I will call on the Deputies who tabled questions to the Minister for Public Enterprise in the order in which they submitted their questions to my office.
Private Notice Questions. - Aer Lingus Restructuring.
asked the Minister for Public Enterprise if she will make a statement on her strategy to allow an orderly restructuring of Aer Lingus in light of the initiation of hostilities in Afghanistan and the resultant impact on air travel; in light of the dramatic change in the scale of redundancies now being sought in Aer Lingus; and in light of the hardening of the EU Commission's attitude to state aid.
asked the Minister for Public Enterprise the action she will take to protect the survival of Aer Lingus in view of the threatened loss of 2,500 jobs; and if she will make a statement on the matter.
asked the Minister for Public Enterprise the information she has received from the board of Aer Lingus regarding the actions needed to save the company; the steps she has taken to make a case to the EU Commission for aid for the company; and if her attention has been drawn to the devastation that will be caused to the thousands of families if there are 2,500 job cuts.
asked the Minister for Public Enterprise if she will make a statement on the Government's plans for the future of Aer Lingus in view of the Cabinet meeting held on 9 October 2001 and the meeting of the board of the company held on the same day; the proposals she has to involve the trade unions and workers in a rescue effort so that the future of the company can be guaranteed and a maximum number of jobs saved.
(Mayo) asked the Minister for Public Enterprise the steps she proposes taking in order to avert the loss of 2,500 jobs announced by Aer Lingus following the Aer Lingus board meeting this afternoon; and if she will make a statement on the matter.
asked the Minister for Public Enterprise if she will make a statement on how she proposes to ensure the long-term viability of Aer Lingus.
(Dublin West) asked the Minister for Public Enterprise if she will confirm that up to 2,500 job losses are being sought by Aer Lingus management.
asked the Minister for Public Enterprise her proposals to secure the future of Aer Lingus in view of the announcements made in Brussels on 10 October 2001.
I propose to take the questions together and in the time remaining will answer individual questions.
The board of Aer Lingus met yesterday, 9 October, and was updated on the current state of the industry, the trading position of Aer Lingus and the plan being prepared by management to address the serious issues facing the company. I understand the plan will be finalised within the next week and the following week it will be submitted to me. As of today I understand staff and their representatives are being provided with a full briefing on the matter. The chairman has given me an outline of the grave situation facing the airline. Aer Lingus is losing £2 million per day and is therefore haemorrhaging cash. Without action the company will run out of cash early next year and is forecasting a loss of £74 million in this year and losses of £120 to £130 million in 2002.
As a result of the events of 11 September, bookings, particularly on the transatlantic flights, have been dramatically reduced. Recovery next year is difficult to predict given the uncertainty about the US military situation. Without urgent action the company will be insolvent within a short period of time. Let me be perfectly clear, what is at stake is the survival of this company.
The chairman believes, and has told me so, that there is a need for a reduction of 2,500 people in the workforce. I regret that this should be necessary. As I said in the House on 4 October last, one of my key aims is to protect the maximum number of sustainable jobs. That means taking action to ensure we will have an airline, fundamentally restructured, which will have a basis from which to grow in the future when markets improve.
In relation to State aid, I already outlined on 4 October last that I had discussions on the current difficulties in the aviation sector with the European Transport Commissioner and my Belgian counterpart who is currently President of the Transport Council. The financial state of European airlines and the question of compensation as a result of the events of 11 September will be discussed at the next meeting in Luxembourg of the Transport Council next Tuesday. At that meeting, I will seek to ensure that, at a minimum, European airlines are not disadvantaged in relation to their US competitors.
I will also meet the French Transport Minister, Jean Claude Gayssot, in Dublin on Friday. I have already spoken by telephone with him concerning the issue and intend to have a meeting with him after he has concluded his seminar.
The US Government responded quickly to the serious difficulties of its airlines and significant amounts in assistance have already been paid out in recent days. In the case of one airline, Delta Airlines, a competitor of Aer Lingus on the transatlantic route, this amounted to almost US$327 million. In line with that I wish to tell the House that in the Department today Doreen Keaney accessed the Internet and found two airlines who are operating transatlantic into Ireland. Continental received almost $200 million from the US Government in direct aid and Delta Airlines received almost $326 million. In the Irish Independent today Delta Airlines was reported to be offering return fares to New York at £118. When they talk about the distortion of the EU market, it is my belief – I will state these matters very clearly to the Commissioner next week – that money given by the US Congress directly to those two airlines who are operating direct flights between the US and Ireland distorts the market hugely. I understand that Delta will shortly make a further announcement.
I will be calling for an urgent response to address the European airline industry's difficulties in these exceptional circumstances taking account of the need for a level playing field on the transatlantic route. In adopting my position, I will take into consideration the plan submitted by Aer Lingus, the strategic interests of Ireland as well as the fair competition issues.
I am fully aware of the importance of direct transatlantic links to the Irish economy and their contribution in recent years to the tourism industry as well as the manufacturing and services sectors. These links are crucial for attracting US tourists and facilitating business traffic. I will also be pointing out that the transatlantic aviation market is proportionately more vital to the Irish economy than it is to the economy of any other EU member state. This case is greatly strengthened when one takes account of our small population and our island status. In support of this case, Ireland ranks seventh among the 15 EU countries in terms of passengers carried on direct routes to the US, Aer Lingus accounts for 70% of that direct Ireland-US traffic and the transatlantic routes account for up to 60% of Aer Lingus's profits – when it was making profits. These three simple facts demonstrate why the impact of the events of 11 September were so severe on Aer Lingus and why direct links with the US are a matter of strategic importance for Ireland.
I wish to comment on the question of the Shannon transatlantic policy which has been raised in public in recent days. Government policy on Shannon remains unchanged. It should be obvious that a viable future for Shannon is dependent on the survival of Aer Lingus. Government policy is that both Aer Lingus and Shannon survive as viable entities going forward. I will now take individual questions.
I will enthusiastically support the Minister in any possible way in this campaign. What position was put to the Commissioner last week with regard to State aid and what was her response to the model of support that was sought? Does the Minister reject out of hand the reported position of the EU Commission in regard to State aid which we heard today limits it to compensation for just three or four days of lost business? Does the Minister reject this as being an incorrect interpretation of the stated EU guidelines in regard to State aid which permits restructuring in exceptional circumstances, a point which the Commissioner does not appear to have taken on board?
What form of package does the Minister envisage and what will be the elements for which approval will be sought when the Minister meets the Commissioner?
I thank the Deputy for his statement of support for the plan that will be put forward, it is much appreciated. When I spoke to the Commissioner I explained Ireland's position and having listened carefully she said she would make a statement in addition to Commissioner Monti, which they did today and to which the Deputy referred. As the Deputy said, it is restricted in that they both talk about slots, security, safety, insurance, the four days and arising out of the four days the damage suffered by the airlines. She then goes on to respond to questions from the press, one of which referred to Sabena – I do not have the press cuttings here – and the fact that the Government had made bridging finance available for one month. She talked, inter alia, of limited Government backed loans to an airline company in the event that it could prove it had a particular case which would stand to be considered under the exceptional circumstances. That is a follow-on from earlier matters. I have just got this statement in the past 20 minutes and, obviously, Deputy Seán Ryan has also read it. They are the two measures which she and Commissioner Monti are adopting. There will be a full agenda of items to be discussed next Tuesday.
On Wednesday the Taoiseach will go to Brussels to meet the Commission on a general statement but obviously Aer Lingus will be mentioned. I have spoken to Commissioner David Byrne. I will meet the Irish Ambassador to the EU, Ambassador Anne Anderson, at 6 p.m. and will outline what I intend to say next Tuesday. In turn she will be speaking to her colleagues.
What are the dimensions of that?
I would prefer if the Minister did not answer interruptions. There are eight Members who have submitted questions.
That is the question. What will the Minister tell the ambassador?
I am going to say that Ireland has an exceptional case as Ireland is an island nation. I have all the facts, which my very diligent staff have found out, about competitors in the US and what they have obtained in direct grants from the US. I will explain exactly what percentage of Aer Lingus's business is transatlantic and that an island nation needs to have, for strategic purposes, its own airline.
The Minister wanted to sell it a few weeks ago.
Will the Minister agree that the announcement made today by the Commission is only peanuts in relation to funding and support for Aer Lingus or any of the national carriers and that no consideration has been given to the damage caused due to the falling passenger numbers? What case does the Minister intend to make to the Council of Ministers? Is it only in relation to redundancy or a viability package as put forward by Aer Lingus? What specific approval is the Minister seeking from the Commission? What discussions have taken place with her Belgian counterpart who will chair that Council meeting? With how many of her Council of Ministers colleagues has she been in direct contact? What type of support has she received from those individuals in relation to the case put forward on the floor of the House? Will the Minister agree that the Belgian Government has been prepared to put its neck on the line and support its national carrier? Will she agree that the same should have happened here and that she should support our national carrier to ensure its future viability?
I met Ms Isabelle Durant who is the Belgian President of the Council of Ministers last Monday week and we had a long conversation. Each Minister is concerned with his or her airlines but, obviously, they are interested to hear what each person has to say. I will meet the French Minister on Friday with whom I will have a full conversation. I will go to Brussels on Monday to attend a telecommunications Council of Ministers meeting but I intend to use Monday afternoon and Monday evening to have bilateral meetings with each of my colleagues. The Deputy asked how the Belgian Government was prepared to be up-front in seeking aid. The Commissioner, Ms De Palacio, was asked that question today at her press conference and she said the reason for that is that Sabena was about to be grounded, it was within a day of going bankrupt. I do not propose to allow that to happen to Aer Lingus.
I repeat the question asked by Deputy Bruton and perhaps the Minister will reply. What is the Minister's view on the statement we have all seen that the only areas in which she will be allowed to involve herself relate to supporting insurance premiums, extra security costs and direct losses due to 11 September? Is that a false statement, is it a statement we can ignore? If the Minister agrees with that statement she may as well not go to the meeting next week.
What discussions have taken place about the loss of 2,500 jobs and the payments that will be made to those people if that is the figure that has to be arrived at? Will there be only the statutory redundancy payments or will there be extra payments? Many of these people have worked for many years in Aer Lingus, have been responsible for its growth and success and are now to be thrown out by the Government. On 16 October will the Minister for Finance, Deputy McCreevy, who will attend the ECOFIN meeting, sing off the same hymn sheet as the Minister at the transport meeting or will something different be said to the economic and finance Ministers? Has the Minister had an opportunity to involve the Minister for Enterprise, Trade and Employment, Deputy Harney, in the discussions taking place given the huge damage that will be created in the constituency of Dublin North and other areas? Some of the Minister's colleagues from constituencies north of the Liffey are present. What discussions has she had with the Minister for Enterprise, Trade and Employment, Deputy Harney, to begin preparations to provide work for these people in the event of this number of jobs being lost in that area?
I have had discussions with my colleague, the Minister for Enterprise, Trade and Employment, Deputy Harney, who is extremely concerned. Indeed all Deputies in front and behind me are extremely concerned about the matter. The Deputy will appreciate that concern is not only on one side of the House. The Deputy asked if the Minister for Finance, Deputy McCreevy, and I would sing from the same hymn sheet. He will be at one meeting and I will be at the other.
That is what I am afraid of. Will he go to the same—
Allow the Minister to reply without interruption.
The Deputy asked about the redundancy packages. As I understand it, the management and all who work in Aer Lingus are talking together and going through all the details. That work will continue tomorrow. The size of the package will be eventually negotiated. That is not for me on the floor of the House, that is for negotiation between management, unions and workers. I welcome the question asked by Deputy Quinn today, if the Taoiseach would consider the inclusion of ICTU in working through the proposals. I understand that Dermot McCarthy, chairman of the National Implementation Body, and ICTU have been talking together. I expect those details would be worked through at that level.
The Minister did not answer the question I asked about the statement made today.
The Deputy asked if I considered it adequate. She then said I should not go to Luxembourg.
I want to know that the Minister is discrediting what is in the newspapers.
I do not intend to discredit people.
Is that the truth?
If I am to make my way through a very difficult process I do not intend to discredit anybody. I intend to work my way through it, tackle it and manage it. By discrediting people I would not add anything to my cause.
(Interruptions.)
I call Deputy Stagg. Deputy Owen will have another opportunity, I hope.
Is the Minister giving credence to the notice we got at 11 o'clock today?
I did not write it. It was written by the Commissioner.
I welcome the sea change in the attitude of the Minister towards Aer Lingus from that a few weeks ago when she wanted to flog it to anybody who would buy it. Is she specifically rejecting the very limited Commission proposal – if so, I can assure her of my support – which would result in the collapse of Aer Lingus and the loss of 10,000 jobs in Cork, Shannon and Dublin? Will she now formulate a Government response to the Commission's proposal for inclusion at both the Transport Council and ECOFIN Council, thereby ensuring that the Minister, Deputy McCreevy, is on board? We have serious doubts in that regard given his hostility not just to State aid but to State enterprise. We want to ensure he does not pull the rug from under the Minister when she attends the Transport Council and he attends the other Council.
Why did the Minister, her Department and the management of Aer Lingus exclude the unions representing the workers of the company from the preparation of the plans which we understand are in place to deal with the crisis? Will she accept the workers and their families will suffer most arising from a crisis which was not of their making, that they have an absolute right to be involved in the preparation of plans for their future and that they have been treated with contempt and are being presented with a fait accompli by management, the Minister and her Department?
The Minister got all her advice from the pilots.
I do not know any pilots, but I wish I did.
(Interruptions.)
I never spurned a union member or a worker.
The Minister did not let them into the talks in the last two weeks.
Deputy Stagg should allow the Minister to reply to the question.
I certainly met them. Since then I have spoken continuously to them on the phone.
The Minister should have spoken to—
(Interruptions.)
I can only outline for the Deputy what I have done.
The Minister should address her remarks through the Chair.
I have every confidence in my colleague, the Minister for Finance, Deputy McCreevy, that we will formulate a Government response for next week's events. He will be attending the ECOFIN Council and I will talk very intensely with him. When the issue arose at ECOFIN a month ago, I heard Deputy McCreevy say clearly on television that was now the issue but there would be further developments in a month's time, which will be up next week. I spoke to him about the issue the following week and I will be talking to him again at the weekend during the Fianna Fáil Ard-Fheis.
(Mayo): Will the Minister agree that the announcement by the Commission today in regard to the restrictions on the amount of finance that can be made by member states is a minimalist approach and will do nothing to address the crisis in Aer Lingus which is of a much broader dimension? Will she agree that the European Commission decision is ill-timed and pre-emptive and is designed to pull the rug from under the Minister and her Transport counterparts who are meeting next week? In other words, it is saying “This is it, we are doing this by diktat”? What kind of collective xenophobia is afflicting the European Commission which cannot see there has been a change of policy, a U-turn, on the part of the United States which is giving £327 million to Delta and £200 million to Continental Airlines flying into this country while Europe dogmatically decides it will not do a U-turn? Can the Minister and her counterparts at the Transport Ministers Council meeting next week collectively overturn the Commission's decision or is it the bureaucrats or their so-called political masters who are calling the shots?
The Deputy has asked again about the Commission's decision. There are two Commissioners involved, the Commissioner for Competition and the Commissioner for Transport. I do not consider this statement meets Irish requirements which I will outline clearly when in Luxembourg on Tuesday. I will outline clearly my position on our special status and the moneys provided to Delta and Continental Airlines. I intend to make our position very clear and to bring forward the plan for the restructured Aer Lingus at the Council of Ministers. I will then make my case based on the restructuring of Aer Lingus.
Will the Minister direct some comments to Cork airport about which I am concerned? As she will be aware, Cork does not operate a transatlantic route, nevertheless flights from Cork will be affected by the downturn in the airline industry. I have seen today's report from the European Commission which offers no element of comfort to Cork airport. Will the Minister indicate how she proposes supporting jobs in the Cork region within Aer Lingus? What proportion of the 2,500 jobs under threat will be in the Cork region?
The Deputy said the Commission's statement did not take account of Cork. This statement was of a general nature and did not refer to individual countries or airports. On the number of jobs under threat at individual airports, these details will be worked out in the next two or three weeks between management and all the workers in Aer Lingus.
(Dublin West): Has the Minister for Public Enterprise any realisation that the proposed destruction of 2,500 jobs mooted by the board of Aer Lingus is tantamount to the destruction of the national airline as we know it? Does she agree it would mean the dismemberment of virtually all the different sections including the outsourcing of all services, perhaps keeping cabin crew and pilots, which would undoubtedly be flogged off down the line? Does she not understand that this will lay waste communities in north and west Dublin, Shannon and Cork? Will she tell the truth about what is involved, that is, that the international aviation industry is cynically using the atrocities of 11 September to carry out massive rationalisation of hundreds of thousands of jobs, which they wanted to do prior to 11 September, but could not do so for political reasons in the various countries? Does she understand that the EU Commission is part of the conspiracy because it wants to privatise all the nationally owned airline carriers, and this is the opportunity for it to push through this policy which it could not politically get through heretofore?
Will the Minister wake up to what is going on or is she prepared to stand up for the interests of Irish workers and the Irish population in this instance? Will she admit it is incredible that a mere four weeks following the atrocity we are witnessing the virtual destruction of the national airline on the basis of the drop-off in transatlantic numbers and the projected losses for two or three years? What about a development plan to increase the numbers in a very short time, which will inevitably happen? Does she understand that since low fares were advertised two days ago Aer Lingus cannot cope with the massive bookings? The Minister referred to the downturn in bookings. Is she aware from the board of Aer Lingus that the airline cannot handle the volume of bookings and, therefore, it is entirely possible to put the national airline on a viable footing as a nationally owned entity if there is a will and a plan?
Will the Minister agree that the main threat to Aer Lingus as a viable, state-of-the-art publicly owned company is not the events of 11 September or the EU Commission but her Department, the most senior officials in which do not want to maintain Aer Lingus in public ownership? They want to see it privatised and are prepared to use any excuse to bring that about. Is the Minister aware that one of them stated publicly that the problem with the State putting money into Aer Lingus is not the EU Commission but because it is a foolish thing to do and that the national airline should be privatised? Will she agree that if the Government is not prepared to give the necessary resources to Aer Lingus in investment or loans to tide it over this difficult time and to lay the basis for full recovery that it will be responsible for and complicit in the sabotage of one of our most vital national resources and the sabotage of the lives of workers and the communities in which they live? I hope Aer Lingus workers, their families and communities rise up against the Government to compel it to invest the necessary funding, irrespective of what the EU or those in favour of privatisation say.
I repeat some of the facts I gave previously. The airline is losing £2 million per day. All the unions and advisers whom the unions have engaged have full access to the books which show this figure. The figure was not invented by me – it is a fact.
When did you give them access to the figures?
Since when have they had access? I spoke this morning to—
That is happening today. I checked with Aer Lingus before coming to the Dáil and it is well able to cope with bookings. It is glad the European routes have shown a surge in interest, but the American routes have not shown such a surge as yet. The American people will not travel. Aer Lingus has lowered its fares to £169 to New York, less than one third of the fare during the summer, and people still will not travel.
(Dublin West): They will travel when their government stops bombing Afghanistan.
Please allow the Minister without interruption.
Deputy Higgins had a great run. I and the Government want Aer Lingus to survive, and it appears there is cross-party support for this. I will not propose that Aer Lingus should survive in a state which would leave it in the same situation in six or nine months time. It cannot continue to lose £2 million per day. It will make every effort to get bookings and to encourage people to travel. It can well cope with bookings they are getting. Regarding the idea that people in the US and here are being put off travelling, I wish they would take to the air and again take up the travel habits which they previously enjoyed, but that is not happening on the transatlantic routes.
(Dublin West): They will do so when the bombing stops.
I do not accept that the document which came from Brussels this morning must be accepted by us. Neither do I accept that there must be 2,500 job losses. The Minister led us to believe that the viability plan has not been finalised by the board. However, if that is so I do not know how the workers had access to it today. Secondly, she said it would be presented to her on Saturday or Sunday and that it would be brought to Brussels on Tuesday. We all remember the very difficult period in the early 1990s and the Cahill plan. Notwithstanding the reservations, does the Minister accept that one of the successes in bringing about a resurgence in Aer Lingus at that time was the involvement of the trade unions and the workers? In that context will she accept it is totally illogical to bring a viability plan to Brussels without any consultation with the workers? Will she now agree to discuss the document? I do not believe there was any meaningful document to discuss today.
In the context of the exceptional circumstances which have existed since 11 September, is the Minister or the Government prepared to go to Brussels on Tuesday and to have a showdown with the Commission? Will the Minister accept that existing policy can be changed? It is not the bureaucrats who will bring about that change but the political leaders. Will the Minister give a specific commitment that she is prepared to go to Brussels and, in the interests of workers, the regions and of north Dublin in particular, ensure the policy is changed if necessary?
I will certainly go to Brussels in the interests of workers, the company and of Dublin. I do not believe a showdown is the way forward. The alliances I have already begun to form and the presentation I will make will, I hope, lay the foundation for our case to the Commission. I will speak in favour of the workers and of keeping the company viable. I want Aer Lingus to remain in operation. The financial situation of the company is extremely perilous and it will very quickly become insolvent – within the next few months according to the chairman – if there is no restructuring. If that occurred, we would be here discussing what happened. I am not prepared to allow that happen, but I am prepared to put my case strongly in Brussels. However, in no circumstances is a showdown with the Commission the way forward in terms of getting the result we want.
It may be necessary.
The Minister is aware of the anxiety in Shannon Airport, Aer Lingus and the region in general at the evolving situation.
She did not mention it in her speech last week – Shannon was excluded.
That anxiety has brought people from Shannon to the House in order to emphasise to Deputies the seriousness of the situation and their fears.
The Minister will also be aware that in the context of aviation in Europe she has some latitude in terms of peripherality of airports such as Shannon Airport and in terms of public service obligations through which Shannon Airport could be assisted given that it would be more directly affected than any other location because of its reliance on transatlantic business. I have already written to the Minister and again ask her to establish a Government committee or task force, or a subsidiary of the current task force, to look specifically at the mid-west region to see how the impact can be assessed and minimised, and that this be done as soon as possible.
I noted the press briefing given today by Commissioner Monti in which an Irish journalist asked about the Shannon stopover and if the current situation would be used to press home the immediate need to do away with the stopover.
Those were not the exact words but they indicate the underlying thread. She clearly said that was what she would wish. She has raised it at least twice a year in the past four years. On the last occasion in December, I was the only dissenting member of all the member countries. However, she said that it would require the mandate from the 15 members before she could proceed with it and it was the members who made the decisions. Deputy Daly wrote to me and to the Minister, Deputy de Valera, as did Deputy Killeen, and other Deputies have also strongly and unremittingly pressed the case for Shannon to me.
It is only the Fianna Fáil Deputies who have names, the other have none.
I did not hear from Deputy Donal Carey. I was being kind in including him.
The Minister will hear from me in a few minutes and it will not be complimentary.
Deputy Daly wrote to me and to the Taoiseach. We had a conversation with the Taoiseach about it. An economic task force under the Cabinet is reviewing the fall-out from what happened on 11 September. Deputy Daly asked for the insertion of a subsection dealing with the Shannon region.
In the Aer Lingus board's restructuring plan, will the Minister ensure that Shannon will not have to bear disproportionate cuts in jobs and flights and become the Cinderella of Aer Lingus, bearing in mind its vital role in western development? In view of her most recent statement that she is going to Europe not for a showdown but in the interests of Aer Lingus, the workers and Dublin, there is no wonder that the people in Shannon would have serious anxiety. I want the Minister to ensure there will be no disproportionate shedding of jobs or flights throughout the company.
They have already done it. They have closed Shannon down and there is not a screed out of the Minister.
I answered Deputy Seán Ryan's question directly in relation to the workers in Dublin. That is the term he used to me and I was answering the question he put to me for the area he represents. I accept Deputy Burke's concern about Shannon. I have unremittingly pressed the case of Shannon in Europe, so much so that every other Minister around the table knows that when the open skies issue is raised, I will speak up about Shannon. I cannot give a guarantee about jobs at any particular airport, but I will go to Brussels to speak about Aer Lingus and its workers.
In relation to Shannon, who said the rabbits would run over the runways of Rineanna? It was Deputy James Dillon in his day.
I welcome the commitments made today by the Minister and the Taoiseach to the survival of Aer Lingus, which is the real issue. I ask the Minister to use every legitimate argument and every arm of Government to maintain as many jobs as possible in Aer Lingus.
My aim is to stop the haemorrhage of job losses, keep the company viable and present a restructured airline in the plan, keeping as many sustainable jobs as possible. Aer Lingus is doing its best to continue to trade through its difficulties, hence the seat sale it has advertised, and I hope it will be able to follow that up with more. I repeat that it is in a very perilous financial state.
Why does the Minister continue to mislead the House about her concern for Shannon? Why does she say she is doing her best for Aer Lingus, when it has already announced the cutting of 70 to 80 flights per week through Shannon Airport, which effectively will make the airport unviable? The Minister has taken no steps to protect us from that. Why does the Minister always imply that she is looking after everything? She denies there is a plan then states that there is a plan and she is concerned about workers. However she was not concerned last week when Aer Lingus cut 80 flights out of Shannon with the associated job losses. Why did the Minister not order Aer Lingus to review the Shannon flight cuts in the first instance?
There is a chairman and a board of Aer Lingus and they are faced with the possibility of the company becoming insolvent. It is not for me to decide what flights will be eliminated.
The company applies to the Minister for flights and she is the arbitrator of flights.
Will the Minister ensure that the viability plan to be presented by Aer Lingus management at the weekend is thoroughly examined and appraised well in advance of her visit to Brussels to progress the issues she has indicated, which I welcome? Will she ensure the Government will not repeat the mistakes of many previous Governments—
It is not long since 1993 when Deputy Killeen and the Minister, Deputy de Valera, resigned over the same issue.
Deputy Carey, if we have any more interruptions, I will simply conclude the question. We are almost an hour on it now. In deference to your colleagues in the House who wish to submit a supplementary question, I ask you to be quiet.
These policies were not just to the detriment of the regions, including the Shannon region, but also of the quality of life of the people residing in this capital city by driving so much development into it that people cannot get around to do their business. I do not want to see that repeated on this occasion. I ask the Minister to ensure that the voluntary redundancy option and all other options are carefully reviewed and that people are not unnecessarily forced into obligatory redundancy.
I will certainly give the plan very careful attention, as will the Cabinet.
Over the past 48 hours I have spent much time trying to find out from my European trade union colleagues and from the European Parliament what regulations are there to prevent the Irish Government from giving a subvention to Aer Lingus to save it from complete closure. Will the Minister quote that regulation for the record of the House? When was it enacted? When was it passed by the European Parliament or the Commission? Will she detail in specific terms what is preventing her and the Government from assisting Aer Lingus financially? When was that law enacted by this House as a result of legis lation enacted in the European Parliament? Was legislation enacted by this Parliament as a result of a European directive? Furthermore, is the Minister aware that unofficial discussions have been taking place with Ryanair, the maverick organisation which is partly if not totally responsible for the problems of Aer Lingus—
Michael O'Leary will love that.
—and other interested parties for the purpose of taking over Aer Lingus? If that occurred, would the Government be in favour of Ryanair taking over Aer Lingus? Will the Minister give a guarantee to the House that the Government would not be in favour of that and she, as Minister, would not agree to it?
With regard to the Deputy's last sentence, he can be assured of my assent to that.
We will wait and see. Watch this space.
To answer Deputy Bell directly, I am not aware of any discussions between Ryanair and anybody else whom I know to take over Aer Lingus.
Would the Minister be in favour of that?
Not particularly. With regard to the Deputy's other question, it is Article 81.3 of the Treaty of Rome which resolves a competition issue. I do not know if that ever came before this House but when the Cahill plan was finalised in 1993, it was stated then – it is the State aid issue – that that would be the last payment a domestic Government would be allowed to give to its national carrier.
It did not stop the Minister investing in it though, but she did not do that.
I am just explaining—
Allow the Minister to reply without interruption. We will conclude this question very shortly.
On a point of order—
Deputy Bell, I ask you to resume your seat for one moment.
On a point of order, I have never interrupted a Minister. Has any directive in relation to a subvention to the national carrier been enacted in this House of Parliament?
I am not aware of it but
clearly as a member of the European Union we
abide by the rules of Europe. I am just explaining that.
Some do, some do not.
That is what we are talking about.
There are a number of Deputies offering. I will take a brief question from Deputies Stanton, Richard Bruton, O'Sullivan, Naughten, Jim Higgins, Broughan and Owen, and we will then have a final reply from the Minister.
Are the job losses announced today all permanent jobs? Can the Minister give us information on other temporary and downstream jobs that might be affected also?
I would like to ask the Minister about her plan in relation to State aid. What is her interpretation of a level playing pitch? My understanding is that the US Government has given state aid that will cover 80% of the projected losses of their carriers for this year, only half of which was related to the 11 September attacks. They are giving substantial state aid in cash, not in loans. Furthermore, does she believe that Aer Lingus can be long-term viable if the only form of aid is in loans, as she appears to be implying? We are told there are losses of £2 million a day, that is £180 million before the end of the year, and £125 million in redundancy payments. We are potentially talking about £300 million, £400 million or £500 million in loans. That would leave the company debt-ridden and unable to produce a viable future. Can the Minister clarify what is the nature of her plan?
Can I pursue the question raised by Deputy Stagg in relation to an agreed Government position between the Minister and the Minister for Finance, Deputy McCreevy? To ensure that the hymn singing is totally harmonious, will the Government make a written submission to be circulated at the meetings on Tuesday, for which I understand there is precedence, so that there will be a cohesive and well thought out approach from Government and that there will be no doubt in the minds of other Ministers attending and of the Commission? Furthermore, is the Minister aware of the vital importance of air access to the Shannon region? I accept what she said about safeguarding Shannon but if competition is to supersede policy in terms of regional development and cohesion, we are giving way to the competition issue in relation to our dealings with the European Union. It is vitally important that the Minister emphasise regional development and cohesion and the importance to Shannon, as other people here have said, of airline traffic in view of the fact that 35% of airline traffic in Shannon is transatlantic whereas it is only 17% in Dublin. Will the Minister give us an undertaking that she will ensure that the interests of Shannon will be uppermost, particularly in relation to regional policy?
Will the Minister assure the House that she has the full support of the Cabinet for this viability plan? If that is the case, will an emergency meeting of the Cabinet be held this weekend when the Minister receives the viability plan for Aer Lingus? The Minister spoke earlier about our special status. Will the Minister explain to the House why she has had discussions with only one of her counterparts in the EU, her Belgian counterpart, and the reason she has not met her other 14 colleagues prior to next Tuesday? Will she ensure that she will meet those colleagues? Two weeks of board meetings have taken place, yet she has not met any of her colleagues bar one. This disaster happened a month ago and the Minister has still not met them. Why has the Minister not discussed this issue with her colleagues? Are there no phones in her Department?
No photo opportunities.
(Mayo): I want to ask the Minister about the net question, that is the loss of 2,500 jobs, which the Minister seems to accept. If Aer Lingus sheds 2,500 jobs, will that not totally undermine the company? How can a company shed 40% of its workforce while sustaining either volume or quality of service? Does the Minister not agree that if she accepts a reduction of 2,500 jobs, instead of it being the kiss of life this will be the kiss of death for Aer Lingus? Will she not accept that a company that made £60 million profit as a group in 1999 and has now run into a series of short-term crises, including foot and mouth disease, industrial relations problems, which thankfully have been sorted out, and the 11 September attacks, has the capacity to trade back into viability if it is given a financial injection, time and scope?
The House knows that the Minister takes her responsibilities seriously but will she accept that it was the shilly-shallying and the toing and froing on the ownership issue which placed the airline in a very vulnerable position, and that the Taoiseach and herself are primarily responsible for that? In relation to restructuring the airline and making it successful again, which everybody wants, does the Minister see any lines along which we might proceed to address the underfunding of the pension funds over the years? People accept that Aer Lingus and Aer Rianta were seriously underfunded. Does the Minister see any scope in that area? Does she have confidence in the current management team?
About six months ago we celebrated the strong performance of the 1999 accounts and the tremendous sacrifices made by the workers during the 1990s. Looking at comparisons with British Airways and some of the smaller European airlines which are trying to restructure – I am not talking about Sabena, which got into trouble – does the Minister have confidence in the current management team?
I want to ask about the north side and the west side of Dublin. In mid-August I wrote to the Taoiseach about the jobs meltdown that was beginning in the west and north of Dublin when 2,000 jobs were lost at Gateway. Job losses have accelerated during September. Dublin City Council and, I understand, Fingal County Council passed motions demanding a jobs task force for the Dublin region to address the devastation that has hit the IT and related industries. The aviation industry is the linchpin for the current job losses. The Taoiseach has not responded to Dublin City Council and we continue to wait for him to take a lead as the representative of our region. Perhaps the Minister will convey my concern to him.
Are 2,500 jobs under threat in addition to the 700 temporary staff? What is meant by restructuring? Does it mean shutting down half the company's flights? Will it mean, for example, no more Aer Lingus flights to Cork or between midnight and the morning? What effect will the restructuring and the job losses have on Aer Rianta? What are the cash reserves available to the company? Do they amount to £185 million the Minister referred to in the Dáil last Thursday and can they be used to ameliorate the losses?
Does the Minister know the basis of the proposed 2,500 redundancies? Has anybody explained to her if the company will be viable if these are effected or is it a figure plucked out of the sky to balance the books? With regard to her interview on "Morning Ireland", is she saying that the Government is prepared, given the necessary approval, to make available loans or grants to the company to enable it discharge its redundancy obligations? Does she agree that long-serving colleagues in Aer Lingus could not reasonably expect to lose their jobs for any less compensation than was forthcoming in the Cahill plan?
Deputy Stanton asked about the effects on the jobs in Cork dependent on Cork Airport, including ancillary jobs in downstream activities. I do not have the figures because downstream activities would involve related industries. However, I am sure they can be provided to the Deputy when they are to hand. Deputy Richard Bruton asked if there would be a viable plan.
I asked about the Minster's suggestion on loans. If Aer Lingus is debt ridden will these suffice, especially when cash grants were provided in the US?
The Cabinet has discussed various options in the first instance because we must first make a case which will allow us to take necessary action. The Deputy referred to the difference between a grant and a loan and what would be involved in the repayment of a loan. This will be subject to further exploration but in their statement today the two Commissioners referred briefly to guaranteed state loans.
I accept Deputy O'Sullivan's concern about Shannon Airport continuing as a gateway to the mid-west and the Shannon region. She asked if competition should supersede the need for balanced regional development. This is a huge issue for the Competition Commissioner and competition policy in this country. I am not sure if one supersedes the other.
Will the Minister outline her views on an agreed written submission by the Government?
I will discuss this with the Minister for Finance.
Are the Ministers still on speaking terms?
We are on great terms. Deputy Naughten asked if there would be a special Cabinet meeting at the weekend. There is a special meeting at the weekend – the Fianna Fáil Ard-Fheis – and we will be engaged in regular meetings there.
Will the Progressive Democrats be in attendance?
No. Deputy Jim Higgins said the loss of 2,500 jobs would be the kiss of death. It will be the kiss of death for the company if we do not proceed with restructuring. It is agreed, or it should be, among all that there should be a viable future for Aer Lingus.
I will speak to the Taoiseach about Deputy Broughan's concerns and I am sure he will reply to the Deputy. I will ask the chairman about the pension fund in the restructuring talks. The Deputy referred to the question of confidence in north and west Dublin and the need for a task force to address the issue of job losses. I am sure the Taoiseach will address that in view of his customary zeal for his constituency and the wider constituency of Dublin North.
Deputy Owen asked if the proposed 2,500 redundancies encompassed the 700 temporary staff. The temporary staff are different.
So there will be a total of 3,200 redundancies.
The Deputy is aware that temporary staff have always been laid off each year. It is sad for anybody to lose their job but if no action was taken Aer Lingus would go the same way as Swissair and perhaps Sabena. I do not wish either airline ill.
Deputy Rabbitte asked if the figure of 2,500 redundancies was plucked out of the sky. It was presented to me by the chairman and he discussed the matter in detail with me.
Did he indicate the flights he would be cutting?
Allow the Minister to reply.
In response to Deputy Broughan, I have confidence in the present management team. Deputy Rabbitte asked if the Government is considering the terms of the redundancy package. That matter will stand to be negotiated between the board, the management, the unions and the workers within Aer Lingus.
Will the Minister outline the position on the cash reserves?
Written Answers follow Adjournment Debate.