Dáil Éireann díospóireacht -
Tuesday, 19 Jun 2001

Vol. 538 No. 3

Private Members' Business. - Aer Lingus: Motion.

Mr. Higgins

(Mayo): I move:

That Dáil Éireann:

recognising the success of the national airline, Aer Lingus, the company's proud record of quality service since the airline was established 65 years ago and the importance of the national airline to an island nation, condemns the Minister for Public Enterprise for:–

her failure to protect or promote the welfare of the company over the past four years;

her failure to promote a positive industrial relations climate within the company;

her total confusion and lack of vision as to the airline's role and future;

her decision to allow the company to be sold by way of a trade sale;

her failure to ensure that the Aer Lingus workers are made aware of the Government's intentions and calls on the Government to:

abandon immediately any plans to sell off Aer Lingus by way of a trade sale; and

make a clear statement as to what Government plans are for the future of the airline.

I wish to share time with Deputies Owen and Donal Carey.

The people of Ireland have a very strong attachment to Aer Lingus. Over the past 65 years, since the company was set up in 1936, it has carried the flag and the symbol of Ireland throughout the world. It is truly part of what we are. For Irish citizens, and the millions of people of Irish ancestry, the Irish diaspora, who use Aer Lingus to fly to Ireland, it is true to say that once the seat-belt is secure, you feel as if you have already arrived home. Aer Lingus has an unrivalled safety record. It has a permanent place in our concept of Irishness. As an island nation, it is also important to have our own national air carrier.

Aer Lingus made £60 million profit in the year 2000 and it employs up on 6,000 staff. This makes all the more pathetic the current paralysis of thought or ideas on the part of the Government as to where exactly the airline is and what exactly is the airline's future. Two weeks ago the Minister for Public Enterprise delivered the ultimate insult to our proud national carrier when it was announced that she was considering selling off the airline in a trade sale. Small wonder that the trades union movement reacted angrily by dismissing the Minister's proposal as tantamount to a basement fire sale. When questioned about the trade sale in the Dáil last Tuesday, the Taoiseach was adamant that an IPO is still very much an option. Therefore, the Taoiseach favours one option, which is clearly not a realistic prospect if he took the trouble to look at the situation or to listen to, or examine, the expert advice for which the taxpayer has already paid more than £700,000, and on the other hand the Minister for Public Enterprise clearly favours putting the airline on the market and allowing the highest bidder take over one of the jewels of the semi-State sector.

No previous Government, and certainly no previous Minister, has ever shown such abject disinterest in the national airline as the Minister, Deputy O'Rourke. For four years she has dithered while the airline has stumbled from crisis to crisis. In the past nine months alone, cabin crew have been on strike on more than one occasion. They closed the airline down on successive days, leaving 18,000 passengers stranded and costing the airline £2 million per day. Despite this, the Minister stood idly by. When the clerical staff paralysed the company, grounding flights and costing £2 million each time things ground to a halt, the Minister again donned the garb of a disinterested spectator. Baggage handlers and caterers all took industrial action at different stages, each time impacting on the airline's services, and again the Minister washed her hands of it. In addition, the pilots lodged a 70% pay claim in pursuit of parity with their colleagues in the One World Alliance and Aer Lingus management, which is one of the most costly sectors, lodged their own individual salary pay claim. While an uneasy peace has descended on the airline for the present, one must be apprehensive about how long it will last because there does not seem to be any comprehensive overall inter-locking strategy or agreement in place.

One also must be apprehensive of the fact that much of the disruption and industrial disharmony stems from competition within the airline between the two rival trades unions, IMPACT and SIPTU. I know of no other Minister, who has custody of one of the most important instruments of commercial life in a country, who has displayed such a manifest lack of concern as the company, which she controls and of which she is the major shareholder, was beset by such a myriad of problems as in the case of Aer Lingus. The Minister seems to have no clear focus and no vision of where the airline is going or what the airline's future should be.

On 12 June 2000, the Aer Lingus Bill was published. The explanatory memorandum, which sets out the thrust of the Bill, states that the purpose of the Bill is to provide a legal framework to enable an initial public offering of shares in Aer Lingus Group plc to proceed. The Bill duly passed all Stages in the Seanad and since then it has been grounded.

Each time we asked the Taoiseach and the Minister for Public Enterprise if the IPO was to proceed, we were assured that this was still the intention once the industrial relations problems within the company were resolved. The reality is that the IPO has never been a realistic prospect for several compelling reasons. First, the credibility of this Government, particularly of this Minister, to manage the flotation of a further State utility has been irreparably damaged by the debacle of the Eircom flotation.

Mrs. O'Rourke

What about Esat?

Mr. Higgins

(Mayo): Some 500,000 small investors were duped by the Minister into investing their savings or borrowings in the mistaken belief that there was a guaranteed crock of gold waiting at the end of the rainbow to be claimed. The shares were over-priced and over-sold. To date the bulk of the half a million small share owners, who did not sell their shares, are left licking their wounds and searching in their empty pockets. In spite of the proposed takeover by Valentia, the shares still languish at a pitifully derisory 1.27.

Second, the Bloomberg index of European airline stocks has shown airline stocks to be consistently weak. Stocks have fallen 20% on average. Both Lufthansa and Swiss Air stocks have performed very poorly. Indeed, Swiss Air continues to struggle to remain solvent. Even British Airways shares continue to see-saw, and the same has been the story with Alitalia, Air France and KLM.

However, perhaps the most relevant case history in this particular instance is that of Iberia. The Iberia experience should have taught the Government and Aer Lingus management that the IPO option is a rocky path, given the current market trends. The Spanish Government spent five years cutting costs and re-organising the airline to make it the second largest in Europe and one of Europe's most profitable carriers. Revenue is growing by almost 8% per annum. It is one of the most modern fleets among European carriers. In spite of this the Spanish Government was forced to cut the IPO price by 44%.

Apart from the slow-down in the US economy and the impact of FMD, for the first time in a decade transatlantic passenger numbers have ceased their upward spiral. It is quite clear that the IPO option is not an option, certainly not for the foreseeable future. The Government should make a definitive statement to this effect and cut out the shilling each way tactics being played between the Taoiseach on the one hand and the Minister for Public Enterprise on the other.

As regards the recently arrived trade sale announcement, the decision by the Minister to instruct her advisers, AIB and City Group, to search for buyers over the next month is absolutely ridiculous. The trade sale proposal should be debunked once and for all this evening. It is simply not on. A few months ago the value of Aer Lingus was conservatively being put at £500 million. Today, according to so-called informed Government sources, Aer Lingus is being valued at half that figure. Small wonder therefore that venture capitalists are lining up to pounce on the company if it is put up for sale. These should be more aptly named ‘vulture' capitalists as there is every likelihood that they will pick the flesh off the Aer Lingus bones leaving a much slimmed down skeletal operation.

Selling off the airline to another airline company does nothing to guarantee the future of Aer Lingus. Indeed quite the reverse could well be the case. Take, for example, the current speculation that 49% of Aer Lingus could be bought by British Airways and that this would overcome the bilateral agreement between Ireland the US which stipulates that the majority shareholding in the airline must remain in Irish ownership. While this would undoubtedly be an attractive prospect for BA it would certainly mean cutbacks. BA will not require many of the existing Aer Lingus staff. In effect, we are talking about many redundancies and early retirement packages. There is the very real prospect that Aer Lingus could well be reduced to a feeder airline merely feeding all transatlantic passengers through Heathrow.

I am not saying Aer Lingus does not have problems. It has major problems. However, these problems should have been addressed as they arose. Had they been confronted and dealt with then the paralysis of vision or ideas would not have sparked off the Minister's panic measure of putting the company up for auction. Aer Lingus has a financial problem. While it made a profit of £60 million in 2000 it looks as if this will fall to £15 million in the current year. The company is under-capitalised with substantial debts and a debt to equity ratio that is much too high. It is over-politicised. One can see immediately that people like Paddy Wright and Des Richardson have little, if any, aviation experience. They are Aer Lingus board members simply and solely because they are cronies of the Taoiseach.

The company has also been very adversely affected by a lack of continuity of senior management personnel. There have been three chief executives within the past three years. The last two cost the taxpayer £700,000. So many chief executives in such a short space of time is serious and unacceptable. The Minister seems intent on replicating Olympic Airways which had 29 chairmen between 1975 and 1999 with an average job expectancy of ten months.

Minister for Public Enterprise (Mrs. O'Rourke)

Is the Deputy referring to chairmen?

Mr. Higgins

(Mayo): How can there be any clear and explicit direction or development strategy with such a senior management staff turnover? Management at Aer Lingus is bureaucratic and over-centralised. Decision-making is increasingly concentrated at the top of a sharply pyramidal management structure and staff with good ideas are afraid to make decisions. What is needed in Aer Lingus is stable professional management working to clearly defined business aims. New managers with experience of the commercial world, focused on reducing costs, improving labour productivity and industrial relations should be brought in. If Aer Lingus is to survive, change is a prerequisite for survival. Aer Lingus has to be made fighting fit again but the trade sale option or the IPO option are certainly not on. The first is not on in either the short or long-term. The IPO option is a possibility if the airline is rejuvenated, properly capitalised and invigorated.

As regards the dismissal of former chief executive Michael Foley, the Minister's handling of the issue has been typical. The Minister parades herself around as the person taking credit for any success in the State sector and then stepping aside when the going gets rough. She left us with the clear impression initially that Michael Foley was hand picked by her yet she now disowns him completely just as she has almost disowned Aer Lingus by putting up the "for sale" sign.

Fine Gael is adamant that the Aer Lingus "for sale" sign should come down. The company has been one of the pillars around which this country has developed. It has stood the country in good stead over the years. It is still a very proud airline with an excellent track record. It deserves better than to be thrown to the commercial wolves. What it needs is encouragement, investment, management and vision. If it gets all four, I have no doubt that it will emerge from the tunnel, fit, willing and able to take on the best by playing its own unique strengths and availing of the commercial opportunities that undoubtedly will come its way.

Mrs. Owen

Am I sharing time with Deputy Carey?

An Ceann Comhairle

Yes, you have 23 minutes, Deputy.

Mrs. Owen

I wish to commend my colleague, Deputy Higgins, for tabling this important motion this evening.

From the early, scary, exciting days of the foundation of the company, Aer Lingus has been part and parcel of our national being. Whenever Irish people travelling around the world see the shamrock on the tail of the Aer Lingus plane they feel a little bit of home.

The Minister, as recently as February 1998, in a major speech on aviation policy in this House said:

Aer Lingus Good Commercial Performance in Recent Years:

Having successfully undertaken a major restructuring programme in the early 1990s, Aer Lingus has emerged stronger and better positioned to meet the challenges posed by the liberalisation and globalisation of the aviation industry. Consistent profits in recent years have demonstrated the extent of the turnaround in the underlying profitability of the company. This, from a company which only a few years ago had been faced with the worst financial crisis in its long history.

The Minister went on to talk about the sacrifices and implementation of the Cahill plan. That is what the Minister had to say in 1998. She is now giving the impression that she cannot fast enough get rid of this company from her hands, her Department and her responsibility. The Minister must take full responsibility for what has happened in Aer Lingus given what she had to say in 1998. We are tonight debating the selling off of Aer Lingus in a trade sale. I recently referred to it as a car boot sale. The value of Aer Lingus has already been peddled about as being less than the £500 million once quoted. It is now down to between £250 million and £300 million. No wonder, as Deputy Higgins said, people are sniffing around to see if they can achieve a cheap buy-out of the company.

As long as Fine Gael is around to stop the Minister's hand that will not happen. The 5,500 to 6,000 employees have given their lives to the development of this company. Many people in north Dublin lost their jobs or took redundancies when the Cahill plan was introduced in order to ensure the survival and growth of Aer Lingus. The Minister is the master of the disastrous situation facing us. As recently as 10 May the Minister, answering questions in the Dáil, expressed her commitment to implementing the Government's decision of 14 December in relation to the Aer Lingus IPO once the industrial relations issues were satisfactorily addressed. She went on to advise that the precise timing would be influenced by the conclusion of discussions on the shareholding for Aer Lingus employees, the enactment of the enabling legislation and market conditions. Despite this, she is today trying to suggest that the only solution to the Aer Lingus problems is a trade sale. Does she know what is happening to the companies under her aegis? Does she know what is happening in her Department? If so, how can it be that in such a short space of time, approximately three weeks after this advise to the House, she and the Taoiseach are giving conflicting messages about what is to happen to this company?

I raised the issue with the Taoiseach and he told me that the legislation introduced in 2000 would be before the House before the end of this session. The Minister has not briefed the Taoiseach, otherwise he does not believe her or he is dumping her in it. Is the Taoiseach pretending that the IPO is the only option? This approach is not only unfair to Members, it is especially unfair to the employees of Aer Lingus, many of whom have given a lifetime of service to the company.

There has been an upturn in Aer Lingus in recent years. The company had a profit of approximately £52 million in 1998 following an operating profit in 1997 which was diluted to a loss by share payments to staff. Nevertheless, there has been a steady increase in profits. The company has been attempting to adapt its package of products to the needs of today. The presence of Ryanair has helped to make the company more competitive and ensure that flight prices encourage people to use it. The company has won many awards, including the best transatlantic airline and the best airline award in a survey of business customers. In 1998 it was asked to look at a possible strategic alliance and a report was submitted to the Minister that year which made it clear that the long-term strategy of the company was to build sustainable profitability based on a market position as a differentiated, high quality full service added value airline providing direct and connecting passenger and cargo services to all of Ireland's major markets.

Great efforts have been made by Aer Lingus, which is not to say the company does not have problems, including industrial relations problems. However, every time Members try to raise these issues in the House the Minister has washed her hands of them by passing responsibility to the unions and management. The Minister is the shareholder of the company on our behalf and she cannot wash her hands of the problems in it. As a result of the failure to adopt a hands-on approach by the Minister and her Department to ensure that these problems are addressed with vision and management capability, the value placed on the company has dropped. I am very angry about that. It is regrettable that a company that was the jewel in the crown among public companies has declined in value during the Minister's term of office to such a point that people are now talking of a trade sale. It is disgraceful.

I will not stand over the sale of the company to a bidder, perhaps to an entrepreneur who has no interest in the airline business and who may gradually sell off parts of it. In a recent newspaper article it was speculated that the company would be divided up, with the transatlantic section sold to one buyer and the Europe section to another. That would mean we would have no national identity with the airline, which is needed. Other Governments have divested themselves of their national airlines but they have remained identified with the countries. Iberia Airlines is associated with Spain and Lufthansa is associated with Germany. I do not want someone to buy a bit of Aer Lingus and give it a new name with which we cannot identify.

I hope the Minister recognises the damage she and the Government have done to the workforce in Aer Lingus. They are demoralised and do not know what is happening. I spoke to a senior trade union official who has dealt with this issue but even at that level he did not know what is happening. The Minister has offered to meet the unions but they are seeking a full audit of the company's assets and value. They cannot get this information. When they receive it they will be prepared to meet the Minister but not on the basis of a trade sale. I urge the Minister not to press her amendment for the sake of the many thousands of people in the north Dublin region and the surrounding areas who get their living from Aer Lingus or who are in ancillary employment. She will regret it if she does.

How does the Minister propose to allow Aer Lingus to raise the capital investment of approximately £350 million which it says it requires? I understand the EU may not give permission for further investment. The Minister must find a way of ensuring it is available, through public-private partnership or whatever.

I received a letter concerning the Minister from the representative of the pensioners of Aer Lingus and Aer Rianta. There are approximately 4,500 in all and they include widows and widowers of pensioners who worked in both companies. The Minister had a high profile meeting with their representatives involving the Fianna Fáil element of the Oireachtas Members. There were many photographs in the local newspapers following that meeting and the impression was given by the Minister that she would be able to do something to address outstanding issues.

Mr. Stagg

There was a lot of humbug.

Mrs. Owen

That is correct. The Minister has washed her hands of the problems. In a letter dated 16 June, the secretary of the Pension Action Committee states: "Instead, in various replies to Dáil questions she tries to give an impression that a new scheme will address our problem but she knows that the management of Aer Lingus and Aer Rianta are steadfastly refusing to address the inadequate pensions provided to our members in their proposals for a new scheme." In another instance the Minister gave the impression that the IPO would provide an opportunity for this issue to be discussed. She knows that is not the case but she is trying to fool the pensioners, people who gave their lives to both these companies, into forgetting about the issue until after the next election and encourages them to vote for her party because it offers them some hope. The letter continues:

The Minister speaks about many representations, her meeting with us and our meeting with officials of her Department, again giving the impression that she is listening and acting on our behalf. The evidence is all to the contrary. She fails to record that these meetings and representations have had zero results and that our organisation has been forced to express our frustration in the bluntest terms.

This is what the pension action committee thinks of the Minister's actions. This is another issue the Minister has tried to abandon. I urge her to take more interest in the lot of these pensioners and to find a way of ensuring that they receive a pension for the rest of their lives. This is possible and the Minister can do it. The Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, found a way to give pensions to former employees of the sweepstakes after years of attempts to secure pensions. The Minister should find a way to do that in this area. I hope that, when the time comes, she will not push the amendment and she will accept the Fine Gael Party's motion.

Mr. D. Carey

I join my colleagues in supporting the motion and I wish to outline the experience of people in my constituency in recent days since the Minister's announcement of, as Deputy Owen called it, a car boot sale. It is a difficult matter to understand. If the Minister did not understand that the support of Aer Lingus employees was important, some of her advisers should have done so.

In Aer Lingus's last annual report, great emphasis is placed on the operation and financial review of the employees' share participation scheme. I fully support this scheme and it is a great idea because people should work. However, it is most disconcerting when people who are employed in Shannon ring to ask what is happening because nobody has told them. The trade unions and the management cannot tell them although the Minister announced that a sale will take place.

Regardless of the quality of the service provided in Dublin Airport, a quality service, such as the one provided by Aer Lingus in Shannon, is necessary for the survival of the airport. The Minister knows that the operating costs in Shannon are such that the service provided by Aer Lingus at present must continue. If there is a car boot sale, undoubtedly, there will not be the same confidence in a new company servicing an airport that does not have a sufficient population stock to ensure that it can expand or participate in profit-making parts of the company.

I remind the Minister that when Shannon was the only transatlantic airport, Aer Lingus operated a successful service to the United States and Dublin. The prices paid on the route were a little higher than the prices charged by other airlines, but the people on the western seaboard made a contribution to Aer Lingus and kept it going. I find it difficult to understand why the Minister would get rid of the national airline. I doubt there will be a national airline and if that is the case, there will only be irregular flights into Shannon Airport. The airport will be akin to Farranfore with only occasional flights. If that happens, tourism and other services on the west coast will reach the point where they are abandoned.

Aer Lingus has served Shannon well, although I was critical of some of its actions from time to time. For example, when it wanted to get rid of the airport's transatlantic status, it said aircraft would be parked in Shannon and that crews would live in the area. I ask the Minister to go to Shannon and count the small number of crews for transatlantic flights who now live there. Mr. Cahill is a great person to send as a front man. He illustrates his confidence with his double chin and he listens and takes in everything.

Mrs. O'Rourke

We all have double chins.

Mr. D. Carey

He must get a taste of reality because many people in the mid-west region depend on Shannon and its services. Industry in the area wants Aer Lingus to remain there. Other companies have come and gone, but Aer Lingus has remained because it is a national company and the national interest is at stake.

The State owes money to Aer Lingus because, in the past, when Aer Lingus and Aer Línte were separate companies and made substantial profits, the Minister for Finance took his lion's share of them. This money should have been used to update equipment in Aer Lingus and to provide better and more modern national services. Instead, Aer Lingus must hunt everywhere for capital. The amalgamation with American Airlines has worked well. In the middle of 2000, Mr. Bernie Cahill said everything was all right and nothing was wrong. In the flight packs at Christmas, the former general manger, Mr. Foley, said a major development was Aer Lingus joining the One World global alliance as a full member, enabling the company to provide its customers with access to a greater route network and significant frequent flier and lounge benefits.

There has been an amazing turn around in Aer Lingus's fortunes in a short time. How did the Minister not have any control over the situation? Why was there nobody in Aer Lingus to put up a red flag about the situation? People in Iarnród Éireann and CIE put up many red flags for the Minister, but apparently there was nobody in Aer Lingus to give her notice that matters had deteriorated. Some people have complained about industrial relations in the company, but, in the main, they have been good. I do not remember any industrial relations problems involving Aer Lingus staff at Shannon. It appears that when issues arise in Dublin, the Minister is unable to control them.

Regarding the IPO, the people advising the Minister about shares, sales and flotations should be changed because the Eircom flotation experience is enough to put everybody off. However, an IPO is the only way to go if the Minister is intent on taking that direction. I remind the Minister that the Minister for Finance took surplus funds from Aer Lingus and Aer Línte over many years when profits were made, particularly on the transatlantic route. This route through Shannon Airport kept Aer Lingus going, but it will be now left out.

I admire Aer Lingus for continuing bilingualism. It makes announcements on its flights in Irish and English and I admire the staff who continue that practice. Their actions show there is a separate Irish culture which is valuable and worth keeping. I ask the Minister to ensure that is maintained.

Minister for Public Enterprise (Mrs. O'Rourke)

I move amendment No. 1:

To delete all words after "Dáil Éireann:" and substitute the following:

"notes the Government decision of December 1999 authorising the Minister for Public Enterprise to initiate an Initial Public Offering (IPO) of shares in Aer Lingus;

notes the Government's decision was heavily influenced by the need to strengthen Aer Lingus' capital base and to position the company to prosper and grow against the background of radical restructuring in the global aviation industry;

notes that the company's trading position in 2001 has been severely affected by the impact of industrial unrest and the foot and mouth outbreak and increasingly by external market conditions;

recognises that, as a result, it will not be possible to complete the IPO in the near future;

commends the Minister for Public Enterprise for taking action to address the needs of Aer Lingus in its changing environment by having her advisers examine all sale options, in addition to an IPO, to ensure the company's future going forward and to report back to the Minister for Public Enterprise on their findings; and

welcomes the fact that arising from the Minister's recent discussions with unions, agreement has been reached on the resumption of negotiations on the increased shareholding of 9.9% of the company for Aer Lingus employees."

I thank the Fine Gael Members for tabling the motion. I propose to share time with Deputy Pat Carey at eight o'clock. As the House will be aware the Government authorised me in December 1999 to initiate a process leading to an initial public offering of shares in Aer Lingus. The IPO decision was the culmination of a process started by the then Minister for Transport, Energy and Communications, Deputy Alan Dukes, in 1997 when he mandated the board of Aer Lingus to explore the possibilities of the airline entering a strategic alliance with or without the transfer of equity and to submit proposals to the shareholder. In a reply to the Minister in early May 1997 the airline said it would commence this process.

The process involved a number of reports by the airline and independent advisers engaged by myself and the Minister for Finance, Deputy McCreevy. It resulted in Aer Lingus's entry into the Oneworld Alliance and after further analysis of funding related issues, a decision to proceed with an IPO of shares in the airline. The analysis undertaken by my advisers revealed that the airline needed funds to strengthen its capital base to take advantage of growth opportunities afforded by the alliance and to cushion against any industry downturn.

In addition to the capital needs, the Government's decision for an IPO was heavily influenced by how best to position a small niche carrier like Aer Lingus to prosper and grow in an industry undergoing significant changes arising from alliance consolidation, ownership changes, increased competition from low cost carriers and accelerated technological innovation. Following on from the Government's decision on an IPO, the advisers to facilitate the implementation of the IPO were engaged. The Aer Lingus Bill, 2000, to provide the legislative framework for the IPO was published and passed through Seanad Éireann last summer. Discussions were also initiated with the Aer Lingus unions on an increased shareholding of 9.9% of the company for the Aer Lingus employees in addition to their current holding of 5%. While significant progress was achieved, these discussions were suspended last summer as a consequence of industrial relations problems in the airline.

These industrial relations problems, combined with difficult market conditions, have delayed implementation of the IPO. A further influence on timing is Aer Lingus's performance in 2001. This will be seriously affected by the impact of the industrial relations unrest, the foot and mouth outbreak and, increasingly, by the softening economic conditions, particularly in the important US market. While the first two matters can hopefully be considered once-off, in relation to the latter there is some evidence emerging internationally of a downturn in aviation.

The above factors, when combined with the significantly increased cost base as a result of recent pay settlements and higher fuel costs, are likely to result in the airline moving into a loss for 2001 even if there is significant recovery in performance over the remainder of the year. Having regard to these factors and particularly their impact on the timing of the planned IPO, it would be irresponsible of me not to keep under review all options for giving effect to the Government decision to privatise Aer Lingus.

Strong and resolute decisions are required in relation to the future direction of Aer Lingus and unless these decisions are taken soon, less palatable choices could emerge which would not be in the interest of the airline, its customers or its employees. In this context, particularly the financial position already referred to, I recently asked my advisers to look at alternative sale options for the airline, take soundings of interest from potential investors or buyers and report back to me within a few weeks. This does not represent a U-turn by the Government nor does it mean that the IPO has been abandoned. The Government remains committed to the privatisation of Aer Lingus as the best option for the airline going forward.

It is appropriate, however, given all the commercial issues facing the airline and developments in aviation globally, that I and my colleague, the Minister for Finance, Deputy McCreevy, should review all possible options for the privatisation of the company. This is now being done. It is too early to speculate on the outcome of the advisers' work. If there is merit in alternative sale options, having regard to the report of the advisers and other relevant issues, a formal sale process will be launched at the appropriate time which will be open and transparent. The enabling legislation will also come before Dáil Éireann to allow any transaction to be undertaken.

I have apprised the Aer Lingus unions of these developments in recent discussions and agreement has been reached on the resumption of discussions with the unions on increasing the current employees shareholding up to 14.9% of the company. I inform the House that I had a very full meeting with the unions involved in the week before last and further meetings are planned, one for this Thursday with others to follow next week.

Aer Lingus is operating in an industry undergoing fundamental and dramatic changes and this new environment demands on-going and significant adjustment. It is clear that changes in consumer attitudes towards travel, combined with shifts in the economics of the airline business, are placing the traditional national flag carriers such as Aer Lingus under increasing pressure. Across Europe Governments have responded to these challenges by reducing or withdrawing from direct control and/or ownership of airlines. This includes BA, KLM, Lufthansa, Iberia, Air France, Alitalia, Swissair and Austrian Airlines.

In today's airline industry Aer Lingus needs the operational and financial independence and flexibility to equip itself against the various competitive forces facing the airline. This can best be achieved in the private sector.

Mr. Stagg

Rubbish.

Mrs. O'Rourke

This has been a very difficult 12 months for Aer Lingus arising from a combination of internal difficulties and external market conditions. In this industry, which is very vulnerable to external shocks over which it has no control, it is vitally important that the internal difficulties over which the airline has control are resolved speedily and effectively.

Mr. Stagg

The Minister created most of them.

Mrs. O'Rourke

I believe that management and staff will now quickly and jointly address outstanding difficulties and refocus on the needs of the business so that appropriate strategies can be adopted to allow the airline grow and prosper in a difficult trading environment, which is demonstrated by the latest statistics for all the major European airlines taken together as released by the Association of European Airlines. It reported a fall in passenger volumes for April 2001, the first monthly year on year decline since autumn 1991 when travel suffered because of the Gulf War. These figures incorporate a traffic decline of over 4% on the north Atlantic. The impact of this downturn has already been felt by all European carriers, including BA, Lufthansa and KLM, all of whom have recently reported deteriorating performances.

I regret that Aer Lingus has been in the headlines recently for all the wrong reasons but it is emphatically not in a terminal crisis. Let me put on record that I do not intend to let such a crisis develop.

Mrs. Owen

The Minister has not helped.

Mr. Stagg

The Minister created it.

Mrs. O'Rourke

That is why I am now looking at all options. Many Deputies will recall the last crisis in the early 1990s and the trauma involved for all concerned. Let me remind the House of some of the details. By 1993, and that was the year in which Labour and Fianna Fáil were in Government together, the group was losing £1million per week. Group debt was in excess of £500 million, shareholder funds had fallen from £443 million to £73 million, a cash crisis was looming and the banks were expressing concern.

Mr. Stagg

The Minister should just deal with her own business.

Mrs. O'Rourke

All this led to the Cahill plan which involved widespread restructuring including cost savings, rationalisation, disposal of non-core assets and a one-off Government cash injection of £175 million. There were over 1,200 redundancies and remaining staff agreed to changes in work practices and pay freezes – the consequences of which are still being felt by the airline.

Mr. Stagg

Now the Minister is selling them down the river.

Mrs. O'Rourke

I do not intend to preside over a Cahill plan Mark 2 and that is why I am, as I said earlier, looking at all options for the future of the airline. The question of State aid has also been raised. I would like to remind the House that on the approval of the State aid package, a commitment was given by that Government in 1993 to the European Commission that no further State aid would be given to Aer Lingus. Since that time it has been the position of all Governments that no further State funds would be made available to the airline and I do not intend to change that position.

Mr. Stagg

There is the bottom line.

An Ceann Comhairle

Order, please. The Deputy should cease interrupting.

Mrs. O'Rourke

Were the Government and I to revise our policy and go down that difficult and uncertain road, and seek EU approval for an equity investment on the basis that it did not constitute State aid, we would not only be subjecting the airline to intense EU, competitor and media scrutiny and criticism but, more importantly, even if eventual approval was received, we would be taking a very short-term view and depriving the airline of the financial and operational certainty so necessary in the modern aviation world.

Mrs. Owen

How does the Minister know that?

Mr. Stagg

Hand it over to Dermot Desmond and Denis O'Brien.

An Ceann Comhairle

Order, please.

Mrs. O'Rourke

No commercial company would wish to find itself in such an uncertain position given the wide ranging options for accessing other sources of funds in the private sector. It would certainly not be conducive to proper and prudent planning in this vulnerable industry. May I remind the Opposition that we did not sell any phone company to any one person.

(Interruptions.)

An Ceann Comhairle

Order, please.

Mrs. O'Rourke

There has been media comment, some of it inaccurate, concerning the impact of a change of ownership on Aer Lingus's international traffic rights.

(Interruptions.)

An Ceann Comhairle

Order, please. The Deputy will cease interrupting.

Mrs. Owen

The Minister has not found anything wrong.

Mrs. O'Rourke

I have them all. It is appropriate that I should clarify the position for the benefit of the House. The ownership and control of airlines is governed by the terms of the EU licensing regulation No. 2407 of 1992, and the terms of bilateral air services agreements. Under the EU regulation, airlines must be "owned directly or through majority ownership by member states and/or nationals of member states"—

Mr. Stagg

Is the Minister a eurosceptic or a Bostonian?

Mrs. O'Rourke

—to operate in the European Single Market while the terms of bilateral air services agreements stipulate that designated carriers must be "substantially owned and effectively controlled" by nationals or corporations of the State which designates the airline, or by the State itself. Irrespective of the method or timing of the sale of Aer Lingus, given the current international and national rules on airline ownership, Aer Lingus must remain in majority EU ownership to continue to operate within Europe and remain substantially owned and effectively controlled by Irish nationals or corporations to continue to operate on US routes.

Mr. Stagg

What about tax exiles?

Mrs. O'Rourke

I do not know anything about those but perhaps the Deputy does.

Mr. Stagg

The Minister knows well.

Mrs. O'Rourke

These nationality requirements are not a new development. They apply to airlines worldwide and have long been a key regulatory control in the aviation world. They are likely to continue to influence developments and relationships outside the EU until replaced by multilateral agreements which I believe will not occur for some time.

My advisers have already, in the context of preparations for the IPO, made recommend ations on mechanisms that would allow Aer Lingus to ensure compliance with nationality requirements following a sale. These mechanisms have been deployed in the privatisation of state controlled airlines in other jurisdictions. The purpose of these mechanisms will be to ensure that Aer Lingus can continue to be regarded as an Irish airline and thereby continue to fly to countries within the EU Single Market and to countries with which Ireland has entered bilateral agreements, of which the US is by far the most important. The House can be assured that irrespective of which sale option is chosen or whenever that occurs, the Government will ensure that appropriate arrangements are put in place to protect traffic rights. Despite a welter of negative and sometimes misleading comment and the difficult trading conditions, Aer Lingus is a good company with an excellent brand. It has an admirable record in customer service which can be regained if staff and management co-operate in meeting the challenges ahead and in providing a quality service at a competitive price.

It is to ensure that the company can build on these positives and, most importantly—

Mr. Stagg

The Minister is going to flog it.

Mrs. O'Rourke

—that it has access to capital to fund the new aircraft to take advantage of profitable growth opportunities and to rebalance its fleet to ensure a more cost efficient mix between owned and leased aircraft, that I am determined to move the company to the private sector. I am prepared to work with all interests to ensure the future of Aer Lingus.

Mr. Stagg

The Minister does not give a tuppenny.

An Ceann Comhairle

Order, please.

Mrs. O'Rourke

The way forward for Aer Lingus will be through partnership – partnership between Government, management and unions. To that end I have already had consultative meetings with the unions involved and arrangements are in hand for these meetings to continue.

Mrs. Owen

That is about share ownership.

Mrs. O'Rourke

I wish to inform the House that I have already had what I would regard as comprehensive meetings with the unions—

Mr. Stagg

About what, share ownership?

Mrs. O'Rourke

—about Aer Lingus.

An Ceann Comhairle

The Deputies will please allow the Minister to make her statement.

Mrs. O'Rourke

We now move to much more comprehensive meetings on this Thursday.

I wish to make two points. There have been various references to the chairman. Mr. Cahill has been appointed and reappointed by various Governments of differing hues, by Fianna Fáil by Fianna Fáil in coalition with the Labour Party and by the Fine Gael-Labour-Democratic Left coalition Government. The chairman has enjoyed the trust of people from various political parties in this House.

Mr. D. Carey

He does not want to come to Shannon again.

Mrs. O'Rourke

That is another matter. I wish to refer to the matter concerning Mr. Foley. This was raised by Deputy Jim Higgins who said I gave the impression that he was very much my man. I have only met Mr. Foley once, at a social function.

Mrs. Owen

It would have been a good idea to get to know him.

Mrs. O'Rourke

The chairman and the board sought out Mr. Foley and he came to Aer Lingus. A month later, I met him at a social function. I did not seek him out, as the Deputy said. I could not do that because I did not know him. It is not my role to decide who to appoint as the chief executive of a commercial company nor is it my role as the shareholder to decide how strikes will be settled. A favourite of Fine Gael among chairmen, Mr. Joyce, said that he resigned because I was taking an interest in the company of which he was chairman. That was CIE and, as it happened, I should have taken a much keener interest during that stewardship, as things are now arising.

There was a question why I did not address the issue of capital investment. Deputy Donal Carey spoke about flights to Farranfore. I wish to inform the House that Farranfore now has four flights a day.

(Interruptions.)

An Leas-Cheann Comhairle

The Minister without interruption, please.

Mrs. O'Rourke

The Deputy said Farranfore had an odd flight per week or some such remark. The final point I wish to address is the Shannon stop-over. When I came into Government there was ambiguity about the Shannon stop-over as to whether we would be resolute at European Council meetings about our particular stance. At the first Council of Ministers meeting I attended as a representative of the Government I made my position clear and I have continued to do so at every transport meeting at which that issue has been raised. I got somebody to look over the records and I find that it has been raised seven times in various ways seeking to push out the boundaries. The Government gave a commitment to retain the Shannon stop-over. I continue to give that commitment. I am glad that at a very important time when ambiguity was beginning to creep into policy making that I was on hand to ensure that continued.

I wish to share ten minutes out of my half hour with Deputy Pat Carey. The Ceann Comhairle agreed to that.

Mrs. Owen

Fair dues to the Minister for attending some of the meetings, not like some of the other Ministers who have attended two out of eight meetings.

An Leas-Cheann Comhairle

Please allow Deputy Carey.

Mr. P. Carey

I am pleased to have an opportunity to contribute to this debate. I support the amendment.

Mr. Stagg

Does the Deputy agree with flogging as well?

Mr. P. Carey

I am waiting to hear what the Labour Party has to say.

Mr. Stagg

The Deputy can hear it again and again.

Mr. P. Carey

We heard it again and again out in those bleak hangars at Dublin Airport not many years ago.

Mr. Stagg

In spite of the Deputy's party—

An Leas-Cheann Comhairle

Deputy Stagg will have an opportunity to contribute shortly.

Mr. P. Carey

The Deputy talks about euro-scepticism and so on. Some people in the Labour Party are late converts to any kind of a positive approach to the preservation of State assets but I will listen to what Deputy Stagg has to say and I will evaluate it.

Mr. Stagg

The Government will flog the company, come hell or high water.

An Leas-Cheann Comhairle

Could we have order, please?

Mr. P. Carey

The Deputy is in danger of becoming a caricature of himself. For goodness sake—

An Leas-Cheann Comhairle

Could we have order while the Chair is speaking. I ask Deputy Stagg to resist from interrupting and afford the same courtesy to Deputy Carey that he expects to receive shortly. If Deputy Carey addresses his remarks through the Chair he might not provoke the Deputy.

Mr. P. Carey

Merely by standing up I seem to be able to provoke one of the Members opposite. I would hate to do that. I do not like to see apoplexy setting in.

Mr. Stagg

There is nothing personal about it.

Mr. P. Carey

I welcome the statement by the Minister that the way forward is through partnership between Government, unions and management. Like a number of people here I represent—

Mr. Stagg

On a point of order. The Deputy is misleading the House by saying that. The Minister said she was determined to move the company into the private sector, not a partnership, holus bolus—

An Leas-Cheann Comhairle

That is not a point of order. The Deputy will have an opportunity to make his own contribution.

Mr. P. Carey

Like a number of other Deputies here, I represent a constituency that has a large number of airport and Aer Lingus workers who have worked hard to ensure Aer Lingus is the fine international carrier that it is. Like Deputy Owen I am not surprised they have won so many awards. I am deeply saddened that recently they have been beset by problems and those problems need to be overcome. I know from my discussions with the workers that they are determined to overcome the most recent setbacks even those at senior management level. Let us not fool ourselves. We need to look at how we can preserve the future of Aer Lingus in the context of a changing aviation environment.

Mr. Stagg

The Government is not doing that. It is flogging the company. It is amazing.

An Leas-Cheann Comhairle

Deputy Stagg, I will have to ask you to leave the House if you do not allow the Deputy to continue without interruption. You will have an opportunity to deal with those matters shortly.

Mrs. Owen

Did Deputy Carey read the Minister's speech? She said she is determined to flog it.

Mr. P. Carey

I am surprised that Deputy Owen has been so facetious. Of course, I followed the Minister's speech in great detail as, indeed, I followed the Deputy's contribution which I found worthwhile. However, she mentioned that the Minister had not been a hands on Minister. The Deputy would be the first person to jump up and down if the Minister was interfering in day to day business.

Mrs. O'Rourke

Yes.

Mr. P. Carey

In regard to Deputy Higgins's contribution I would hate to be an employee of Aer Lingus. I would hate to be a middle or senior manager in Aer Lingus because what I heard was damning with faint praise. I did not hear one solution proposed in the Fine Gael motion but I heard a good deal of reference to Iberia, Telecom shares and fire sales. I now know what Fine Gael is against but I am not sure what it is for.

Mr. Stagg

We know what the Government is for; it is for flogging the company.

Mr. P. Carey

The Minister has shown she is prepared to work with everybody to ensure that Aer Lingus thrives. I am pleased discussions have started with the unions over the expansion of the employees' stake in the company and I am pleased to note that further meetings will take place in the coming weeks with a view to increasing their stake from 5% to 14.9%. Participation is the way forward. Deputy Stagg may be a recent convert to the EU model of social partnership in which I firmly believe but the participation of workers is extremely important.

Mr. Stagg

After all we got all week, that is a bit rich.

Mr. P. Carey

Is it not great that the Deputy has so little to do that he can listen to us all the time.

Mrs. Owen

I would love to have been a fly in the wall when the Taoiseach and the Minister for Finance, Deputy McCreevy-—

Mr. P. Carey

The growing liberalisation of the European air transport industry in the early 1990s and the subsequent pressures on all airlines, including traditional national flag carriers, to operate in a truly commercial way led in turn to significant permanent changes in the market environment for airlines with the development of global strategic alliances and the emergence of low cost no frills airlines. We have seen that where there has been recession. On the basis of the September 1998 report, the Government accepted the Aer Lingus view that the airline should seek to participate in a major strategic alliance and authorise the company to enter into discussions with prospective alliance partner airlines with a view to obtaining proposals from those airlines. It also concluded that an alliance could involve an equity stake in Aer Lingus. The Government requested that the Aer Lingus board submit a report at the conclusion of discussions with prospective alliance partners in which it would make specific recommendations on the future strategic direction of the airline. The subsequent report submitted in April 1999 by the Aer Lingus board sought the approval of the Government to proceed with a major operation, a strategic alliance subject to satisfactory due diligence, etc. In July 1999 the consultants report supported Aer Lingus recommendations for a strategic alliance and concluded that the company needed additional capital to fund the growth opportunities. In July 1999 the Government approved an Aer Lingus proposal to oper ate strategic alliances with American airlines and British Airways. The Aer Lingus alliance includes extensive co-operation with British Airways on a range of issues including frequent flyer programmer, scheduled co-ordination sales and marketing. In addition to the significant benefits to Aer Lingus in participating in a major strategic alliance, the alliance also offers substantial benefits to travellers to and from Ireland.

I wish to mention an issue raised by Deputy Owen. Many of us have had conversations, and if my information is correct they have not been exclusive to Fianna Fáil people, with workers.

Mr. D. Carey

They have been exclusive to Fianna Fáil.

Mr. P. Carey

I happen to be a Fianna Fáil representative so it is hardly a criminal offence to do that. Meetings have taken place with the retired aviation service workers over a protracted period and various solutions have been explored. This is vitally important. Many of these people have taken early retirement but—

Mr. Stagg

They have not a notion of doing anything about it and the Deputy knows it.

An Leas-Cheann Comhairle

Please, Deputy Stagg.

Mr. P. Carey

I ask the Minister to be imaginative and creative in the way that the Tánaiste, Deputy Harney, was for the Sweepstakes workers. I do not know whether this is interference, but I suppose I had better give way to Deputy Stagg.

Mr. Stagg

On a point of information, the Deputy is not giving way to me. I have an entitlement to speak and I am taking the time to which I am entitled. I wish to share my time with Deputy Michael D. Higgins. The Labour Party amendment states:

To delete: "– make a clear statement as to what Government plans are for the future of the airline." and substitute the following:

"– recognise that the strategic role of Aer Lingus as our national carrier can best be guaranteed by the airline remaining in public ownership; and

enter into discussions with management and trade unions to devise an acceptable strategy for the future of the company."

I look forward to a bit of good heckling from across the floor; I do not mind that at all. I ask them to speak up a little because my hearing is not so good.

Mr. P. Carey

There will be a bit of dialogue from here.

Mrs. Owen

We can hear the noise of aeroplanes from over there.

Mr. Stagg

I thank the Fine Gael Party for giving the House the opportunity to debate this important and urgent matter.

Despite the current difficulties it is undergoing, Aer Lingus has been one of the outstanding successes not just of State enterprise but also of commercial life generally in this country and the Government is going to flog it. Since it was established in 1936, Aer Lingus has played a central role in the development of the economic and commercial life of this country, but they are going to flog it.

Without Aer Lingus, our tourism industry would never have developed to the extent it did and without the high quality reliable service it provided for both passengers and cargo, it is doubtful if this country would have been able to attract and sustain the high level of investment from overseas which has contributed so much to our economic development, especially over the past decade. However, Fíanna Fáil is going to flog it.

Apart perhaps from Guinness, Aer Lingus is probably the brand name most associated internationally with Ireland. That brand image is an important national asset as it has come to symbolise safety, high quality, efficiency and reliable service. It is a national asset that we should seek to enhance and protect and most certainly not to discard, but Deputy Pat Carey of North Dublin somewhere, supports the Minister in her determination to flog Aer Lingus.

Mr. P. Carey

The Deputy is as condescending as Professor Ronan Fanning.

Mr. Stagg

The air travel business is notoriously cyclical. There is hardly a major international carrier, private or state owned, that has not experienced major difficulties in the past decade. Aer Lingus has had its share of problems, most significantly in the early 1990s when it nearly came to grief. It was largely as a result of the commitment and dedication of the workers who made significant sacrifices that the company was put back on a sound footing. It has enjoyed a number of successful trading years since then, which have also seen the expansion of the fleet and development of new routes.

Aer Lingus has been misfortunate in having a Minister who is incapable of dealing with the complexities of her Department and is given to hare-brained, off-the-cuff and often contradictory statements on the direction and policy for the companies in her remit. This had led to damaging uncertainty.

Every time there is a difficulty, every time there is a hard decision to be made, every time leadership is required we get the same responses from the Minister, Deputy O'Rourke – find someone to pass the buck to, sell off the trouble some enterprise or, Minister's favourite, appoint a quango.

While this is going on the Minister, Deputy O'Rourke, sticks with the photo opportunities and late chat show quizzes.

Mrs. Owen

How is she getting on?

Mrs. O'Rourke

I have failed so far.

Mr. Stagg

What has she been up to? She sold Eircom to an unsuspecting public and left it holding the baby. She gave control of the energy sector and aviation to so-called independent regulators. These are people in the private sector with no democratic accountability and are given power that is given to this House by the public.

Mrs. O'Rourke

Deputy Stagg was part of a team that did that.

Mr. Stagg

I will never stop regretting that as I have said in this House on many occasions. The mistake is continuing and the Minister is continuing to hand over people's power to quangos outside this House at every chance she gets.

She threatened to sell the ESB, the Gas Company and Íarnród Éireann. The usual bribery of workers with share holdings did not work in these cases. She talked the Luas light rail project to death and it will cost £500 million to bury the corpse. She tried to hoodwink the aviation pensioners with baseless and false promises. This is a scandalous carry on.

In the case of Aer Lingus, she has prevaricated on its fate for the past four years. First it was to be retained and developed as a commercial State enterprise which would not be a problem. Then the privatisation fever infected our Minister for Public Enterprise and her true Thatcherite political position came to the fore.

Mrs. O'Rourke

It was Deputy Stagg's Government who started it.

Mr. Stagg

Aer Lingus was now to be privatised by means of an IPO, whereby shares in the company would be offered for sale. The full scale of the Eircom disaster was not yet apparent and the Minister intended to repeat the performance.

As Eircom began to unwind, the Minister, to protect her own political hide – and she is very good at that – began to cast doubts publicly on the IPO option but the fat consultants appointed by her continue with the IPO option.

The uncertainty created by this prevarication led to serious commercial and industrial relations problems for the company. The company was effectively prevented from pursuing its necessary investment programme and three chief executive officers have now come and gone during the Minister's reign.

Given the uncertainty created by the Minister, workers, through their unions, sought to protect their positions by lodging and pursuing claims for wage increases and better conditions. Despite the glamorous image associated with the airline business, the fact is that many Aer Lingus workers endure unacceptably low pay and relatively poor working conditions.

The Minister's inability to make a clear decision and to establish clear policy for Irish aviation has led to practically every problem now being faced by the national airline. What is her response to this disaster she has created? Let there be no doubt, she did create it.

Mr. O'Flynn

The Minister is not the chief executive.

Mr. Stagg

She will sell Cork Airport on if Deputy O'Flynn is not quiet.

Mrs. Owen

We are down to four flights a day out of Shannon and two out of Cork.

Mr. Stagg

She said she is determined to hand over all these to the private sector. Out of the blue, without warning or consultation and obviously without informing her Cabinet colleagues or the Taoiseach, she announced that the national airline, Aer Lingus, is to be sold in a trade sale. Tonight she confirmed that she is absolutely determined to flog Aer Lingus regardless of the conditions.

Fíanna Fáil, this great republican party, was now proposing that the strategically important national airline was to be dumped in a depressed market. It was to be subject of a glorified fire sale or monster car boot sale, all because the Minister is incapable or unwilling to deal with the crisis of confidence created by the Minister's own actions and confusion.

Within days of the Minister's cop-out trade sale decision, the Taoiseach intervened in the debate. Most unusually for the Taoiseach, he was clear and unequivocal. He said in the Dáil last week: "There will be no trade sale – the decision for IPO stands."

Mrs. O'Rourke

Did Deputy Stagg read the next sentence?

Mr. Stagg

The Minister goes into hiding and spends a week reading the tabloids to bring her up to speed on the issues of the day for a week long chat show quiz.

Mrs. Owen

And watching "Big Brother".

Mr. Stagg

In the middle of this crisis, the Minister spends a week reading the tabloids so that she would be able to answer questions on a chat show quiz. Are we not getting great value from this Minister? Maybe the Minister has found her true level at last.

Mrs. O'Rourke

Jealousy will get the Deputy nowhere.

Mr. Stagg

How are the national airline and other important State commercial enterprises under the remit of this incompetent Minister to behave in the face of confusion and conflicting indecision as to their future? They are now stranded in a policy vacuum. My sympathy also goes out to the excellent civil servants who have to operate without direction or leadership from this Minister in this section.

It is now clear that the Government strategy for dealing with Aer Lingus is in total chaos with the Taoiseach and the Minister for Public Enterprise publicly contradicting each other as to the Government's preferred option for the future of the company. We got more of that tonight. At a time when the airline is experiencing internal management problems and a downturn in the market and it needs clarity and consistency from the Government, what it is getting is confusion, contradictory statements and key Ministers at odds with each other. The lack of a coherent Government policy is posing as big a threat to the future of Aer Lingus as any of the other problems it faces. Beyond doubt, a trade sale would be the most disastrous possible option. It would leave it open to sale at a bargain basement price to a rival whose primary interest may well be its landing slots at Heathrow and which might well cut key routes or even sell it off altogether.

For an island nation, heavily dependent on tourism, an efficient, reliable national carrier is absolutely essential, but Fianna Fáil proposes to flog it. Aer Lingus has served the nation well for over 60 years and the prospect of the Minister for Public Enterprise, Deputy O'Rourke, preparing to hawk the company around the world, like some Molly Malone of the midlands, has filled both staff and customers with dismay. The Minister has placed Aer Lingus in an impossible situation and for every day she remains as Minister, their situation will only get worse. Her actions or lack of them have proved that she is not up to the task at hand.

No convincing case has been made for the privatisation of Aer Lingus. As we have seen with Eircom, once a company is privatised no control is possible over what then happens to it. The myth of large numbers of the public retaining small shareholdings in a privatised company is just that – a myth. The mobile division of Eircom is now in the hands of a British company and the fixed line division is about to end up in the hands of a small group of very wealthy, largely foreign, private investors. If Aer Lingus was to be floated, there would be every likelihood that it would follow the Eircom precedent and within a couple of months would fall victim to another predator airline or end up in the hands of a small number of wealthy investors. The only factor that would interest these people would be profit. No doubt, some of the Minister's colleagues would see nothing wrong with this. The strategic interests of Ireland, the needs of our tourism industry and the needs of our industrial or commercial sector would not figure on that agenda at all. We would find ourselves without a national carrier, with routes pared down to an absolute minimum and perhaps thousands of staff thrown out of work.

The Labour Party has taken a pragmatic but principled approach to the issue of privatisation. We have judged each case on its individual merits. We are not opposing the sale of the Irish National Petroleum Corporation and did not oppose the sale of the Trustee Savings Bank. Where there are convincing arguments that the interests of the consumer and the wider community will be served by privatisation, we will not oppose it, but we will not go along the road of ideologically driven privatisation, especially where this is likely to be to the disadvantage of the consumer and the wider community. This is most certainly the case with Aer Lingus. That is the reason we have tabled an amendment to the Fine Gael motion, seeking to delete the last sentence which simply calls on the Government to make a clear statement as to its future plans for the airline – which, as we now know, are to flog it – and substitute the following:

Calls on the Government to recognise that the strategic role of Aer Lingus as our national carrier can best be guaranteed by the airline remaining in public ownership and to enter into discussions with the management and trade unions to devise and acceptable strategy for the future of the company.

A Deputy

How would the Deputy make a profit?

Mr. Stagg

With the Government having so much money that it does not know what to do with it, financing fleet requirements should not be a major difficulty. We must also make it clear to the European Commission that our unique status as the only member state with no land link to the European mainland creates a compelling case for the State to retain and invest in our national airline.

Mrs. Owen

Some of the money for the Bertie Bowl could be used.

Mr. Stagg

If the Minister can get the European Union to agree to the funding of the purchase of buses for CIE, there is absolutely no reason she cannot allow the State to invest in Aer Lingus. I regret her change of policy to the extent that she is determined to flog Aer Lingus to whoever may come forward and divest Ireland of what has been a major flag-carrying commercial project for this country.

Mr. M. Higgins

I welcome the opportunity to speak on the present position in which Aer Lingus finds itself. In considering the Fine Gael motion, the Labour Party amendment and the Government's reply, it is worth considering the history of Aer Lingus to which the Minister made some reference. Her speech was an extraordinary mixture of paradox and contradiction in practi cally every page. For example, she said: "It is to ensure that the company can build on these positives, most importantly access to capital to fund the new aircraft, to take advantage of profitable growth opportunities and to rebalance its fleet to ensure a more cost-efficient mix between owned and leased aircraft." That does not require privatisation. There is nothing in any EU regulation which has impeded other air companies associated with states in the European Union from proceeding to fund aircraft and the rebalancing of fleets.

It is interesting to consider the background to the Minister's unwillingness to contemplate the possibility that the company might remain in State ownership. We are in the process of transferring what is left of the national telecommunications infrastructure to a private individual. I am amazed that, in this Republic, the thought has not occurred to many people that the two significant bidders for what was a State asset are both tax exiles. It is fascinating that people who are unwilling to accept the discipline of living in the country and paying their capital gains taxes and other taxes but decide to live abroad, become the new owners of what was previously a State asset. There is something morally reprehensible about the public acceptance of this as a kind of fact which cannot be disputed.

The same ethos guided the Minister's speech, in which she suggested time and again that what she is doing is for the purpose of giving security to Aer Lingus. She also mentioned that she has confidence in the airline and asked the staff to work together with management and Government to ensure the future of the company. That sounds wonderful, but how can she create an atmosphere in which that is possible if she is saying she is not yet sure to whom she is selling it? She is not sure of the value of the asset and every single action which she takes is devaluing it, almost in every sentence and every paragraph.

There is an extraordinary ideological confusion involved here. It begins with the prejudice that the State cannot be involved and moves to an assumption which is not validated anywhere. Through their taxes, people built up the State companies at a time when huxters were opposing them. The original State companies all encountered objections, as documented by Todd Andrews. The Sugar Company wanted to make galvanised buckets but could not do so because a huxter was producing them somewhere and the State could not interfere with private enterprise. That is the traditional thinking which is at the heart of the Minister's speech. There is nothing to prevent the State from being involved in replacing or leasing aircraft and renewing the fleet. Such involvement has happened all over Europe.

The Minister also spoke of certainty and the Cahill plan, which is a great achievement by the workers. She said: "The industry is undergoing significant changes arising from alliance, consoli dation, ownership changes, increased competition from low cost carriers and accelerated technological innovation." It is up to her to show that consumers would benefit from any changes which take place. What about the competition which is so superficial that it is, in fact, a disguised monopoly? I challenge the Minister to show what is happening in relation to the flotations to which I referred. If the flotation leads to a concentration of share ownership with no commitment to consumers, how can it be regarded as some great liberalising benefit to consumers, in this case air travellers? Nowhere in the Minister's 14 page speech is there one reference to the national economy or security benefiting from having a State airline. That is an important consideration. It is important to a country that relies on tourism for its economy and for an island country that relies on greater relationships with Europe, even though half the Cabinet seems to want to go to America instead.

Mrs. Owen

And the Attorney General.

Mr. M. Higgins

The Minister speaks of her certainty but at the same time she is asking her advisers to look at alternative sales options for the airline, to take soundings of interest from potential investors or buyers and to report back to her within a few weeks. As I child I drove cattle to Newmarket-on-Fergus and Sixmilebridge fair but one would not sell much if one was to operate like that nowadays. The Minister does not know the value of the company. Everything she does is to devalue the asset. It is little less than a cheap little bribe—

An Leas-Cheann Comhairle

Deputy Higgins, I ask you to move the adjournment of the debate. You have ten minutes remaining.

Debate adjourned.