Vol. 485 No. 2
7 Mr. Stagg asked the Minister for Public Enterprise the proposals, if any, she has received from Aer Lingus for the sale of TEAM Aer Lingus; if she will bring details of the proposed sale to Dáil Éireann for approval; if not, the basis by which the Government proposes to dispose of its shareholding in the company; and if she will make a statement on the matter. [23018/97]
8 Mr. Yates asked the Minister for Public Enterprise if she will give details of the current negotiations on the sale of TEAM Aer Lingus; and if the Government, as shareholder, is agreeable in principle to the complete sale of the company. [22617/97]
I propose to take Questions Nos. 7 and 8 together.
The Government's shareholding is in the Aer Lingus Group. TEAM, in turn, is a 100 per cent wholly owned subsidiary of the group. While my approval, given with the consent of the Minister for Finance, is required under section 14 of the Air Companies (Amendment) Act, 1993 for the establishment of a subsidiary, there is no such statutory requirement for the disposal of a subsidiary. However, it is an administrative requirement that proposals regarding major disposals would be brought to my attention and that of the Minister for Finance as shareholder. No such proposal has yet been made to me in regard to the disposal of any shareholding in TEAM.
The conduct of negotiations with potential investors in TEAM Aer Lingus are matters for the board and management of the Aer Lingus Group.
I have been aware of the process of identifying possible investors engaged in by the group. This process has reached the stage where management has identified its preferred investor but, due to legal issues and shareholder requirements on the part of the investor, is not in a position to identify the party until later this week. In this regard I am advised a meeting scheduled for today with union representatives has been postponed until next Thursday. Once in a position to reveal its preferred investor, management must continue and intensify consultations and negotiations with staff interests in order to finalise a suitable proposal for consideration. The board must in turn refer the proposal to me. I have insisted in my meetings with the unions and representatives of the company that the proposal must take account of all relevant issues affecting the future of TEAM. Any proposal from the board will be considered by me on its merits, having regard to the interests of all parties.
My prime concern in examining any proposal from the board regarding TEAM is to ensure a long-term viable future for the company. Furthermore, I will seek to ensure that the prospects for maintaining and strengthening employment opportunities at TEAM are maximised. More importantly, I will insist that employee rights are fully guaranteed and considered in any proposal. For these reasons, I am willing to examine any proposal which the board may put before me.
This is a complex and unusual matter in so far as a State property is for sale and there is no requirement on the Minister to bring the proposal before the House. Has the Minister instructed Aer Lingus to sell 100 per cent of the shares in TEAM? Does she have the authority to do this or does she require authority from the Dáil? Given that the sale involves public property, that we live in an era of openness and transparency and that the rights of the 1,500 workers must be guaranteed, will the Minister bring the deal before the Dáil for approval? If we were dealing with the sale of any other State company she would be required to seek Dáil approval.
I have not instructed Aer Lingus to instruct TEAM to sell 100 per cent of the shares in the company.
It is, therefore, selling the shares without the Minister's authority.
I agree that this is a complex issue. The Cahill plan, introduced when Fianna Fáil and Labour were in Government, contained a proposal in regard to TEAM. I have not instructed Aer Lingus to sell TEAM. I called in the unions some weeks ago because I thought matters were moving too far forward without ground rules being laid down by me. I said that management must give full information to employees, that I wanted to maximise employment in TEAM and that employees' rights must be honoured to the full. I set out my stall, so to speak, and these still remain the criteria.
I have not given instructions to Aer Lingus to sell the company, nor have I received any proposals from it. Three firms have indicated an interest in the company, which is considering one firm. For legal reasons and in order to let the employees know first, the information in this regard will be disclosed on Thursday.
The Deputy asked if I would bring the proposal before the Dáil for approval. While my approval is required under the Air Companies (Amendment) Act, 1993, for the establishment of a subsidiary, there is no such statutory requirement for the disposal of a subsidiary. Following a full debate by the employees and agreement between the employer and employees, I will be disposed to accepting any proposal put before me. I fully accept that I must come before the House with the proposal and make a statement and also answer questions on the matter.
The letter of guarantee held by the employees gives them various legal rights. It also contains a legal agreement that no more than 49 per cent of the company can be sold. Given this legal agreement and that the Minister has given no instructions for the sale, how can the management tell the unions it will sell 100 per cent of the shares in the company to its preferred investor? How was the preferred investor selected as there was no tendering process, no option and nothing was visible? Will the Minister explain the selection process which was certainly not transparent?
In the press release issued today by Aer Lingus reference is made to a shareholder clearance consideration. Does this refer to the difficulties arising from the legal agreement with the employees in Aer Lingus that no more than 49 per cent of the shares in the company can be sold and that part of this amount must be dedicated to an employee share option proposal? Has the delay arisen because of the legal difficulties arising from the letter of guarantee issued to the staff on compulsory transfer from Aer Lingus to TEAM and which is now held by the employees? Incidentally, the letter of guarantee is before the High Court which will make a decision on its status next April.
Letters of guarantee or comfort are letters of employment. However, I will not quarrel with the Deputy's description of them as letters of guarantee. The company clearly knows that the employment rights of the employees must be fully recognised, underpinned and honoured in any proposal. I have been absolutely clear on this point. The proposal is still in the realm of probability or possibility. Any proposal which lands on my desk will not leave my office the same day. It will receive the utmost scrutiny.
I do not know how three parties came to indicate their interest in the company. Aer Lingus owns 100 per cent of the shares in TEAM. I set the ground rules on how management must proceed and the sale will clearly not proceed unless the three criteria laid out by me are fulfilled. I presume that the three parties have an interest in the area of aerospace matters, maintenance and aviation generally. This is only proper. There will be no patronage in regard to this matter. Every "i" must be dotted and every "t" crossed in any agreement between management and employees. Following this the proposal will be sent to the board and then to me. There is still a long road ahead.
It is incomprehensible that neither the Minister, the shareholder, nor her departmental officials have been fully briefed on the sale of TEAM. Is the Minister saying the management will present the results of the negotiations as a fait accompli to her? Is it not the case she has discussed this with the chairman and the senior management in Aer Lingus have discussed this extensively with senior officials from her Department? What are the “legal and shareholder” reasons for the postponement of the meeting from early to late this week? Is the Minister, as the shareholder, in favour in principle of the sale of 100 per cent of TEAM Aer Lingus?
The Deputy said he found it extraordinary that I would not be fully briefed. I have explained to him exactly what I know and what I have been briefed on. I obviously know——
We own it.
——the names of the three interested parties, so I am fully briefed. I am also fully aware one cannot overlook the fact that the employees should be told many of these matters directly by the management before they are put into the public domain. The three companies which declared an interest are B.F. Goodrich, F.L. Schmidt-fuller of Aerospace and Allied Signal. The company is now dealing with one of those proposals but I cannot for legal reasons — nor would I wish to — name the company involved.
The Deputy then asked about the legal and shareholder difficulties which caused the meeting to be deferred from Tuesday to Thursday. Those difficulties relate to the proposal being discussed at present by the TEAM Aer Lingus management and the company in question. They are matters for the shareholders of that company. I do not know if they relate to the letters of comfort or guarantee. That is a matter between that company and TEAM Aer Lingus. I have been fully briefed. I met the chairman and spoke to him by telephone after my meeting with the unions where I demanded and received assurances that the employees would be fully informed of matters as they proceeded. I then met the chairman three weeks ago and told him again to ensure there was full information and transparency within the confidentiality requirements of the company. When I met the unions and the workers they respected the need for such confidentiality.
The Deputy asked me if I am in favour of a 100 per cent sale.
In principle.
I am in favour of the company becoming viable and of any strategic partnership which ensures the maintenance of employment and that the rights and guarantees given to workers are fully honoured. I want all the facts to be given, while bearing in mind the need for commercial confidentiality. I do not have any strong ideological objections but I insist that the whole engagement be as open as possible.
I would be very cautions about drawing conclusions about the end result as there is still a reasonably long road ahead of us. Any conclusion reached with the company would require engagement with the employees. The matter would then have to go to the board of Aer Lingus, then to me and to the Cabinet. There would then have to be full statements in the Dáil. It is not an open and closed issue.
What is the status of the legal agreement between the company and its employees that not more than 49 per cent of the shares of TEAM Aer Lingus will be disposed of in any way, and that within that 49 per cent there is a legal requirement for an ESOP for the workers? Does the Minister agree it is not sufficient to make workers aware of a fait accompli?
It will not be a fait accompli.
It should be accepted that these workers have considerable muscle. They can use the legal agreement they have in their hands to stop any sale.
Exactly.
It is not enough to make them aware of any sale — their agreement is required.
Yes, I used the word "concurrence" three times.
I accept that. However, TEAM Aer Lingus management told them they were selling the whole lot, regardless of whether they liked it. I am sure the Minister heard that from the same source I did, the unions.
Why is it deemed necessary to sell the company now when it is in the third year of a recovery plan? It recently recruited 60 craft workers, its revenue has increased by £10 million this year, it will make a profit in 1997 and its recovery plan is ahead of schedule. Why is it deemed necessary to hive off this company now to an international organisation over which we will have as much control as we have over Seagate? There is no necessity to sell TEAM Aer Lingus to make it viable. It is already viable — its order books are full, it is recruiting additional craftworkers and it is making a profit.
I agree with the Deputy that there cannot be a fait accompli because, as I have said all along, the concurrence of the workers is required. This is an entirely different matter from normal management and trade union discussions, arrangements or divisions where the majority vote of the union membership is accepted. Each person has an individual letter of comfort, guarantee or employment. I cannot stress enough that——
They have a veto.
Yes, because each individual member must signal his or her agreement to the management on foot of those letters. That is why I said earlier there is a long road ahead if this is to be proceeded with. It is not a fait accompli in any sense because of that previous correspondence.
The Deputy asked about the legal agreement which refers to the 49 per cent limit and the letters of comfort. Both those matters will have to be teased out individually with each employee. There will be no deviation from that.
The Deputy asked why Aer Lingus is keen to sell the company now when it has just taken on extra craftworkers and is heading towards viability. The company is not yet viable.
We know that but it is ahead of schedule.
They are behind with their payments, which were delayed as a result of PCW negotiations. There are also other outstanding moneys under that programme. While the company is staffed by creative and outstanding employees, it finds it difficult to become fully viable. I repeat with caution and understanding that there are many hurdles to be overcome. I will come back to the House again and give full answers on the matter.
The Minister is frank in her answers. I asked her attitude in principle to the sale of the company and she gave a pragmatic answer, that she would agree to it if it were in the best interests of the company. Where the board and management believe company A put forward the best offer and the Government has no objection in principle, 900 workers vote to accept the offer and 114 individuals go to the High Court on the matter, if the consensus is that the deal should go ahead but a small number of people do not accept the union's right to negotiate on their behalf, will the Government agree those employees should be offered continuing employment in Aer Lingus?
I have thought of that and every other scenario regarding this matter. Because each individual person received a letter, the matter is much more complex than a collective agreement where a trade union takes a majority vote. The matter is before the High Court in a technical sense and, concurrent with that, the letters were laid before the High Court to test their authenticity. The scenario where 900 people vote in favour of the offer and 100 do not is hypothetical.
It is possible.
Yes, I agree. Were that position to be arrived at, the desires of the 100 people would have to be taken into account.
Deputy Higgins (Dublin West) rose.
Deputy Higgins may not intervene since we are dealing with priority questions and supplementaries are confined to Deputies who put down the questions.
(Dublin West): On that point of order——
It is not a point of order, it is a rule of the House. We are dealing with priority questions.
(Dublin West): Twenty minutes have elapsed.
Since those questions commenced in priority time supplementaries are confined to the Deputies in whose names the questions were put down.
I thank the Minister for her openness and transparency on the matter, but I am amazed she was not able to answer the question of how Aer Lingus found the three principal bidders. Will she establish how that was done? Was it by means of a public statement or otherwise? We need to know what system was employed in this case. Strict requirements apply to the sale of public property, and TEAM Aer Lingus is public property.
I will ascertain that point and come back to the Deputy on it.
