Dáil Éireann díospóireacht -
Tuesday, 28 Feb 1995

Vol. 449 No. 7

Adjournment Debate. - Team Aer Lingus Report.

Mr. S. Brennan

I wish to share my time with Deputy O'Rourke. Team Aer Lingus workers were shocked to hear the announcement by the Minister for Transport, Energy and Communications, Deputy Lowry, last week that the company was a cause of concern to him. They were angry to hear the news in this way and not through the unions, a company structure, as would be normal.I regard it as a reckless statement by the Minister in that its timing and manner undermines the company at a sensitive time. This company, with its high skill and high value employment, needs the Minister's practical support and encouragement and not undermining.

The Minister has asked the Chairman of Aer Lingus for updated proposals to address the problem. We should hold our heads in the current competitive situation and take a longer term view. The new proposals must take into account the fact that some similar companies, close to Ireland, are engaged, deliberately perhaps, in what amounts to a price war. I know of one company, not far away, which is offering 12 months' credit to customers in the same business, unheard of heretofore.

These proposals must be published by the Minister after he has furnished them to the staff — I ask him to furnish them to the staff. He must also meet with staff and management to discuss the new proposals. Above all, these new proposals must remove the uncertainty surrounding this company tonight. The Minister must not continue to hide behind the EU on this issue.

As the Minister will be aware, the previous Government committed £175 million for restructuring the group. Some of this was for Team Aer Lingus. The Government must not welch on honouring this commitment. Some £50 million is still outstanding from this promise to Aer Lingus. This money should not be withheld but rather used now to invest in capital equipment, staff restructuring and replacing the debt with equity, the only strategy for survival.I call on the Minister to proceed in a practical way along these lines.

I wish to pose some questions. Is it true that some £12 million was provided through management to secure 300 voluntary redundancies but that it actually cost £22 million, an average of £80,000 per person? Is it true that a lucrative Saudi Arabian contract was lost recently due to the price war? Is it true that the Minister's remarks last week, in effect, influenced Virgin Airlines to postpone discussions late last week with the company?Is it true that the company is in such a need for capital investment that it is still using ordinary scaffolding poles instead of the high-tech equipment required for such an operation? I ask the Minister to clarify these issues for the benefit of the staff and the public.

Mrs. O'Rourke

I thank my colleague whose brief is Opposition spokesperson on these companies; my brief is Enterprise and Employment. My contribution to the debate is in the cause of employment in a company which is a very valuable source of employment. I had occasion last week to speak on Irish Steel but that was directly in the context of being spokesperson on Enterprise and Employment.

In the commercial semi-State companies it seems that the news comes as a shock when there are changes of fortune.This was the case with the Minister's precipitated announcement last week in the course of Question Time. I understand it was news to those who work in the company that it had again hit rocky waters.

Is it not better, whatever the news, palatable or otherwise, that the Minister come clean with it and make plain the company report which will be furnished to him? He owes it to those employed in TEAM to explain the precise position rather than store up trouble which, when it comes, cannot be borne and rash decisions have to be made. The first rash decision is to cut employment. Why is it a badge of honour for a firm to, first, cut employment and then decide on the next step? More often than not that employment is from a very valuable sector, in this case the craft unions.

The debate is clear. We, the public and those who work in the firm want to know what is happening and what stage of operation has been reached. What has led to the plunge in the financial fortunes of the company? Does the Minister intend to be transparent, accountable and open with those who work in this valued firm?

Minister for Transport, Energy and Communications (Mr. Lowry)

Deputy Brennan, who asked a number of pertinent questions, facilitated the creation of the problem. He presided over the decline of TEAM and failed to confront the problem. Eventually my predecessor made a belated attempt to resolve the problem but failed.

Last week I informed the House that, before being appointed to my present post, I was under the impression that the restructuring programme at Aer Lingus was being implemented successfully. I also indicated my belief that I shared this impression with most Deputies.

Having had the opportunity to assess the position following my appointment, I was able to give the House a measured assessment of the progress made by the Aer Lingus group in general.

I stated that substantial progress had been made at the airline under the restructuring programme. I pointed out that, while the airline had undoubtedly benefited from the general uplift in world aviation, it was at the same time continuing to make the sort of progress envisaged in the restructuring programme.

I had to inform the House, however, that I was seriously concerned about TEAM Aer Lingus, that there were still major problems to be overcome there if TEAM's operating results were to ensure the long-term viability of the company. This was information which I discovered for myself.

One of the first requests I made on taking up office was for a comprehensive update on the situation in the Aer Lingus Group. It was only when the 1995 budget for TEAM was submitted to my Department and the figures brought to my attention that I realised the full seriousness of the problems at TEAM and the potential repercussions for the airline. Having sought the figures and assessed the situation I took a deliberate and calculated decision to bring the matter to a head. I find it deeply ironic that by taking decisive action in ensuring that those who must address the problems of TEAM Aer Lingus do precisely that I am somehow perceived to be returning to the days of interference in State companies. Since when has a demand that a State board act decisively to solve its problem become a case of interfering with that board?

However difficult and unpleasant it is for me to be the bearer of the news which gives rise to general concern, I have a duty to the taxpayer. I make no apology for demanding that Aer Lingus acts decisively to solve this problem — that is its job and that is what I expect of it. It was clear to me that the targets set for TEAM Aer Lingus under the restructuring programme were not being achieved, with all the implications this could have for European Commission clearance of the necessary final tranche of equity for the airline. I called in the executive chairman of Aer Lingus and directed him to submit to me, as a matter of urgency, updated proposals to address the problems at TEAM Aer Lingus. Those proposals are in the process of being formulated and I expect to have them by this week.

I also made it clear in the House last week — and I have not changed my view — that I would not be publishing the report from the executive chairman. I am sure Members will appreciate that the report will contain commercially sensitive information. It is a confidential report made to me, as Minister, it would not be in the interests of the company to reveal. The report will receive careful and detailed consideration and I intend to have it examined in a measured and thorough manner, in consultation with the company and others, if necessary. This process will take some time. I will not rush it, nor will I allow myself to be rushed. I do not propose to make any further statements on the matter of the report in the meantime.

The question of my briefing the staff at TEAM Aer Lingus on the current situation has been raised by the Deputy who knows full well that it is the responsibility of the board and management of TEAM Aer Lingus to brief the employees and, in particular, to take whatever steps are necessary to inform staff of the nature of the difficulties which face the company. I do not propose to interfere in management's responsibility in that regard. However, I am prepared to meet representatives of the Irish Congress of Trade Unions on this issue, as I have done in the recent past on other issues in relation to the Aer Lingus Group generally.

Again I wish to put unequivocally on the record that the resolution of the difficulties at TEAM Aer Lingus is a matter for the board and management of the company. However, not only should these problems be addressed, they must be addressed to avoid jeopardising the viability of the airline.