Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Tuesday, 2 Nov 1993

Vol. 435 No. 3

Ceisteanna—Questions. Oral Answers. - Aer Lingus Rescue Plan.

Michael Noonan


2 Mr. Noonan (Limerick East) asked the Minister for Transport, Energy and Communications the progress, if any, that has been made in the negotiations between workers and management at Aer Lingus to restore the airline to a sound financial base; and when he will be in a position to inform Dáil Éireann of the full details of an agreed rescue package.

Desmond J. O'Malley


3 Mr. O'Malley asked the Minister for Transport, Energy and Communications the up-to-date position regarding the Cahill Plan for Aer Lingus; and whether it is now going ahead as originally envisaged.

Martin Cullen


8 Mr. Cullen asked the Minister for Transport, Energy and Communications if he has satisfied himself that the progress to date on the Aer Lingus rescue plan will lead to the stated number of voluntary redundancies being achieved; and, if not, if he has any alternative proposals to put forward which would maximise the number of employees within the Aer Lingus group.

Eamon Gilmore


11 Mr. Gilmore asked the Minister for Transport, Energy and Communications if he has received any report from the Board of Management of Aer Lingus regarding the progress of the current negotiations with the trade unions on the cost cutting package; his views on the recent Aer Lingus annual report; his views on whether it is appropriate that those members of the board who were responsible for the overall strategy and direction of the company when losses were incurred should remain in charge; and if he will make a statement on the matter.

Bernard J. Durkan


26 Mr. Durkan asked the Minister for Transport, Energy and Communications the extent to which the future of the Aer Lingus workforce is provided for to-date in the discussions between management, Government and the unions with particular reference to maintaining sufficient staff, plant and structures to enable the airline compete and expand in the world market and to cater for the continued employment of its workforce with no loss of jobs; and if he will make a statement on the matter.

Thomas P. Broughan


93 Mr. Broughan asked the Minister for Transport, Energy and Communications if he is confident that the £175 million injection into Aer Lingus will be approved by the EC Commission; and if he will assure Dáil Éireann that the Aer Lingus Express will be allowed to proceed as planned.

Bernard J. Durkan


96 Mr. Durkan asked the Minister for Transport, Energy and Communications the current position in regard to the future of Aer Lingus; and if he will make a statement on the matter.

I propose to take Questions Nos. 2, 3, 8, 11, 26, 93 and 96 together.

As Deputies are aware, on 6 July last the Government announced that it had decided to endorse the broad strategy set out in Aer Lingus's strategic plan for the future of the company, as submitted by the board, including the need to achieve £50 million annually in cost savings.

The Government, as shareholder, also agreed to invest £175 million of taxpayers' money in support of Aer Lingus's strategy: by way of one £75 million and two £50 million instalments. The payment of these equity injections is subject to the following conditions: a full and comprehensive agreement having been reached between management and unions in Aer Lingus on the necessary £50 million annual reduction in internal costs essential for the return of the company to commercial viability; production of satisfactory evidence that the necessary measures proposed are being implemented in full; and a formal indication by the European Commission that it will raise no objection to the proposed State equity injections.

In taking its decision on the strategy for the future, the Government noted that agreement had been reached at a meeting between the Cabinet sub-committee on aviation matters and the Irish Congress of Trade Unions on 22 June last, on the following issues: the underlying financial position of the company was very grave and unsustainable; the core airline business would have to be returned to operating viability; all sides are committed to achieving the reduction in numbers required in Aer Lingus through a voluntary scheme; the question of participation by Aer Lingus employees in the future success of the company should be explored as a tangible form of recognition for the additional contribution being asked of the workforce at present; and a special enterprise development unit would be set up right away, to consist of representatives of the unions and Aer Lingus together with the IDA, Fingal County Council, FÁS, and the Department of Enterprise and Employment, to identify new employment opportunities within the Aer Lingus structure.

I have consistently made it clear that the Government's bottom line is that the £50 million in annual savings must be achieved. The Government has not stipulated how they should be achieved. That has always been a matter for negotiation between the management and unions.

Negotiations have been taking place between Aer Lingus management and the unions on the implementation of the cost cutting measures in the strategy. These negotiations have understandably been vigorous and forceful on both sides. The negotiation and conciliation process has been greatly helped by the very professional facilitation of the Labour Relations Commission staff.

The proposed financial restructuring of Aer Lingus, while involving inevitable job losses, will offer the prospects of secure employment for the remaining core of the company. Without commercial viability, there would be no future for the airline or its employees.

I am glad to note that substantial progress has been made in negotiations and that final agreement now appears to be within reach. It would not be appropriate for me to discuss the numbers of voluntary redundancies or the details of the negotiations which, as I have said, are a matter for the management and unions. I will simply once again urge those involved to grasp this opportunity of protecting the future of Aer Lingus.

The plan for the transatlantic operations is an intrinsic part of the strategy for the future which addresses what Aer Lingus sees as the best marketing possibilities at present in the airline's commercial interest. Negotiations on the detailed arrangements are a matter for management and unions. I understand that substantial progress has been made in that regard.

Aer Lingus is Shannon's best customer and its wellbeing is vital not only for the airport but also for the region. The Government sees the survival of Aer Lingus, with its strong transatlantic presence, as being essential for the future of the Shannon region.

The employees of Aer Lingus have contributed enormously in the past to building up the airline. The Government is fully aware that a stronger commitment than ever before will be required from all of the staff of Aer Lingus, all the way through the organisation. As a tangible form of recognition, the Government has accepted that Aer Lingus employees should have a stake in the future success of the company once that has been secured.

The Government formally notified the European Commission of its proposed investment in Aer Lingus last August. Prior to that, I had met with EC Commissioners and found their attitudes both helpful and informative. Officials from my Department have also had a series of meetings with the Commission. We have explained to the Commission, at both ministerial and official level, the importance of having this matter finalised in order to enable the first tranche of equity to be invested before the end of this year. The Commission has indicated to us that it fully appreciates the urgency of the matter and has assured us that it is doing everything possible to expedite its examination.

Our discussions to date with the Commission have been constructive. The Government remains confident that its investment in the airline will take place within the planned timescale and that Aer Lingus's strategy for the future will be allowed to proceed as proposed.

The critical financial position of Aer Lingus, evident from the annual accounts for the year ended 31 March 1993 which were published recently, underlines the need for a fundamental restructuring of the entire operation. I do not consider it necessary to comment further on the accounts as published beyond endorsing the chairman's statement that the past year has been one of the most traumatic in the history of Aer Lingus.

It is a matter for the board of Aer Lingus to implement the strategy, and I am confident it will do so. Appointments to the board of Aer Lingus are made by me with the consent of the Minister for Finance under the Air Companies Acts.

In looking to the future, it is vital to recognise the realities of the international environment in which Aer Lingus must operate and particularly in the Single European Market which accounts for most of Aer Lingus services. Airlines must compete in an open market where Governments can no longer intervene to regulate access to routes or pricing. I am confident that Aer Lingus, once its costs are brought into line with its competitors, can not only survive but also develop in its main markets.

I am calling the Deputies in the order in which their questions appear on the Order Paper. Deputy Noonan.

(Limerick East): The Minister's very long answer should be submitted for an appropriate children's essay writing competition.

Flippancy will get the Deputy nowhere.

(Limerick East): We could get on to the supplementaries——


Get real.

(Limerick East): This playing for injury time is not real. Now that he has made a both of the renegotiations of the bilateral air agreement, does the Minister consider Aer Lingus can compete successfully with the North American carriers, particularly with the charter flights which will be able to fly the North Atlantic at lower costs than Aer Lingus into both Shannon and Dublin? Would the Minister like to comment on the widespread view in the aviation industry that unless the package includes a partnership arrangement one of the main aviation conglomerates now being formed will not be viable in the medium term?

On the strategy for the future and the whole question of flights to Shannon and to Dublin there are 600 flights to 612 flights this year between Dublin and Shannon and the US. What has been negotiated with the United States is fully consistent with the Aer Lingus plan.

Who will have the chalk, Minister?

Deputy Carey may not intervene at this stage. I have informed him so.

As is clear in the Programme for Government the question of joint ventures and strategic alliances is one to be looked at in regard to what is in the commercial interest of that or any other company. However, I would make the point that for the purpose of this company bringing something to the table, it is necessary for the viability of the company to be secured. That is a first priority as far as this company is concerned and that is what will be sought to be achieved in the months and years ahead.

In my Question No. 3, I asked the Minister whether the Cahill plan for Aer Lingus was going ahead as originally envisaged. The Minister did not answer that but it is evident from his reply that it is not. Because of that why is it that the plan, which suggested that only one in three transatlantic flights fly into Dublin, has been changed so that the majority of transatlantic flights will fly into Dublin? The Minister has given figures of 612 as against 600. Are those figures on an annualised basis because if they are all the Shannon flights will be compressed into the peak summer months? When the Minister agreed the renegotiation of the bilateral air agreement why did he allow American airlines pick-up rights to outside the Community from Dublin and not from Shannon? Why has the Minister not yet published the agreement that was signed in Washington last Thursday in spite of numerous requests from myself and, I believe, other Deputies to his office for a copy of the agreement?

Regarding the second part of the Deputy's question, I dealt with that issue in my reply to Question No. 1. When the memoranda are compiled, it will be a matter for record. What I am setting out is the truthful position with regard to the minimal change that has taken place in the renegotiations. If the Deputy were aware of the opening negotiating position of the United States——

It was the Minister who sought the change.

I wish to answer the questions put to me and I will answer any questions Deputy Carey may have also if it is in order. If Deputy O'Malley were aware of the negotiating position that the United States has taken with other countries he would realise that the achievement of the renegotiation has been considerable.

The second point I would make to the Deputy is that in relation to Shannon the question of using technical stops does not arise. These are bona fide flights which are coming into Shannon. There is no question of any uisce faoi thalamh in relation to this matter despite the parochial democracy which the Deputy is espousing. What the Deputy fails to understand is that the dynamics of the situation have now been changed completely.

I do see how they have been changed. Shannon Airport will be closing down for most of the year.

I can assure the Deputy that I will not engage in political rhetoric in relation to this matter. The fact is that for the first time there will be a Shannon-based fleet. Under the old system there was no year round access to the United States because during the winter period there were not seven flights per week. The position now is that every day of the year it will be possible for people to board an Aer Lingus plane at Shannon and fly to the United States. That was not the case under the old system.

Six days a week.

That is not the case in the off-peak period. The suggestion is being made by Deputy O'Malley that in some way we are not dealing with the seasonality issue and seasonality has always been an issue in Shannon Airport. However, by having a more competitive fares policy and a much better product to market the prospects for increased business, which people do not seem to be prepared to take on board, is far greater now than under the old system where there was a decline in business and where, because of the uncompetitive nature of the carrier, the number of indirect flights and passengers coming in over London was increasing. We are seeking to address that issue and it must be addressed by improving the incremental flights that will be available to Shannon and improving the competitive base of the national carrier.

Why did the Minister not answer my supplementary about giving landing rights out of Dublin and not out of Shannon and——

Order. Deputy O'Malley, I am on my feet.

I will answer that.

You may not, Minister. I have to say that the time for dealing with Priority Questions is fast running out. I was going to call Question No. 4 if it was responded to immediately.

(Limerick East): Would the Minister agree that the issue of Aer Lingus is wider than the Shannon issue? I am sure he will join with me in complimenting the union and management in Aer Lingus for their prudence and dedication through protracted negotiations. Where does the Government stand on the Aer Lingus unions' demand to give a shareholding to the workforce in Aer Lingus commensurate with the sacrifices they are undergoing in their restructuring process?

I have made the point in my primary reply that a formal offer is on the table from the Government. It is a matter for that forum, under the auspices of the LRC, to progress that issue.

In relation to Deputy O'Malley's point regarding the reason only one access point was given outside the Community, which in effect means Zurich, I wonder if the Deputy is aware that the opening position of the United States was to seek Fifth Freedom rights from Dublin throughout the Community which would have totally undermined the commercial position of Aer Lingus. This is an excellent deal and it has been well negotiated by my officials.

The Minister referred to access outside the Community, is he saying that it is to one airport only?

I am saying that under the agreement the pick-up rights are only in respect of one city which is outside the Community. I would make the point also that as a result of the transatlantic fleet now being based in Shannon, that fleet is available to expand, where commercially possible, UK and European routes from Shannon which has not been the case up to now.

Has the Minister conceded access rights to American airlines from Dublin within the Community?

Why will the Minister not publish the agreement?

The agreement will be published when it is available.

Has it not been agreed yet?

It is agreed.

Why not publish it if that is the case?

Deputy O'Malley should inform himself of the position and then ask a credible question.

I am endeavouring to inform myself, that is the point of the question. The agreement either exists or it does not exist and if it exists, why not publish it?

It will be published in due course. There is no problem with it.

Why not publish it now?

Deputy O'Malley must desist from any further interruptions.

I would refer the Deputy to my first reply and suggest that he read it.

It was given to the Minsiter's colleagues in Clare.

Where are they now? There is no sign of them today.


A Cheann Comhairle, I presume it is not in order to request a quorum during Question Time?

No, it is not.

That is a pity, we could have had some interesting Deputies here.

These interruptions are uncalled for.