Vol. 424 No. 6
4 Mr. Flanagan asked the Minister for Tourism, Transport and Communications if the Government have given any consideration, or approval, to the prospect of selling any shareholding in Aer Lingus to another international airline to consolidate the future strategic position of the national airline.
10 Mr. Gilmore asked the Minister for Tourism, Transport and Communications if she has received any request from Aer Lingus for increased Government equity in the company; and if, in view of the company's outstanding contribution to the economy and to the Exchequer, she will provide additional State investment in Aer Lingus.
25 Mr. McGrath asked the Minister for Tourism, Transport and Communications , the proposals, if any, she as the principal shareholder has in view of the details of the most recent published accounts by the Aer Lingus Group, outlining further continuing heavy air transport losses, and the assurances, if any, she will give that the position will improve.
43 Mr. Browne (Carlow-Kilkenny) asked the Minister for Tourism, Transport and Communications the proposals, if any, the Government have in view of the details of the recently published accounts by Aer Lingus, outlining further continuing losses, to improve matters in view of its status as a major shareholder.
47 Mr. Rabbitte asked the Minister for Tourism, Transport and Communications if she has had, or if she plans to have, a meeting with the board of Aer Lingus to discuss the company's proposals for major job losses; if, in view of the current levels of unemployment and the difficulty and cost of securing replacement jobs, she intends to take any steps to avert the job losses; and if she will make a statement on the matter.
51 Mr. Flanagan asked the Minister for Tourism, Transport and Communications the present capital requirements of the Aer Lingus Group for the remainder of the decade; the current debt levels; the proposals, if any, which the Government have, as the principal shareholder, for raising the necessary capital that the group requires in the foreseeable future; and if she will make a statement on the matter.
52 Mr. Kemmy asked the Minister for Tourism, Transport and Communications if she proposes to make immediate financial provisions available to ensure the commercial viability of Aer Lingus; and if she will make a statement on the present crisis in which the company finds itself.
I propose to take Questions Nos. 4, 10, 25, 43, 47, 51 and 52 together.
I have already dealt comprehensively with the matters raised in these questions both in the course of the Adjournment Debate which took place on Wednesday of last week and during my contribution on Tuesday of this week during Private Members' Time which resulted in this House confirming its support for the Government's air transport policy. I will, however, reiterate my position.
I have been deeply concerned for some time at the continuing deterioration in the financial performace of Aer Lingus, particularly in its core air transport business. I have repeatedly made this concern known to the chairman and management of the airline. I have consistently emphasised that it is the responsibility of the board of Aer Lingus to ensure that the commercial and operational strategies pursued are sufficient to ensure the airline's financial viability.
The board, as a first step towards bringing the air transport business out of losses to a position of profitability, are currently carrying out a fundamental and wide-ranging appraisal of their transport business.
I met with the board of Aer Lingus on this day week. I made clear my deep concern at the fact that the air transport division of Aer Lingus had lost over £80 million in the past two years and is facing further major losses again this year. This is despite a cost reduction programme which my prodecessor was assured would get the airline into a breakeven situation. This programme was introduced almost two years ago to counteract the effects of the economic recession and the Gulf War. It was still being negotiated into this year.
I have been criticised for not giving specific proposals to the board of Aer Lingus to solve the airline's problems. It is quite correct to say that I have not done so. That is the responsibility of the board. When the board has produced specific proposals then I, as the shareholder's representative, will carefully examine them.
The Government made it very clear when Aer Lingus were looking for approval to acquire aircraft that the acquisitions had to be funded without recourse to Government equity or State guarantees of borrowing. This condition was accepted by the board of Aer Lingus.
There is no doubt that if Aer Lingus's European fleet had been replaced in a more gradual manner over a longer period of years, the current problems might not be so serious. Aer Lingus's current problems highlight the need for the company to strengthen its corporate planning procedures, particularly in a cyclical business such as commercial air transport. I have urged them to do so.
On the question of funding, the Minister for Finance has already made clear on several occasions that the position of the Exchequer finances is such that the Government are currently not in a position to invest additional equity in semi-State companies, including Aer Lingus. In any event, such investment would not make sense unless the airline can produce a credible plan showing that its business will be operated profitably so as to produce a return on any investment. As I have already said, the days of free equity are gone. It is precluded in any event by EC competition rules.
Both I and my predecessors have over the years encouraged. Aer Lingus to develop linkages with foreign airlines with a view to improving access to international markets as well as achieving additional earnings in areas such as maintenance, overhaul and training. These objectives can be achieved in a variety of ways, such as minority cross investments, joint venture agreements and service contracts. No proposals for such minority cross-investments or joint venture agreements have been received by me. I have always made it clear that, if such a proposal were to emerge, I would give it every support.
Given that the Minister made no reference to the subject matter of Question No. 4 let me put the question to her again. Has she or the Government given any consideration, or approval, to the prospect of selling any shareholding in Aer Lingus? May I also ask the Minister if she would elaborate on a comment made by the Taoiseach to the effect that it is very important for Aer Lingus to find a partner? May I put it to her that it is simply not on for Aer Lingus in the current climate to find a partner along the lines envisaged by the Taoiseach? May I also ask the Minister if she would avail of an opportunity to dissociate herself from remarks attributed to her in the media? It was reported that these remarks were made at a meeting of a Fianna Fáil transport committee at which she is supposed to have said that if she cannot get a board which will work in the interests of the Government, she will fire the board with which she is not satisfied.
Brevity, please.
Finally, may I ask the Minister is she has any plans to create an environment within Aer Lingus within which the workforce of 7,000 can be protected?
Let me say in response to the Deputy's first supplementary question that the Government have not considered the prospect of selling any shareholding in Aer Lingus.
In relation to the Deputy's second supplementary question concerning the Taoiseach's comment that Aer Lingus need to find a partner, I would remind Deputy Flanagan of something I have said twice, both inside and outside the House, this week, that is, that the Taoiseach made that comment at a time when he was Minister for Finance. It was repeated by my predecessor on several occasions to the chief executive, the chairman and senior management of Aer Lingus. When I became Minister for Tourism, Transport and Communications I suggested also that the company should look at that possibility. Therefore it is not something that is being suggested to the company for the first time, and when they are confronted by a financial crisis.
I would also remind the Deputy that in 1977 the then Fianna Fáil Government launched the "European" campaign the specific purpose of which was to alert both public and private companies to the fact that they would face increased competition from 1 January 1993 in the context of the single European Market. We did not want public and private companies to find themselves confronted with a situation on the eve of the Single Market where they had to face this competition having made no preparations to deal with it. It is my understanding that despite this Aer Lingus have not put any specific proposals to the board — I am open to correction on this — that they should find a partner or enter a joint venture or strategic alliance.
In relation to the comments attributed to me and reportedly made at a Fianna Fáil parliamentary party committee, unless Deputy Flanagan becomes a member of the Fianna Fáil transport committee he will never know what I or anybody else said at that committee meeting. Like Deputy Flanagan, I always say to Members of the House that remarks attributed to people and quoted later in the newspapers have to be taken with a large grain of salt.
Is that denial or a confirmation?
Would the Minister agree that the crisis confronting Aer Lingus affects not only the company and their workforce but also the rest of the country and the Government, in particular? The Minister must do far more than merely encourage, exhort and pressure the board. She also has an obligation to lead and to find a way forward. She cannot wait for the board to produce proposals for her. She must use her power and influence to find a way forward and not merely wait for them to deliver plans to her. She must lead by example and devise plans in partnership with the board to find a way forward.
Since, I became Minister last February, I have met with the Chairman and the Chief Executive of Aer Lingus on a number of occasions. Indeed, I have met the Chairman of Aer Lingus more often, and at greater length, than I have met with the chairman of any other State company under the aegis of my Department. I have met the Chairman of Aer Lingus on several occasions since the end of August. I have indicated strongly both to him and to the Chief Executive of Aer Lingus that they have to face up to the severe financial crisis confronting the company. As Deputy Dukes who has served on a previous Government will realise, no Minister can direct the board of a State company to carry out a particular activity; that is a matter for the board of the company concerned acting on the advice of management.
The board have yet to present me, for presentation to the Government, with specific proposals to deal with the present financial crisis confronting the company. Since last February, in all the discussions I have had, I have indicated strongly that the company should look at a number of proposals, including the one issue which is causing most financial difficulty for Aer Lingus, that is, the suicidal fare war on the Dublin/London route. I have indicated strongly to both airlines operating on that route that something needs to be done to stop the haemorrhage, in Aer Lingus in particular, that that service is causing. That is the most important issue that the board of Aer Lingus have to face up to. If one's company are losing money one must address the area in which most money is being lost. The board assured me last Thursday at the conclusion of my meeting with them that after their November meeting they will present me with specific proposals to deal with the financial crisis confronting the company. I await those proposals.
The handbagging did not work.
On a point of order. Deputy Currie mentioned the word "handbagging". I find it particularly difficult to accept that terminology because it is an insult to women. If Deputy Currie, Deputy Flanagan or any male Member of this House went to a State board and expressed openly, frankly and bluntly their thoughts and the thoughts of the Government to the board they would be admired by the male Members of this House.
That is an ungracious remark.
When a female Minister does exactly that suddenly she is accused in a sexist way of handbagging.
The Minister was not handbagging; she was groin kicking.
If the Deputy caused offence to the Minister in regard to the use of the phrase, "handbagging", I feel sure that he would wish to withdraw the remark.
I certainly would not wish to cause offence to the Minister, or to any Member of the House——
Or to women.
——or in particular to any female Member of the House but I should say in relation to my remark that the phrase was used in the way in which it has been used in a large number of the reports of the meeting the Minister had with Aer Lingus. She did not object to it then but is taking the opportunity to do so now.
She was going kicking, not handbagging.
I could reverse the sexist charge.
I deem the reference to handbagging, especially to a lady Member of this House, to be unparliamentary.
Groin kicking would be much more appropriate.
Undoubtedly, many of the difficulties being experienced by Aer Lingus have arisen from the cost of fleet replacement, a problem which will be further exacerbated as more fleet is replaced. May I ask the Minister if she has considered at any stage, given that this is an island nation, the possibility of meeting with the EC Commissioner to seek either Structural Funds or Cohesion Funds for the purpose of fleet replacement, in particular to meet the cost of the two aircraft that Aer Lingus have already purchased? A special case can be made given that as an island nation, we are in a different position from that of the other EC member states which can receive funds for the construction of highways. However to get to another member state we have to traverse by either sea or air. Would the Minister consider making such a case?
An application for assistance for mobile assets, which would include air and sea transport, was made by my predecessor but this was turned down by the European Commission. I have resubmitted this application. The Commission has sought extra information and this has been provided. Given that this is an island nation, as mentioned by Deputy Taylor-Quinn, and taking into account the cost disadvantages for manufacturers and industrialists at present, I have lost no opportunity to push the Commissioner responsible, Mr. Van Miert, and the Commission to favourably consider Ireland's application for assistance for mobile assets under the Structural Funds or the peripherality programme. I have lost no opportunity in pushing that case very strongly and I will continue to do so.
The Minister said that the tourist industry is the main industry targeted by Government. Does she recognise the core role played by Aer Lingus in tourism generation? Will the Minister comment on the statement by SIPTU that there is no partner waiting to bail out Aer Lingus? If no partner is found and she refusees to provide additional State investment in Aer Lingus, how can she envisage the retention of jobs?
I recognise fully the role Aer Lingus play, in cooperation with Bord Fáilte and other State agencies, in relation to tourism and marketing. The Government made a decisions since last February that each of our State agencies abroad, particularly in the United States, should come together in one building in the various cities to market Ireland as a whole. In that way tourism would not be left to Aer Lingus or Bord Fáilte on their own, or indeed to CIE International Tours who have a substantial presence in the United States. Every State agency abroad would deal with all aspects of the Irish economy, including tourism. In relation to the SIPTU statement that there is no partner available, I said already that Aer Lingus have not put specific proposals to me. The airline told me that they have spoken to a number of airline companies and others who may be interested in a partnership, and when they bring forward their proposals in November I presume they will give details of those discussions, what companies they had discussions with and what the outcome was.
Why is the Minister so coy about giving a direction to Aer Lingus when she had no hesitation earlier this year in directing them very firmly to keep their mouths shut. Will the Minister try to persuade Aer Lingus that leasing might be a better option for fleet replacement in present, and probably future, circumstances than purchase, which is the direction the company have taken up to now? Would the Minister not agree that it is virtually impossible for Aer Lingus to expect that they can do an equity deal with another company as long as their present statutory position exists whereby the Government are the sole shareholder? Would the Minister not agree that a change in the legislation might open up the possibility of finding an equity partnership to ease the company out of their problems?
The Deputy will recall that the direction I gave to Aer Lingus, Aer Rianta and Bord Fáilte related specifically to the Shannon stop-over policy — a matter of policy is the responsibility of the Government — and not to the day-to-day operational matters of the company. As regards fleet replacement, I said already that concern was expressed by the government at the time the company requested permission to replace the European fleet, but eventually approval was granted to the company in this regard. I said that had the replacement taken place on a much more gradual basis the present serious problems would not exist. In relation to the 767s, the fleet on the north-Atlantic route was replaced by way of lease. On the final aspect of Deputy Dukes's supplementary, whether or not the legislation should be changed to allow for another shareholder rather than have a 100 per cent shareholding by the State, that is a matter that may be considered at any time.
May I take it then that the Minister is considering the matter? I welcome the Minister's statement about seeking the support of the European Commission as regards funding for fleet replacement, particuarly on the north-Atlantic route which will be of great importance in the next three years. To continue along the line pursued by Deputy Madeleine Taylor-Quinn on the question of Ireland's peripheral position in the European Community, I would put it to the Minister that, in spite of what she said regarding competition laws, a case could be made to the Commission to permit the Irish Government to inject equity into Aer Lingus. Having regard to what the French and Belgian Governments did recently, there is a precedent for that. Considering that European competitions laws were relaxed to suit Belgium and France, surely, having regard to our peripheral location in the European Community, the Minister would have an even stronger case to make for Ireland. Why will the Minister not pursue that angle?
As I have said, no consideration has been given by the Government to the matter of the shareholding. The application by the Irish Government to the EC for mobile assets for air and sea transport is being pursued vigorously by myself, my Department officials and the officials permanently based in Brussels who represent the Irish Government. We have made the case as strongly as possible and will continue to do so on the basis that we are the most peripheral country in the European Community. In relation to European competition rules, the European Commission precluded the Spanish Government from injecting further capital into Iberia on the basis that it would distort competition. That is the difficulty facing us now. The Deputy can be assured that every avenue possible is being explored and vigorously sponsored by me as Minister and by all the officials on behalf of this country who are working with me.
Would the Minister agree to put before this House whatever proposals she receives from the board of Aer Lingus, assuming that we have a Dáil at that time? That would give us a chance to discuss the proposals in full. I agree with the Ceann Comhairle's ruling in banning the word "handbagging" in this House. I did not use that phrase last night because members of my party would not allow me to use such a sexist expression, although it was widely used on the floor of the House. The Minister has been well capable of dealing with Opposition speakers down the years and many of us come out second best with her. However, we will not use that word in future.
As regards the proposals from the board of Aer Lingus I am quite sure that, as has been happening in relation to this company in the last number of weeks, as soon as or perhaps before I receive the proposals they will be already very much in the public domain. The Deputy can be assured that those proposals will be examined in great depth by me and I am sure there will be many opportunities for Members of the House to discuss them at great length.
The Minister hopes to fly off before the decisions have to be taken.
