Emmet Stagg
Ceist:4 Mr. Stagg asked the Minister for Public Enterprise the progress, if any, made in the negotiations for the sale of TEAM Aer Lingus to FLS; and if she will make a statement on the matter. [8396/98]
Other Questions. - TEAM Aer Lingus.
I am aware that Aer Lingus management has finalised an offer, subject to the approval of the board of the Aer Lingus group and of the shareholder, in respect of the overall financial compensation which would be made available to the staff of TEAM Aer Lingus in the event of the sale of TEAM to FLS.
Individual letters have been sent to each employee in TEAM, indicating the amount of financial compensation in his or her case. I understand that at the end of a period of two weeks from 31 March 1998, a form will be issued to each staff member to allow their acceptance or otherwise to be indicated. These forms are to be returned to the process facilitator, Mr. Gerard Durcan, at the Law Library by close of business on 21 April 1998.
In the meantime, the due diligence process between Aer Lingus management and the management of FLS is proceeding and is expected to take some weeks to be concluded. I expect that the board of Aer Lingus will consider the overall position towards the end of this month and will make a recommendation to me.
I have repeatedly said that the proposed sale of TEAM to FLS will not proceed without the concurrence of the TEAM workforce. I will examine carefully any proposal which I receive from the board of Aer Lingus and then make my recommendation to the Government.
I congratulate the Minister on the work done to date. Will she consider the possibility of an ESOP within TEAM as it would require legislation? If an employee shareholding option within TEAM was the desire of the company and of the unions, would the Minister facilitate that by introducing the necessary legislation?
TEAM is a wholly owned subsidiary of Aer Lingus. If there were discussion of an ESOP it would take place at that level. Nothing has been conveyed to me in that regard.
If an alternative offer is made for TEAM——
By another company?
——by the workers, for example, to buy out the company, would the Minister give preference to that offer? Will she allow such an offer to be considered before she makes a decision on the existing offer from a foreign company? The Minister will be aware of the fears of the staff in TEAM concerning the purchaser. About 90 per cent of TEAM's work comes from abroad and, as FLS is a foreign company, they fear that the work would not come here but to the company's base abroad.
I have not been told of any plan by the workforce to purchase TEAM. I read a comment in the newspaper, in the context of an article on TEAM and FLS, which related to that but nothing has been forwarded to me. If a proposal had been made to TEAM or to Aer Lingus, I expect I would have been informed. I have received no information on such a proposal but if I do, I will study it.
I am aware the Minister has received nothing concrete and has only read about the proposal in various reports. However, if such an offer is made, will she favour the workers rather than a foreign based operation buying out the company?
We are all in Europe now. I cannot judge a proposal I have not received. The proposal would have to be made before a decision could be made. As far as I know, there has been comment on such a proposal but nothing definite. I will consider any proposal forwarded to me.
With regard to the acceptance or rejection of the FLS offer by the workers, on what basis will it be decided? Will it require a majority of just the TEAM workers or of the TEAM and Aer Lingus workers? What will be the electoral procedure? There are 1,100 workers. Will the result require 51 per cent of their votes or will their votes be subdivided?
When this matter was last raised, I asked if it would be possible for FLS to put forward a business development plan to the unions so assurances could be given about pay, conditions and job security for each division. Has any progress been made on that? I understand a cumulative offer of £54 million has been put to the workers. Does that exceed the FLS offer and, if so, how will it be financed? Will Aer Lingus contribute money, in addition to the FLS moneys, to make up the settlement to each employee?
The electorate will be the workers of TEAM. The Deputy asked what percentage of the vote would be required. The concurrence of the workers means the concurrence of a substantial number. The letters of offer were sent to the employees two days ago so I do not know what the response will be. However, it will not be a collective arrangement where 51 per cent of the vote wins against 49 per cent. Each worker has a contract of employment so it is up to each worker to decide how he will proceed with the process. A substantial majority would be required. Obviously it will not be unanimous but we must cross that bridge when we come to it.
The Deputy asked if FLS would bring a development plan for each section of the business to TEAM Aer Lingus and outline how it would move the plan forward with guarantees of employment and so forth. The chairman visited me about one month ago and I informed him that I sought a plan such as the one envisaged by the Deputy. The chairman said he would come back to me about it.
With regard to the offer of £54 million, it is considerably more than FLS would be prepared to offer for the sale of TEAM.
How does Aer Lingus propose to pay for it?
I spoke to the chairman about three days ago by telephone and told him I would require a clear plan about how it would be financed. I have not received such a plan because the process has not reached that point.
Can the Minister say when and by whom the decision was taken to contemplate the end of the 51 per cent Government shareholding? The decision has not yet been implemented but it is accepted in principle. I am anxious to pursue the alternative proposals as I do not have the same faith as others in this buy out. Is the Minister aware of the fear of a situation similar to what happened at Seagate since 90 per cent of its business is foreign business? Is she familiar with the proposal for a three way arrangement which proposes to include an original equipment manufacturer — an OEM — in the two way shareholding that currently exists? Is the Minister aware Aer Lingus has said that unless 100 per cent of the company is involved there will not be a deal? Given that the Aer Lingus expanded fleet will cost £65.5 million and that that revenue should be kept as locally as possible, with a three-way arrangement, does the Minister agree there is a considerable question over the wisdom of the buy-out?
The only idea conveyed to me relates to the purchase by FLS. Deputy Stagg suggested employee purchase of the company vis-à-vis FLS purchase. That proposal has not been put to me although I have read about it in the paper.
I have no knowledge of a three-way option as referred to by Deputy Sargent. On who put forward this idea, the chairman of Aer Lingus asked to meet me in autumn of last year. He said consideration would be given to the sale of TEAM and it was thought there were several potential buyers. Some who were interested in the beginning backed out.
I agreed on several matters, but a conclusion was not reached. It has been reported that it is up to the board to make a deal if it has the concurrence of the workers, but I have come to no conclusion on the matter. Last autumn the chairman hoped to move forward in seeking a buyer for TEAM. It is now April and no conclusion has been reached. The workers have been written to and they have a fortnight from the day before yesterday to reply to Gerard Durkan in the Law Library. We will then see where to go from there. I wish to be clear on what I consider is a very important matter. A deal has not been done and no arrangement was made. There will not be a decision until I am aware of what the board thinks. I will put my interpretation on that and it will then go to Government. Nobody from the employees or any other grouping has signalled to me their intentions to purchase and I would be glad to hear them.
Are we putting the cart before the horse? I would have expected that the Minister, as the member of Government responsible for this matter, would first issue a statement of policy on what she wants to achieve with the aircraft maintenance business, which she currently owns, and her criteria in selecting a partner and that an audit of the suitability of FLS would be carried out. Is it unfair to expect the workers to make a decision by 21 April when they do not know the Minister's mind? They only have the view of Aer Lingus management on the suitability of FLS. The shareholder has not expressed a view or carried out an audit of FLS. I take the Minister's point she has come to no conclusion on the matter, but surely her conclusion and her policy thrust is crucial to the decision of workers rather than the Minister waiting for the workers' decision before coming to a conclusion. Even in the UK under the Tory Government before any privatisation was undertaken a White Paper was published on the policy implications and directions.
TEAM is a wholly-owned subsidiary of Aer Lingus. It is not a separate semi-State company. The Deputy referred to a policy paper on aircraft maintenance and an audit of FLS suitability. My Department prepared a very good document on FLS operations, from its beginning in the last century up to now. I have studied that and note that profits for last year were £17.5 million, which it forecast the previous year. A professional account was undertaken and I am satisfied with what that account of the company.
The Deputy referred to Tory Government privatisation, but I would prefer not to go into that matter because they made a mess of their approach to utilities. On whether the workers should know my mind, this is very much overlaid by the way the TEAM issue proceeded from 1990. In 1991 each worker received a letter stating that he had a contract of employment for as long as he wanted. Each person was named in the letter and the letters were personally addressed. That is a completely different matter from any other arrangement into which one might enter. It was in that context that the negotiations took place and letters were issued since last November. I received nothing in writing from Aer Lingus. I have monthly meetings with the chairman. Because the workers received a personal letter about a contract of employment I must consult each worker now.
As the owner of Aer Lingus and of its subsidiary, TEAM, the Minister seems to be badly briefed, not briefed at all, innocent or deliberately ignorant about the matters.
A question, please, Deputy Stagg.
Does the Minister agree with me on that?
No, I do not. I am too well briefed. I know too much.
Having examined the suitability of FLS, will the Minister examine the possibility of a buy-out by the workers? She should not make a decision on one matter until she has examined the other.
I would be very interested to receive a proposal from the workers. One does not usually chase after a proposal such as that.
It is a wonder some of them did not tell the Minister about it.
I have received no proposal from the workers about an employee buy-out.
That is amazing because people here know about it.
I am aware of it.
Let us be clear on this. I have received no proposal.
Is there a proposal from FLS?
I ask Deputy Stagg not to interrupt the Minister and I would prefer if the Minister did not respond to questions asked by way of interruption.
Deputies may interrupt, but I cannot respond.
Unfortunately, that is the position. I cannot allow Deputy Stagg to ask three or four supplementary questions when I have refused other Deputies permission.
I will ask the chairman of Aer Lingus to get this proposal and to give it to me.