Vol. 431 No. 5
1 Mr. Noonan (Limerick East) asked the Minister for Transport, Energy and Communications if the report on the reorganisation of Aer Lingus to which he referred when Mr. Bernard Cahill was appointed Executive Chairman will be made available to members of Dáil Éireann; and if he will make a statement on the matter.
4 Mr. Gilmore asked the Minister for Transport, Energy and Communications the number of occasions on which he has met the Executive Chairman of Aer Lingus since his appointment on 9 March 1993; and if he will make a statement on the matter.
29 Mr. Cullen asked the Minister for Transport, Energy and Communications whether a Supplementary Estimate will be necessary in the event of a decision by the Government to inject additional equity into Aer Lingus.
I propose to take Questions Nos. 1, 4, and 29 together.
As I indicated in response to a similar question on 18 May 1993, I asked the executive chairman of Aer Lingus on his appointment on 9 March to prepare, as soon as possible, a strategy for the company which would return it to commercial viability.
I have had two meetings in my Department with the executive chairman since his appointment and have also spoken to him on the telephone on a number of occasions. Officials of my Department are also in constant contact with Aer Lingus and are keeping me fully briefed.
The executive chairman has informed me that Aer Lingus management and consultants are still analysing all elements of the company's business. This analysis, when completed, will form the basis of the strategy. I have impressed upon the executive chairman the need for urgency in preparing the strategy. However, I have not given him a specific deadline for doing so. I do not intend, nor would it be appropriate for me, to make available to Members of Dáil Éireann any report in this particular matter which is given to me by the executive chairman in my capacity as Minister.
A Supplementary Estimate would not be necessary in the event of a decision by the Government to inject additional equity into Aer Lingus. Where equity is invested in State bodies it is issued from the central fund under legislative authority. In the case of Aer Lingus, the relevant legislative provisions are contained in the Air Companies Acts, 1966 to 1983.
(Limerick East): I thank the Minister for his reply. I regret that he will not put whatever report is made by Mr. Cahill before the Members of the House, but I presume he will communicate the main recommendation of any such report. When Mr. Cahill was appointed executive chairman the House was informed that Government policy on Shannon was sacrosanct and that any rescue plan proposed by Mr. Cahill would have to be in line with this policy. Is this still the position or should we believe newspaper reports that proposals from Mr. Cahill contain recommendations to change the status of Shannon?
I cannot comment on media speculation until such time as I see the strategy and consider its overall impact. There are no proposals before me which indicate the necessity of a change in policy in this matter.
(Limerick East): Arising from the meeting the Minister has had with Mr. Cahill, the several phone calls and contact between his officials and those in Aer Lingus, will the Minister inform the House if the same constraint about the status of Shannon is included in Mr. Cahill's terms of reference or will the Minister entertain a proposed rescue plan for Aer Lingus which would allow for a variation in that?
We are awaiting a strategy to ensure the survival of Aer Lingus. The company is in difficulties and serious issues have to be addressed. There are no proposals before me and I do not wish to speculate in regard to any media reports. I assure Deputies that Shannon Airport is a very important part of our aviation industry and a central part of our transatlantic operation. I wish to ensure that its importance in that regard is maintained.
(Limerick East): The House understands what the Minister is saying.
I note the Minister is no longer using the term "recovery plan" and that he has replaced it with the term "strategy". What is the significance of the change in terminology? Does it mean that the Government will approve some type of general statement in relation to Aer Lingus which would permit the new management of Aer Lingus to proceed with the dirty work of letting go workers and reducing the size of the company? At the time of Mr. Cahill's appointment it was intended that this plan or strategy would be produced within a matter of weeks. In view of recent reports that it will be necessary to have it produced in advance of the submission of the national plan to the European Commission, will the Minister indicate from his discussions with Mr. Cahill if any date has been set for the completion and submission of the plan to him?
The Deputy has raised a number of questions. Given the seriousness of the position that reference to dirty work, as the Deputy terms it,——
Sacking workers.
——is not helpful. We are seeking to achieve a position whereby Aer Lingus is a commercially viable company, consistent with the maximum possible levels of employment to sustain that commercial viability. Everybody understands that the difficulties in relation to this company must be considered seriously and fundamentally. We must bring forward proposals for a strategy for the survival of this company. It is not true that the recovery strategy for Aer Lingus to ensure its survival must be produced in tandem with or before a national plan is submitted to Brussels. The European dimension in this regard relates to the competition directorate and the transport directorate in relation to State aid. That matter is separate from issues relating to support for transport infrastructure which may form part of the national development plan when final decisions are taken.
In relation to the question of terminology, it is important that the forthcoming strategy, subject to approval by the board and which would then come to me as Minister be a decision by Government, must set a definite direction for this company to ensure its commercial future. There must then be detailed proposals internally within management and staff to achieve the objective of such a strategy. That is the only way in which we can proceed to ensure the survival of this company. There are very difficult issues that must be faced in the interests of its long term future.
Has the Minister had discussions with the chairman, Mr. Cahill, the numbers of jobs which may have to go at Aer Lingus or the amount of equity which may be provided by the State?
In relation to equity, as I indicated previously on a number of occasions with as much clarity as is at my command, support by the State for this company will be forthcoming on the basis of a commercially viable strategy being put in place by Aer Lingus. The Government, as a shareholder, will support the company in the interests of my wider responsibilities to the general taxpayer to ensure that such investment will have a return and will ensure the company's commercial viability. That is not only a matter of prudence for me in terms of my responsibility to the taxpayer, it is a requirement and prerequisite from the European Commission as to the State aid that can be given in these circumstances.
The Minister has not answered my question.
I call Deputy Michael Noonan to ask a brief supplementary. 22I will call Deputy Gilmore again and then pass on to the next question.
(Limerick East): I put it to the Minister that while his assurances on the Government's recognition of the importance of Shannon Airport are welcome they fall short of assurances given by him and his predecessors previously in this House. In the context of a rescue plan for Aer Lingus will the Government consider proposals on their merits from the board of Aer Lingus to modify the arrangements for transatlantic flighs to Shannon Airport?
As I said, there is no change in Government policy nor are there any proposals before me which would necessitate even a consideration of a change in Government policy. It would be premature to speculate on any such matter other than to say that the present Government policy is as I have stated. In view of the fact that we are discussing the survival of this company we must await the strategy that will ensure its survival and in that context everything will be considered. I assure the Deputy that Shannon Airport is an important asset. It must be maintained, supported and developed, I have made that clear. It should be to the forefront of the whole transatlantic fleet operations of that company and in terms of incoming traffic to this country.
Why did the Minister avoid answering my direct question to him concerning the——
Avoid repetition please, Deputy.
——discussions with Mr. Cahill? I am merely repeating the question because I did not get an answer the first time.
Repetition is a luxury we cannot afford, especially in dealing with priority questions.
Is the Minister seriously asking the House to believe that there has been no discussion between himself and Mr. Cahill concerning numbers of jobs that may be lost and the amount of equity? In relation to the EC dimension what is the position now in regard to the provision of State aid for Aer Lingus? Is he aware that in recent weeks the EC permitted the provision of State aid for the Portuguese airline and if he now expects as a result of that decision the EC to permit the provision of State aid for Aer Lingus?
I apologise for not answering the Deputy's question earlier.
The Minister can answer it now.
It is premature to speculate on the outcome of this matter until a strategy is laid before me. I will then be in a position to consider all aspects of the situation. I have impressed upon the executive chairman from the time of his appointment the need to maintain the maximum number of jobs consistent with the commercial viability of that company. That is my position and the Government's objective.
That does not answer my question.
It does answer the question because the Deputy is asking me, prior to consideration of management proposals and without the prior approval of the board to speculate in this area, which I am not prepared to do.
In relation to State aid, I have spoken to Commissioner Van Miert and Commissioner Matutes, the transport Commissioner. I have also spoken to Commissioner Flynn to ensure his support in this matter. I am well aware of the criteria and when this issue arose I went to Brussels at the earliest opportunity to clarify the position so that everybody here would know the prerequisites for State aid to be considered which would be approved by the Commission in these circumstances. I assure the Commission and the House that the State aid which this Government will make available will be on the basis of a commercially viable strategy being put in place in Aer Lingus. It will be in accord with European requirements and be consistent with the position outlined in the Programme for Government.
Mr. Noonan (Limerick East) rose.
I am sorry, Deputy, I have to proceed to Question No. 2.
(Limerick East): The next two questions are in my name. I wish to ask a final supplementary on the last question.
No, Deputy. I have called the next question.
(Limerick East): It is effectively my time anyway.
That may be so but the Chair will not cause a precedent in this matter. The Chair must be obeyed.
