Dáil Éireann Debate, Thursday - 7 November 2013
5. Deputy Mattie McGrath asked the Minister for Transport, Tourism and Sport his plans for the State's stake in Aer Lingus; if he considers it is of any strategic value to the State; the role the State gains from its stake; the financial benefit it is returning to the State; and if he will make a statement on the matter. [47289/13]
View answerWhat is the current position of the State's share in Aer Lingus and the Minister's views on the strategic airline, especially in view of attempts by rivals to buy out shares? Will the Minister make a statement on the matter, as the airline is of strategic importance to the country?
In 2006 the State retained a minority stake of 25.1% in Aer Lingus when the initial public offering of shares in the company took place. The minority stake was retained to protect the State's interests at that time. Since that time, the trend towards consolidation in the airline industry has accelerated and competition for short-haul and, in particular, long-haul air services in the Irish market has increased. In 2012 the Government included the Aer Lingus stake among the possible assets to be sold under the State asset disposal programme but agreed that the stake would only be sold when market conditions were favourable and if acceptable terms and an acceptable price could be secured for the stake. It remains the case that the Government is willing to sell its stake but I stated recently that I find it unlikely that a buyer willing to offer the right price and accept appropriate conditions will emerge in the near term. The ongoing pension deficit issue and legal challenges to the EU and UK regulatory authority decisions on Ryanair’s stake creates major uncertainties for any potential buyer.
The 25% stake has proved helpful in protecting the State's interests in the past. It made the Government a key stakeholder in the three takeover attempts, which successive Governments have opposed. It also gives the Government an important say in any proposal to dispose of Aer Lingus's valuable slot portfolio at London Heathrow Airport and gives the Government the right to nominate up to three directors on the board. The Government will continue to manage its shareholding actively, with the aim of maximising the value of the shareholding, securing dividends and encouraging new routes and additional capacity where commercially viable. Since 2012 the company has paid two dividends to the Exchequer totalling in the region of €9.4 million in respect of financial years 2011 and 2012.
The Minister has quoted many facts and figures but he has not really answered the core question of what appreciation the Government has for the stake in the airline and its strategic importance to the nation. The Government is speaking a lot about getting back our sovereignty but we need our national airline. We are aware the Government has held a 25% share since 2006, as mentioned by the Minister, but a sale is nonetheless possible. He has indicated it is not being sold because he cannot get the right price but if there is a good offer, will it be sold? This is creating much uncertainty for staff, shareholders and everybody who wants to use the airline. He has not really answered the question of what value is placed on the airline by the Government and what gains are being made by the Government through the current operation of the airline. It is our national carrier and brings in traffic to the country.
To be clear, Aer Lingus is not our national airline and we do not have a national airline per se. It is a public limited company traded on the stock market and the Government owns a share of that company. The Government's position is as it has been for quite some time and we are willing to sell the stake but only at the right price and only to the right buyer. It should be under the right terms and conditions.
At the moment I see those conditions as being very hard to meet because there is such uncertainty both with the pension deficit and the case involving the Ryanair stake. Whether Ryanair will have to sell down will have a large bearing on the situation.
The privatisation of Aer Lingus has been a success story. This is a company that used to require State support and now it pays a dividend. It is also a company that used to be in serious financial trouble and it has recently had its best quarter ever, is making profits and is expanding. It is a good example of how the sale of State assets can be in the public interest.
I must correct what I said. People have an affection for the airline and they regard it as part of Irish culture. I accept that when the outcome of the Ryanair case is handed down by the EU Commission, it will have a major impact. There is a value to the State in having a stake in the airline as it is returning dividends, but it has more than a financial value. The question is how we feel about Aer Lingus and its value to the country.
The value is evident in a number of ways, including the value of the stake itself and the dividends the company can pay every year. Value is also evident in the employment Aer Lingus provides and the connectivity it provides to the rest of the world. We are an island nation and that is more important to us than to most nations. We cannot rule out the possibility that there could be a buyer in the future who would be willing to retain the brand and expand the airline rather than breaking it up and who would be willing to pay a very good price. The Government has not ruled out the sale of the remaining stake. We will do it if it is in the interests of the country as a whole and not just to raise a bit of money in one particular year.
