I propose to take Questions Nos. 9, 12, 23, 25 and 93 together.
On 22 November 1990, I was advised by the chairman of Aer Lingus of decisions taken by the board to counter rising costs and the effects of the recession in air transport, particularly in the US and UK markets, which has been exacerbated by the continuing Gulf crisis.
The chairman informed me that the board had undertaken a major review of the airline's operating plans in the light of weakening demand and escalating costs affecting airlines worldwide. As a result, they had unanimously adopted an integrated action plan designed to protect the airline's strategic longer term interests and to position the airline to take advantage of expansion opportunities when buoyancy returns to the market. The plan requires cost reductions of £20 million per annum within Aer Lingus, savings from operational changes of £15 million per annum, as well as increases in fares.
Key elements in the plan include postponement of commencement of the Ireland/Los Angeles passenger service, suspension of the Ireland/Los Angeles cargo service, reduction of flights on smaller cross channel and domestic routes and cessation of the Dublin-Manchester-Hamburg service.
In addition, the plan proposes that services between Dublin and Knock and Dublin and Derry will be discontinued. It also provides for the disposal of a number of the airline's older aircraft.
On the basis of the financial forecasts provided to me by Aer Lingus, I fully accept that urgent corrective action has to be taken by Aer Lingus to avoid substantial losses on air transport which, without such corrective action, could amount to as much as £50 million in 1991-92.
While I have conveyed to the board in general terms my broad approval in principle for the thrust of their recovery plan, I have asked them for further detailed information before deciding whether or not to approve the plan in detail. It would be premature, therefore, to comment on individual elements of the proposals or on the effect the proposed cutback in services would have on the targets set by the Government in the Programme for National Recovery.