose of the shareholding in Aer Lingus, as previously announced, has he considered how he might protect the Heathrow Airport slots, in particular, and access to Heathrow Airport from this country to provide for onward connections to the wider world? If so, what is the result of the consideration? The Heathrow Airport connection has been identified as being of significant benefit and strategic importance.

I will come back to the Deputy.

Ryanair's continued existence on the share register of Aer Lingus has been a significant retarding factor for Aer Lingus. Has the Minister discussed the matter with the chief executives of the two airlines in his various contacts with them?

There is very little we can do to protect the Heathrow Airport slots. At the time of privatisation having a golden share might have been a good idea, but there is nothing to prevent the company from leasing the slots. This could be done by the board at any time. The sale of the slots would just require a special motion.

It is clear that airlines across Europe are consolidating. If Aer Lingus has a buyer in the future, probably the best way to secure access to Heathrow Airport is to have a buyer that wants to feed that airport rather than one that wants to use the slots for another purpose. It seems the British Government is changing its position on a third runway at Heathrow Airport, which means we may find there will be more slots in the future than we thought. Now that British Airways has taken over BMI, I am reassured to see that it is maintaining access to this country for purely commercial reasons. I am pleased to see that the fears in that regard have not materialised.

The issue of Ryanair continuing to own approximately 30% of Aer Lingus comes up in conversations with the CEOs of the two companies, but it is now one for the United Kingdom Competition Commission. There would be greater clarity on the future of Aer Lingus if the United Kingdom Competition Commission were to determine whether Ryanair could continue to remain as a shareholder of Aer Lingus before the Government makes decisions.

I accept the Minister's point on future plans for Heathrow Airport. While the State retains an interest in Aer Lingus, it has the capacity to influence board decisions through the appointments made by the Minister on behalf of the Government. Although I had noted his point about the golden share, it was not possible to arrange it at the time, as doing so would have been in contravention of EU rules.

Will the Government consider the formulation of a battle plan to protect slot access at Heathrow Airport? In this regard, will it consider establishing a working group to table proposals to the Minister and his Department in order that a vital and necessary element of Ireland's connectivity might be protected?

I have no concerns about access to Heathrow Airport. There is access through Aer Lingus and British Airways. Last week my Heathrow-Shannon flight was full, which I was delighted to see. These connections work because they continue to be profitable. Should the State be in a position to sell its 25% stake, this is the kind of conversation we would like to have with a buyer. Among the other issues we would like to discuss are protecting the company's brand and access in so far as possible. Once 75% or 100% of a company is sold, one's influence is limited.