Vol. 542 No. 3
5 Mr. Stagg asked the Minister for Public Enterprise the Government's plans for the future of Aer Lingus following the Council of Transport Ministers' meeting of 16 October 2001; and if she will make a statement on the matter. [24522/01]
I made a statement to the House earlier today in relation to yesterday's transport council and the situation in Aer Lingus. In summary I said I would prepare a report for Cabinet next week in which I would ask the Government to agree in principle to an Exchequer guarantee for a loan for Aer Lingus which would deal with the issues of redundancy payments and working capital for the airline. I cannot at this point indicate what recommendations I will make to Government on the funding requirements. This will be a matter for Government to decide. In addition, whatever is decided by Government will be subject to agreement by the European Commission. Moreover, any Government decision will be critically subject to agreement on the survival plan.
At yesterday's Transport Council meeting, the majority of Ministers either backed the Commission's limited proposal in its present form or agreed that some aspects of it should be eased but only in a horizontal manner available to all airlines.
There was general agreement that we should not assist in dealing with the pre – 11 September problems of inefficient airlines. I concur because that was not the situation with Aer Lingus. I emphasised to the council the exceptional nature and impact of the events of 11 September on Aer Lingus, how it would be wrong to reward terrorism by allowing any EU airline to collapse because of 11 September. I warned against any agenda to hasten consolidation of European airlines on the back of the terrorist attacks. There was a strong case made by Stephen Byars of the UK Government that we should use the opportunity to have consolidation of airlines. Four or five of us strongly resisted that suggestion. I emphasised the importance of Aer Lingus to the Irish economy.
This morning I advised the House that there was a significant amount of negotiation on the council's conclusions and that a reference to the exceptional circumstances was included at my insistence. I will quote the relevant conclusion on the general economic situation facing airlines:
The Council recognises the impact that the exceptional events of 11 September have had on the economic situation of the air transport sector. Control of State aid being a matter for the Commission, it takes note of the Commission's communication on the repercussions of the terrorist attacks in the United States on the air transport industry. It emphasises that any targeted aid is subject to approval by the Commission, in accordance with Community competition rules and State aid guidelines taking into account in a clear and objective manner the consequences of the closure of certain parts of the airspace in the four days following 11 September 2001. Beyond that period and in relation to the issue of airspace closure, the Commission will examine on a case by case basis the compensation which would be granted on the basis of objective criteria to make up for restrictions imposed to European airlines by the country of destination. Any aid or compensation may not lead to distortion of competition between operators.
Additional informationWe face an extremely daunting task in obtaining approval from the Commission to provide assistance to Aer Lingus in any form other than the limited horizontal measures already proposed, but I will work with the company to make the best possible case to secure the future of the airline.
Will the Minister accept that she failed miserably yesterday to effectively make the Irish case to assist the national airline which now needs assistance? Will she also accept that the damage done by the Minister before 11 September to the company, by her prevarication on the ownership issue left Aer Lingus in such a weakened state that it was not able to deal effectively with the crisis that arose after 11 September?
The terrible events of 11 September have had a huge effect on the travelling public. This in turn has affected airlines. We take no joy in the fact that every day there are media reports of the loss of confidence of the travelling public in air travel. The last report I received from the recently deceased chairman of Aer Lingus was dated 6 June. It stated that the airline was forecasting a loss of £25 million for the end of the year. That was due to foot and mouth disease and the economic slow down. That was expected to be overcome through trading in 2002. At the beginning of September the company proceeded to put a limited plan into action which I have no doubt would have overcome the trading difficulties of 2001. Post 11 September the situation has altered dramatically both here and throughout the world with regard to the travelling public.
It would be nice if I could come here with soft words for Aer Lingus. I have great admiration for Aer Lingus, for its workers and its management—
The Minister wanted to sell it a few weeks ago.
The chairman has presented me with a survival plan which he will present to the board tomorrow. That plan is very critical to the future of Aer Lingus. The Government is determined to keep Aer Lingus in operation. It is determined to sustain as many viable jobs as possible and equally it is determined that the
road to viability must be based on the survival plan.
Has the Minister accepted the so-called rescue plan for Aer Lingus and will she comment on the statement this morning by Noel Dowling of SIPTU who said that the union representing the majority of workers had no input whatever into this plan, that it was hatched in secret behind closed doors? How much money will the Minister seek from the Government for redundancy payments? We need to know the amount involved – the Minister will shortly ask the House to vote for it. Will that money be regarded by the EU Commission as state aid – money for redundancies – and will it be in the form of cash or a loan? I understand the plan refers to cash.
Any guarantee of a state loan
would be regarded as state aid – that has been made quite clear to us – including redundancy payments. I regard it as a very perverse situation in which Sabena is allowed to have bridging finance, because it has gone into bankruptcy, while we are trying to prevent Aer Lingus going into bankruptcy but the Commission does not allow us to make Exchequer backed loans, which the company would take at commercial rates. Officials of my Department will go to Brussels on Friday to meet Commission officials and to explain the Irish aviation sector in general and the Aer Lingus plan.
The Minister is not answering the question. What about Noel Dowling's comments?
I will come back to that. At my meeting yesterday with Commissioner de Palacio, she told me of two formal statements of complaint from within the Irish aviation sector, warning against permission being given for any State aid. It was not my business to ask who were the complainants and I did not do so. With reference to Noel Dowling—
How much money is the Minister looking for?
That is a matter for Cabinet. It is in order for me to bring a matter to Cabinet without having to explain it to the House beforehand.
I ask the Minister to proceed to Question No. 6.
I wish to answer Deputy Stagg's reference to Noel Dowling. Before I went to Luxembourg on Monday, I telephoned Dan Loughrey in Aer Lingus and asked him to provide full briefing to the financial advisers to the trade unions. When I spoke to him again this morning, he told me he had given them a very full briefing.
We must proceed to Question No. 6.
