The opening statement of the Minister for Public Enterprise and the spokespersons for Fine Gael and the Labour Party shall not exceed ten minutes in each case. They will be followed by questions to the Minister for 30 minutes.
Aer Lingus: Statements.
On the Order of Business there was a request from the leader of the Green Party to be allocated time to contribute to the debate. I propose, therefore, to share three minutes of my time with Deputy Sargent.
Acting Chairman
Is that agreed? Agreed.
I welcome the opportunity to report to the House on the outcome of the Transport Council meeting held in Luxembourg yesterday. The Council discussed the repercussions of the events of 11 September on aviation. Central to the discussions was a report by the Commission which included proposals for a limited package of horizontal measures to compensate for the events of 11 September. Those proposals included compensation for the four days when US airspace was closed, coverage for insurance to the end of the year and discretion for states to cover additional security costs. The discussions ranged across the overall economic impact on airlines, aviation security, insurance, air traffic control and competition issues.
In preparation for the meeting, I had face-to-face meetings or telephone conversations with a number of my EU ministerial colleagues, including those from Austria, France, Portugal, Italy and Greece. This is in addition to correspondence and a meeting with the Belgian President of the Transport Council. I also met Commissioner de Palacio on several occasions, most recently in a private meeting yesterday morning prior to the Council, during which I was explicit about the position of Aer Lingus.
In my statement to the Council I strongly expressed the view that it was not acceptable that any European airline should be allowed to collapse as a result of the terrorist attacks. That would be fulfilling the agenda of the terrorists. Second, I warned that these dreadful circumstances should not be used as a means to fast-track consolidation in Europe in a "big bang" way, however justified that policy could be in normal times. This would be unwise and could lead to unpredictable results. I also highlighted 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.
I stated that direct transatlantic links are crucial in attracting US tourists and facilitating business and cargo traffic and that despite being the second smallest member of the European Union, Ireland ranked seventh among the 15 states in terms of passengers carried on direct routes to the United States. In tourism terms, our dependence on the US market is, on average, three to four times greater than for other member states.
I stressed the importance of Aer Lingus to the Irish economy. Aer Lingus accounts for 70% of direct Ireland-US traffic, carrying in excess of one million passengers in 2001. This represented a significant proportion of Aer Lingus's revenue and profits in 2000. I pointed out that these figures starkly show how the events of 11 September had such an impact on the company and the reason we believe strongly that a strategic national interest is threatened. I informed the Council that we do not advocate or seek a return to a regime of unco-ordinated or easy availability of state funding for European airlines and that we should not look at this as a normal state aid problem. I stressed that these are exceptional circumstances in aviation to which the European Commission should respond in an effective and measured way in co-operation with member states.
I emphasised that we recognised the enormous strides achieved under the liberalisation of the European aviation sector. It has resulted in more competition, new routes, greater variety, different ownership profiles of airlines and so forth. In concluding I emphasised that the Commission proposals for compensating airlines as a result of the US terrorist attacks fell short of the measures deemed by Ireland to be necessary to address the difficulties, particularly in light of the aid given by Congress to US airlines. In relation to concerns expressed about possible distortions in competition, having regard to the assistance available to US airlines which are in competition with European airlines, Commissioner de Palacio outlined that she had written to the US Secretary of Transportation, Mr. Minetta, to convey the concerns of the European Commission on this issue.
Around the Council table the majority of Ministers either backed the Commission's limited proposal or agreed that some aspects of it should be eased, but only in a horizontal manner available to all airlines. There was a significant amount of negotiating on the Council conclusions and a reference to the "exceptional circumstances" was included at my insistence. Members of the House have received a copy of the relevant conclusion on the general economic situation facing airlines. I hope we will revert to parts of it when the officials go to Luxembourg on Friday. The Council recognises the impact that the exceptional events of 11 September have had on the economic situation of the air transport sector.
All in all, the position adopted by the Council yesterday is one which will make it a challenging task for Ireland to persuade the Commission that it should permit any form of direct financial assistance to Aer Lingus outside of the horizontal measures I have mentioned. We agreed with ECOFIN yesterday that domestic governments would continue to underwrite, on a month by month basis until the end of December, the enhanced insurance needs of airlines.
I now turn to the Aer Lingus survival plan which I received last Monday morning. The plan broadly confirms the key details which I outlined to the House last week, including the cash crisis it faces in January 2002. It sets out the various revised revenues and costs necessary to achieve viability and take account of the company's reduced scale of operations. It also identifies the need for a loan guarantee in respect of a working capital facility. In addition, Aer Lingus stated it does not have the cash to pay for a redundancy programme of any kind. Accordingly, non-
repayable funding is requested.
We have an extremely short timespan in which to find solutions to this critical situation and significant work will be undertaken in the coming week. The board is meeting tomorrow afternoon and I will also meet the chairman tomorrow. A team of officials from my Department will travel to Brussels on Friday to brief Commission officials on the general aviation situation pertaining to Ireland and the Aer Lingus restructuring package. We are also examining in detail every aspect of the Commission's guidelines for state aid in order that we will be able to argue in the best possible way for any form of state assistance the Government may ultimately propose for Aer Lingus.
I will prepare a report for Cabinet next week in which I will 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 and working capital. I cannot indicate at this stage what the recommendations will be on the funding requirements because that will be a matter for Government. In addition, whatever is decided by Government will be subject to agreement by the European Commission.
I met the central representatives committee of Aer Lingus unions on 24 September and last Thursday, 11 October. I have assured the representatives that I will engage with them regularly in the coming critical days. I will meet them again this evening.
The Government is committed to the survival of a fundamentally restructured Aer Lingus and the protection of the maximum number of sustainable jobs. However, that support is subject to the full and immediate implementation of the plan and approval by the European Commission. I will be perfectly clear. We face an extremely challenging task in obtaining approval from the Commission to provide assistance in any form to Aer Lingus, but I will work with the company and its employees to make the best possible case for securing the future of the airline.
I welcome that a Fine Gael delegation comprising its Deputy Leader, Deputy Jim Mitchell and Deputies Owen and Richard Bruton will meet the staff of Commissioner de Palacio. I also welcome the statement made by the main Leader of the Opposition in Shannon last Monday evening. It is clear we are in a perilous situation and I welcome any attempt by anybody to help in regard to this plan.
I am grateful to the Minister for sharing her time with me and I regret having to eat into her slot, but I was unable to get any time from my Opposition party colleagues.
The ability of the European Commission to respond effectively to the crisis in Aer Lingus is an acid test for us to know if it is there for the people of Europe or if the people of Europe are there for it. Some of us have been warning for a long time about the undemocratic nature of the European Commission. This is a time when we need democratic accountability, and the parties of this House are saying the European Commission needs to deliver a package that is adequate and satisfactory, which to date it has not been. This highlights the inadequacy of the European project to cope with the needs of workers. I hope that will change because a salient point in regard to outcomes of future referenda on the EU will be whether, when it comes to the test, the European Commission is able to deliver when people are in need. This is one of those examples.
Going beyond the issue of Aer Lingus and the European Commission is the need to evaluate the various contingency plans that have been put in place for many airlines in the United States as well as in Europe. When one reads those contingency plans, one realises there is a need for much greater flexibility in regard to Aer Lingus. For example, Delta has given its workers three options which are more complex than I have the time to go into now. It is important to take options and flexibility into account rather than to adopt a take it or leave it attitude. Each of the workers, not only in Aer Lingus but in the many industries depending on it, needs to be taken into account to ensure we do not jump the gun by announcing redundancies before we have had a chance to evaluate all the options. I fear that is what has been happening.
A question that must be asked is what will be done to end the political appointment system in Aer Lingus. In restructuring the company it is hoped the Minister will not only consider the matter of the many workers who are in a perilous situation but will ensure that the management coming out of this crisis will be one with an expertise in aviation rather than one based on political patronage. It is crucial for every worker to know that. Why should the workers take the pain if management, who have options in banking and many other careers, are left in an untouchable situation?
(Mayo): I wish to share my time with Deputy Owen.
Acting Chairman
That is agreed.
(Mayo): This is one of the saddest and starkest debates we have ever had in this House. We are talking today about the survival or the death of a national institution. Aer Lingus is a cornerstone of Ireland. It is an integral part of what we are. It has been one of the pillars of Irish identity and a key element of our economy. For generations it has carried the flag and emblem of Ireland around the world. The name Aer Lingus has been synonymous with Ireland and with quality service and safety. While Aer Lingus has had its difficulties in recent years, nobody could ever envisage we would be talking today in such fatalistic terms. What is particularly disconcerting is the stark, uncompromising tones of the Minister for Public Enterprise that there is no room for manoeuvre, compromise or negotiation. As I speak, 150 permanent staff who are on probation are in shock as they examine their redundancy notices, which arrived in the post this morning. This is not a rescue plan or a viability plan but an ultimatum. The unions are being told to accept this deal, to accept 2,500 redundancies or else the airline will close down.
Fine Gael does not accept that 2,500 job cuts are absolutely necessary. It does not accept that cutting 40% of a workforce will guarantee the long-term survival of the company. This so-called viability plan is not a kiss of life as it is being portrayed. Cutting a workforce by 40% is not a kiss of life but a kiss of death. It will cut the legs right out from under the company. It will have a major negative impact on the quality and quantity of the service and of the business. It is but step one of a phased but total closure of the national carrier. We will be left with a short-term small, weakened and vulnerable airline. The one thing the Minister and her Government colleagues should do is examine the figures for the poor survival rate of small airlines.
I am at a total loss to understand European thinking. The dogged intransigence of the EU Commission that rules are rules and cannot be changed is absolutely suicidal. Contrast that to the attitude of the United States Government in terms of its determination to rescue its airlines. The United States had little hesitation in changing its rules to bale out its airlines, with $5 billion direct grant aid and $10 billion of loan guarantees within days of 11 September. Two of Aer Lingus's main competitors, Delta and Continental, have got multi-million dollar cash injections. That will completely distort competition. It is of little comfort to the House or to the Aer Lingus workers in the Gallery that it has been decided at Commission level to write to Mr. Minetta in the United States. Writing will have no impact. The result of the US decision will leave EU member states' airlines at a major competitive disadvantage and that will lead inevitably to further airline closures. How the EU can doggedly decide that it will retain its position of only very limited State aid is beyond comprehension. One has to ask if the EU is a political entity or a bureaucracy. One has to ask who is calling the shots. Is it the politicians or the bureaucrats? In this instance, and as happened yesterday, it is game, set and match to the bureaucrats.
The difficulties Aer Lingus is facing today need not be terminal. Commercial aviation by its very nature is cyclical. It is subject to a variety of factors: war, recession, currency fluctuations, etc. There is no doubt but that the current difficulties being encountered by the world aviation industry are short-term and that inevitably a recovery will come. I am at a loss to understand why we are unable to put in place a rescue restructuring package which will retain the bulk of jobs in Aer Lingus and the company intact until such time as a recovery arises. It is worth bearing in mind that Aer Lingus made a group profit of £60 million in 2000. If it was profitable two years ago, surely it can trade its way back to profitability again. We are not only talking about 2,500 jobs but 2,500 families. We are talking about absolute disaster for those employed at Dublin Shannon and Cork airports.
Yesterday was a bad day for Ireland and a bad day for Aer Lingus. The Minister has made no progress. The words "challenging tasks" arise in her script time and again. Having listened to her, it is obvious she was effectively told "Go home, there is no joy, there is no consolation here." The EU has a fixed position, it is not for turning and the writing is on the wall.
I thank my colleague for allowing me a few minutes. I have a terrible sense that this Government has talked into existence the failure to get help from the EU. Unfortunately, since we heard of the situation in Aer Lingus, we have heard nothing but negativity, for example, that 2,500 jobs must be cut or that 25% of service must be lost. I am not blind to the difficulties faced by the national airline and God knows I am touched by the problems in my constituency every day. If the Government has the will, it will find a way to achieve the approval and assistance that is possible. I thank the Minister for her gratitude to Deputies Richard Bruton, Jim Mitchell and me, who travelled to Brussels for four intense meetings last Friday. I left Brussels with the distinct impression that if enough serious heads were allocated to examining EU regulations, a way around the problems faced by Aer Lingus could be found.
I will give one example of this. I have mentioned Article 87(2)(f2>b), which deals with aid to make good the damage caused by natural disasters or exceptional circumstances. What case did the Minister for Public Enterprise make to the EU to prove that the week of 11 September was not the only time Aer Lingus was in difficulty? It is an indisputable fact that on 6 September, five days before the atrocities, Aer Lingus had devised a plan to save £30 million it knew it would lose as a result of foot and mouth disease and the economic downturn. That the plan was drawn up before the atrocities took place shows that Aer Lingus believed it could trade itself out of the difficulties that had been forced upon it.
A second indisputable fact is that before 11 September, Aer Lingus had flagged that it was to lose £30 million in 2001, for the reasons I have mentioned. Immediately after the atrocities, the company readjusted its predicted losses to £74 million. There is clear and indisputable evidence that a loss of £44 million can be attributed to the exceptional circumstances that followed 11 September. I hope this case is being made by the Government. It is a case we put to Mr. Daniel Calleja Crespo, the head of Ms de Palacio's
Cabinet, who took it on board.
There is absolute and clear evidence that Aer Lingus was not a company about to collapse before 11 September. It had a viable future, albeit with some staff cuts which were not to be of the level now planned. I cannot understand how the Government and the management of Aer Lingus can announce 2,500 staff cuts without any reference to where the cuts will take place and without saying how the cuts interface with Aer Lingus's viability plan. The cart is being placed before the horse. The viability plan should be seen before deciding on the number of staff cuts, it should not be done the other way around.
Does the Minister for Public Enterprise accept that the success of the Cahill plan resulted from the sacrifice and co-operation of the staff? I urge the Minister not to use threatening language to staff. As reported from Luxembourg by Conor Sweeney in today's Irish Independent, “the Government last night told Aer Lingus unions they would have to accept the rescue plan or see the airline go under”. It is grossly unfair to the staff of Aer Lingus that the axe will fall on them, not on the management or on the Government for its lack of success at EU level, if the company fails.
What is the situation as regards a guaranteed loan? We were informed that the Government could give a guaranteed loan, provided it was at market investor level. Guideline 1999/C/288/02, under Article 87(f2>c), deals with state aids. It states clearly that when determining if the injection of new capital by public authorities into companies which they own involves elements of aid, the criterion applied is the market economy private investor. It is my knowledge that the bank would have given a loan to Aer Lingus on 10 September. If that is the case, the Minister for Public Enterprise should use every section of EU rules to ensure our national airline is saved.
The crisis facing Aer Lingus is one of the greatest economic and social issues that this country has confronted in many years. During debates on this issue in recent days, the importance of Aer Lingus to the social and economic life of this country has been well aired, to the extent that the Minister, Deputy O'Rourke, seems to be convinced of its importance. She has had a type of Pauline conversion on the road to Brussels. She is simply not credible on this issue. It is nothing short of a disaster that when Aer Lingus workers are facing their most serious challenge, they are saddled with a Government that has no belief in State enterprise. Of all the companies in the State sector, Aer Lingus has been singled out for particular vindictive treatment by the Minister.
A few hours ago in this Chamber, the Minister of State, Deputy Séamus Brennan, was forced to formally withdraw the Aer Lingus Bill, 2000, a Bill that was designed to tee up Aer Lingus for any form of privatisation. When it dawned on the Government that Irish citizens with money to spare will not invest in another disaster like the telecom flotation, it decided to flog the national airline to any corporate bidder prepared to buy it. The phrase "trade sale" was conjured up to disguise this grubby, nonsensical strategy. It made no economic or strategic sense and was solely driven by an ideological axis within the Cabinet opposed to State enterprise. Let there be no doubt that the destruction of the State sector is the over-riding goal of a group, led by the Tánaiste and the Minister for Finance, who have a willing lackey to do their bidding in the form of the Minister, Deputy O'Rourke. The uncertainty she caused greatly weakened the ability of Aer Lingus to deal with the crisis that emerged follow ing 11 September. The blame is clearly at her door.
The Minister for Public Enterprise's inability to direct policy in the State sector was abundantly clear in this morning's newspapers. As the 6,000 Aer Lingus staff contemplate a future which will inevitably involve job cuts, increased productivity without reward and huge personal sacrifice, the Minister decided to lecture them from Luxembourg. In a desperate attempt to disguise her responsibility to fight for a deal in Europe, the Minister declared that Aer Lingus workers, not the EU, will collapse the airline if the survival plan is not backed. Her remarks were arrogant, cowardly and irresponsible. Should anyone be surprised, however, as such qualities have been evident throughout Deputy O'Rourke's ministerial tenure since June 1997.
Time and again during debates on Aer Lingus, I have urged the Government and Aer Lingus management to recognise that substantial change in the airline cannot work unless unions and workers are on board. Will the Minister confirm what Noel Dowling of SIPTU said to listeners on "Morning Ireland" today, namely, that unions have had no input into the survival plan? Will the Minister acknowledge that up to 90 permanent workers in Aer Lingus were this morning issued with redundancy notices, without any reference to their union and without seeing the terms of the survival plan? Does the Minister agree that the so-called survival plan is a private deal, struck behind closed doors between Aer Lingus management and officials from her Department, with her full imprimatur? Yesterday the Minister for Public Enterprise attempted to put a gun to the head of the Aer Lingus workforce and told them to shut up and put up, or else. Aer Lingus workers have been told to accept a survival plan they have not seen and on which they have not been consulted. No worker should be expected to sign a blank cheque, particularly when it is presented by a Minister and her senior officials, whose antipathy to Aer Lingus is barely disguised.
During the negotiation and implementation of the Cahill plan, the workforce of Aer Lingus proved that it is willing to make tough decisions to secure the future of the airline. The workers have clearly demonstrated their commitment to the company, their understanding of the aviation business and their determination to see Aer Lingus play a leading role in European aviation. The Minister and the company's management have decided to throw this record of sacrifice and common sense back in the faces of the unions and the workforce. "Mammy knows best" is the attitude the Minister demonstrated towards the workers yesterday, but nobody believes that to be true. She failed to make any impact on the narrow and legalistic position being taken by the European Commission at yesterday's meeting of the Council of Ministers. This morning, she has sown seeds of mistrust and disbelief among workers at our national airline. It is time she walked off the stage.
The Taoiseach must now take control of our negotiations at European level. To date, apart from some soundbites delivered to the assembled ranks at the Fianna Fáil Ard-Fheis, the Taoiseach has studiously avoided taking responsibility as the national carrier faces its most serious crisis. Perhaps he knows that to do so would mean taking on the Harney-McCreevy axis at Cabinet that is opposed to the concept of state aid and is utterly opposed to the continued State ownership of Aer Lingus. We know from successive budgets that the Taoiseach either cannot or will not stand up to the diktats of the Tánaiste and Minister for Enterprise, Trade and Employment and the Minister for Finance. Will Aer Lingus become another testament to the failure of the Taoiseach to show leadership and to take a stand?
The Taoiseach has two opportunities to assert his authority and to make the issue of state investment for airlines experiencing difficulties his political priority. He will meet the members of the European Commission today and later in the week he will meet all the European leaders at the Ghent summit. The Taoiseach should be on the telephone to every other EU head of state, leading a diplomatic and political campaign that prepares the ground for these critical meetings. Given the difficulties that many airlines throughout the EU are facing, he will find many allies among our EU neighbours, but this campaign needs leadership. This is the challenge now facing the Taoiseach. If necessary, he should indicate that co-operation on other matters could be dependent on the State, as shareholder in Aer Lingus, being allowed to provide sufficient investment to allow it survive with the maintenance of the maximum number of jobs.
The current position of the EU Commission is legalistic. Anybody with an understanding of long-term policy goals of the unelected EU Commission will realise that certain Commissioners are using the economic turmoil in the airline industry, created by the murderous attacks on New York and Washington, to further their own agenda. Many in the EU Commission are determined to see a substantial reduction in the number of carriers operating in Europe and, without any moral qualms, they appear determined to look on the current situation as a window of opportunity to force through their agenda. It is both morally and politically reprehensible and we cannot allow Aer Lingus to become a victim of that untrammelled competition agenda.
I wish to comment on the behaviour during this crisis of Mr. Michael O'Leary of Ryanair. On Sunday night, viewers of RTE were treated to one of the most stomach-churning examples of buccaneerism in living memory. As 6,000 workers and their families contemplate a grim future, we were treated to this doyen of Irish business wallowing in the distress of Aer Lingus. Mr. O'Leary appears to treat this crisis as just desserts for the national carrier and he cannot resist any media opportunity he is given to gloat in public. Mr. O'Leary has been instrumental in establishing the most anti-union and anti-worker employment regime in the country. He is in no place to gloat as 6,000 workers face an uncertain future.
Today, Sabena received EU sanction for a loan of 125 million from the Belgian Government to salvage the airline. Meanwhile, we have been told that the Minister, Deputy O'Rourke, needs wriggle time. We know what use she will make of this time. She will wriggle to avoid responsibility and accountability for her failure to date. I am afraid the only use she will make of the time in the coming days is to target scapegoats for her own failure, notably the workforce in Aer Lingus.
Like the Deputy.
Undoubtedly, yet again, the Minister will be given free rein on Monday morning to have light hearted chats about wriggle time while thousands of workers face the wall in Aer Lingus. The Minister has failed. Time is short and it is imperative that the Taoiseach seizes control of this issue and ensures that a rescue package, agreed in the coming days with the unions in Aer Lingus, receives EU sanction so that the process of renewal can begin at the national carrier.
Acting Chairman
We will now move on to the questions and answers session. Before we proceed, I remind Members that the House is due to suspend at 1.30 p.m. and I discourage them from asking long winded questions that could be interpreted as short speeches. Deputy Ryan indicated that he wished to ask a question.
(Dublin West): On a point of order, an hour was provided for this debate and it is now 1.05 p.m.
Acting Chairman
Yes. Ten minutes each were allocated to the Minister, the Fine Gael Party spokesman and the Labour Party spokesman. The remaining time will be used for questions.
(Dublin West): The debate should continue until 1.35 p.m.
Could we get agreement to continue until then?
A number of Deputies on this side wish to ask questions. The debate should take the usual route; it is our turn now as Deputy Stagg has concluded.
Acting Chairman
If Members co-operate, we will fit in as many questions as possible.
(Mayo): Perhaps the House could agree to continue until 1.35 p.m?
There should be some flexibility to allow Members contribute.
Five minutes will be wasted if we do not proceed.
We are wasting time.
Acting Chairman
We are wasting time and we should proceed with questions.
(Mayo): I formally move that the debate be extended.
We cannot do that.
Acting Chairman
It is not possible for an Opposition Member to do that; it must come from the Government.
(Mayo): The Government could do it.
Acting Chairman
We will have plenty of time for questions if the Members co-operate.
Should I answer each question individually?
They should be banked.
Acting Chairman
It may be possible to group questions at various points. I ask Members to co-operate in terms of posing questions in a way that will save time.
Given the appalling situation and the implications for the regions and the greater Dublin area, does the Minister accept that she utterly failed the country and the workers in Aer Lingus at her meetings yesterday? She accepted earlier that the control of state aid is a matter for the Commission.
It is the law.
It is not my decision. It is the law.
She should stand up for the country.
Given the current situation, she should take on the Commission and governments in Europe. Given the tragic implications of the current situation, rather than accepting the diktats of the Commission, she should have done much more. However, she has failed.
Regarding the loan guarantee, will the Minister comment on the long-term implications for Aer Lingus in terms of what it will have to repay? Will she enter negotiations rather than continue the charade in which she has engaged in recent weeks in relation to meeting union representatives? Does she agree the developments to date are unacceptable and will she give a commitment, on behalf of the Government, to take on Europe, if necessary?
Acting Chairman
Perhaps the Minister could take a group of questions. That might expedite matters.
On a point of order, there is no provision for groups of questions to be taken together.
Acting Chairman
Almost everybody in the Chamber is offering. If Members co-operate, the Minister—
Questions should be answered when they are put.
No, there is precedent for grouping.
The Minister indicated the importance of transatlantic business to Aer Lingus and she is fully aware of the anxiety in Shannon—
She did not acknowledge it in her contribution.
—that the damage to the airport and personnel in Aer Lingus will be dramatic. There is widespread fear in the Shannon area among Aer Lingus personnel and the airport generally. Did the Minister indicate to the Commission that she would be seeking some special provision because of the potential regional impact and the need to maintain services?
(Dublin West): Will the Minister admit that the Government is hiding behind the EU Commission's reactionary opposition to funding publicly owned airlines by governments because it does not believe in the continuation of Aer Lingus as a publicly owned airline? The Government has the right as the owner of Aer Lingus to invest in the company.
Acting Chairman
A question please, Deputy.
(Dublin West): Does the Minister agree that the Government as the main shareholder in Aer Lingus has the right to invest funds in the same way as a private shareholder has the right to invest funds in its airline? The Department of Public Enterprise and the Government are the main stumbling blocks because they do not want to do so. Does the Minister agree that, even if one accepts the strictures of the European Commission's policy whereby Government investment in Aer Lingus can only arise in exceptional circumstances, there is significant latitude for such investment because 11 September was not the only exceptional circumstance? The criminal bombing of Afghanistan which is preventing millions of people from taking to the skies is also an exceptional circumstance.
The Deputy is off the wall completely.
Acting Chairman
The Deputy is taking up time.
(Dublin West): Does the Minister agree the foot and mouth disease outbreak was also an exceptional circumstance and the cause of these problems?
We should also have applied for funding then.
Deputy Ryan asked a number of questions. He will recall how long it took to negotiate the Cahill plan when his party was in government with Fianna Fáil .
We got £175 million.
Acting Chairman
The Minister to continue without interruption, please.
The Deputy will also recall how intractable the negotiations were and that an agreement was signed whereby that would be the last occasion on which the national airline would seek aid from Europe.
In normal circumstances. These are not normal circumstances.
That is a fat lot of good now.
Acting Chairman
The Minister to continue without interruption, please.
I did not interrupt any Member and it is impossible for me to provide answers.
A reference to the words "exceptional circumstances" was included in the Council's conclusions at my insistence yesterday. The conclusions also stated:
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 on European airlines by the country of destination. Any aid or compensation may not lead to distortion of competition between operators.
Deputy Ryan also asked about the implications of the loan guarantee. I will bring my proposals to Cabinet in principle and in tandem with this my officials are travelling to Brussels on Friday to meet officials of the Commission to discuss the aviation sector in general and the Aer Lingus plan in precise detail. The implications of the loan guarantee will be worked out very clearly.
Is the official who wants to sell Aer Lingus also travelling to Brussels?
Acting Chairman
The Minister to continue without interruption, please. Time is limited.
Deputy Ryan referred to the charade of meeting trade unions. I do not ever regard meeting anybody, let alone trade unions, as a charade.
There were no negotiations.
I am sorry if some people within the trade union movement think the meeting was a charade, but I did not regard it as such.
It was a charade because the Minister did not tell them anything.
I respect trade union members.
They do not think so.
Deputy Daly raised the issue of the transatlantic stopover at Shannon Airport. The Commissioner raised the issue of common aviation space between the European Union and the United States on four occasions, during our private meeting, at both the morning and afternoon sessions of the Council and when we wound up last night. On each occasion I clearly stated the Aer Lingus situation was too serious for me to allow any discussion on the Shannon stopover and that the Government remained committed to the principle of the stopover. That decision was taken by the Government some time ago and it remains committed to it.
What is the Commission's view?
The Commissioner did not pursue the issue once I had made my case.
Deputy Joe Higgins referred to the role of my Department. The plan was drawn up and presented by the chairman and management of Aer Lingus, not by my Department. It was presented to me on Monday morning. I did not see it until then and did not have anything to do with its drafting or presentation.
The Minister accepted it and gave it her stamp of approval.
(Dublin West): The Minister did not answer the question about her role as shareholder.
Other Members are waiting to ask questions. We are all involved.
My constituency is directly affected.
Acting Chairman
I will accommodate everybody.
(Mayo): With regard to the plan, has an irrevocable decision been taken that 2,500 jobs will be axed? What sectors within Aer Lingus will sustain the job losses? Are major changes in work practices involved? Has a decision been taken that pay increases must be deferred or forgone? What routes will be axed? How many aircraft will be sold? The Minister said Aer Lingus stated it does not have the cash resources to pay for a redundancy programme. How much will the redundancy package cost?
Who will pay for it?
I am disappointed with the totally spineless performance of the Minister and the Government on this matter. Does she agree this is another in a series of great betrayals of workers, following what happened to teachers and public sector transport workers, by Fianna Fáil, the Progressive Democrats and the Fianna Fáil Independents? Has Commissioner David Byrne been in contact with Commissioner de Palacio in any way, shape or form?
We met his senior official.
What role, if any, is he playing? In the past Commissioners such as Padraig Flynn played a strong role in negotiations on behalf of Ireland. What is Commissioner Byrne doing?
How did the Minister assess the survival plan? What expertise was available to her? Did she query the use of short-time working, for example, in the assessment of the cost base? Did she or her officials give any indication to management at Aer Lingus regarding how the absolute minimisation of job losses could be pursued and cash projections post-Christmas?
Why has the Minister not fully involved the trade union movement in every aspect of this matter? Has she or the Government any proposals on the funding of semi-State companies in the event of a cash crisis? Media commentators have pointed out that private sector companies such as Ryanair can go to the market to seek additional funding, but the Government is prevented under EU regulations from providing funding for semi-State bodies in such circumstances.
I welcome the Minister's comments and congratulate her on her efforts in dealing with this serious issue. Is she aware of how much of a focal point Aer Lingus is in terms of employment on the north side of Dublin? This area has suffered job losses in recent months through, for example, the closure of Gateway 2000. With regard to the survival plan, can the Minister provide assurances that proposed redundancies will be kept to an absolute minimum? As regards redundancy payments, can she indicate if a redundancy package will be as generous as possible, given the circumstances, and above statutory levels?
Deputy Jim Higgins asked about the decision in relation to the 2,500 employees. The detailed plan I got on Monday morning laid out 2,100 job losses. I regret any job losses. My life has not been about shedding jobs or trying to encourage that to happen. However, I am faced with a grim financial reality and would fail in my duty if I did not outline explicitly to the House, the public and the media the perilous situation facing Aer Lingus. It would be a different story if I tried to cloak it in soft words or evasive techniques. I cannot do so because the matter is serious.
The Deputy also asked about the sectors. The plan, which the chairman told me will go to the board tomorrow, details the situation sector by sector. It has been explained in detail to and talked over with the financial advisers to the trade unions. Before I left on Monday morning I telephoned Dan Loughrey in Aer Lingus and asked him to ensure that begins on Monday. There is a section in the survival plan on changes in work practices. There is also a section on the changes in routes now and in the future.
A question was asked about the redundancy package. The plan states clearly that Aer Lingus does not have any money to pay any redundancy, even of a statutory variety. That is a matter for political decision-making. I will bring it to
Cabinet next Tuesday.
Subject to EU approval.
Deputy Broughan mentioned the Commissioner. I spoke on the telephone to David Byrne about the matter and then met him twice.
It did not do much good.
He is aware of the grave dangers facing the company and that Europe has a key role to play in this matter.
It was not satisfactory by the sound of things.
Deputy Broughan also asked about the survival plan and if the workers have been informed. I answered that question in my reply to Deputy Jim Higgins. The financial advisers were informed of the details last Monday. When the plan is presented to the board tomorrow I understand management will start detailed talks. He also asked if other ways of lessening the blow of the redundancies had been considered. That matter will be discussed when management and the trade unions engage in face to face talks.
The Government wants to ensure the airline survives intact and that 4,000 jobs are maintained in Aer Lingus. One of the Government's aims is to maintain as many sustainable jobs as possible. As of now, that figure is 4,000. We wish to ensure the company remains viable. However, I cannot stand over a decision nor can I recommend to Cabinet that the airline should be allowed to continue trading in its present financial situation. That would be an incorrect way for anyone in public life to do their business.
Deputy Haughey wanted to know if I was aware of the central force Aer Lingus holds in Irish life. I am so aware, particularly in north County Dublin.
North of the Liffey.
However, we must also include Cork and Shannon. Aer Lingus's main employment is in Dublin, but it sustains many jobs both in Cork and Shannon. It is important to talk about Aer Lingus in its totality. I understand Deputy Haughey represents that area and that is the reason he mentioned it. However, I do not want to be accused of not addressing the issue in terms of Cork and Shannon.
I was also asked if management had been considered in the context of redundancy. There is a section in the plan which clearly states – it is emphasised in greater detail in a later section – that all grades from the top will be considered in this redundancy package. It also states that exceptions will not be made when the workforce and the redundancy packages are looked at in greater detail.
It would be great if I was able to talk up the company because I want to keep and sustain it as I realise its importance. However, it is equally important that I am frank and straightforward about the perilous financial situation in which the company now finds itself. The chairman is coming to see me tomorrow evening and wishes to express his views and concerns about the present financial situation.
Acting Chairman
As time is running out, we will increase the number of speakers. I appeal to Deputies to keep their questions short. Deputies Donal Carey, Neville, Sargent, O'Sullivan, O'Flynn and Wright may ask questions in that order.
I indicated at the beginning that I wished to speak.
I also indicated.
Acting Chairman
If Deputies co-operate, we will try to allow everyone to speak.
I will co-operate. I remind the Minister that provision was made in the Cahill plan for a transatlantic company called Aer Línte to operate the airlines. Given that the competitors on that transatlantic route have received cash directly from the American Government, will the Minister highlight the fact that we are on the periphery of Europe and have sole transatlantic flights? Why can the Government not give cash to Aer Línte in the same way as the American Government gave money to its airlines?
There seems to be total confusion about airlines and airports. Will the Government host an international or European conference in Shannon Airport to devise a permanent aviation policy which would deal with both airports and airlines? We have plenty of vacant beds in the mid-west region and would be able to look after them. We also have all types of telecommunications. It should be done.
Does the Minister agree it is unfair and insensitive that Aer Lingus staff learn of developments, which have serious consequences for them, from the media? Will she ensure all aspects of the implementation of the plan will be first communicated to those involved? Does she agree that the daily transatlantic business service at Shannon is vital to the North American based industry in the west and mid-west? Any reduction in this service will have serious consequences for the west and mid-west.
Will the Minister accept the impact analysis that if fares were to pick up by 10% in the next year, it would generate an extra £90 million and that, accordingly, the redundancy announcement is extremely premature? Is the new plan to end political appointments to the board of Aer Lingus? Has she told the Commission that what happens in relation to Aer Lingus will be an acid test for future referenda on European Union matters?
Will the Minister tell the company to withdraw the dismissal notices that have been issued to workers? Can she give us a commitment that there will not be involuntary redundancies in the company? What notice is she taking of the workers in all of this, and of their fear that this may be throwing out the baby with the bath water Given the size of the job cuts it may not be possible to have a viable, reliable service at the end of it. Is she taking any notice of the real concerns of workers in this matter? Will she attempt to reduce dramatically the number of job losses that are being proposed? Is the privatisation issue off the agenda? It has been suggested that Aer Lingus was asked to draw up a plan to reach profitability by 2003 and that that is somehow linked to possible future privatisation proposals. Will the Minister state categorically whether privatisation is off the agenda?
There are 250 Aer Lingus workers in Cork. Given that most of the routes out of Cork are to Europe, will there be any job losses in Cork, or can I assume there may not be? I am disgusted with the behaviour of the Opposition which is vilifying the Minister as if it was her fault and that of the Government.
Nice try, Deputy.
Good try.
I am glad there is a small bit of responsibility coming back into the debate.
That will not get the Deputy promoted.
I welcome the commitment and the will expressed by the Taoiseach and the Minister to support a restructured Aer Lingus. When the Minister goes to Cabinet next Tuesday, with the backing of all her backbenchers, she should minimise the job losses. She should maximise the capital funding needed for a restructured company to return to a trading profit. Will she assure the House that on Friday next, when her officials go to Brussels, they will explore every avenue of support for the company?
Acting Chairman
Very briefly please, Deputy Bruton, as we are way over time.
This is a vital issue and we should not be constrained. The Minister should have had the decency to allow the time necessary for serious questions to be asked.
Acting Chairman
A question, please.
When the Minister says Government support is conditional on the full and immediate implementation of the plan, is she saying there is no room for any alternatives to be put forward by the trade union representatives that would save money and avoid job losses? Clearly there is a huge divergence between the Minister's view, as expressed in her statement, and that of the company. She indicated that the company is seeking cash for redundancies and said this is a political issue which she will negotiate. Then, however, she said money will only be provided by Government, at best, in the form of loans to the company. She is saying the company's plan is conditional not on loans but on cash being made available. She says in her statement that it will be non-repayable but her reaction is that the best she will offer is loans. Is it not the case that the company will be debt-ridden going into the future? The company cannot stand over this restructuring plan if it is to be solely funded by loans.
The attitude to State aid by the EU Commissioner is entirely ideologically based and is irrational, particularly in relation to the north Atlantic routes? Will the Minister's officials please impress, particularly on an Italian commissioner, that State aid has been used for the past 50 years throughout Europe? My second point is more pertinent to this House. Would the Minister agree that political sniping is less likely to produce a positive result than political co-operation on all sides of the House?
Get off the stage.
Deputy Richard Bruton has rightly pointed to the single most important sentence in the Minister's statement.
Acting Chairman
Can we have a question?
It is half a sentence which states that the support is subject to the full and immediate implementation of the plan. That does not suggest there is much room for negotiation. How much money is being sought by the company as a capital injection from the Government, and why does the Minister not feel she can commit herself to that one element of the plan which seems to require a Government decision, which is the provision of that capital?
The Minister said the resolution to many of these difficulties rests in the political domain. Would she accept that, at EU Commission level and broadly at European level, she is now reaping the harvest sown by the Minister for Finance who, earlier this year, dumped all over the Commission when it introduced strictures on his budgetary policy? Would the Minister for Public Enterprise accept it is an error of political judgment for the main Government party to align itself with the arch-Eurosceptic British Tories?
I thought they were the Deputy's lot.
Acting Chairman
I do not want any more interruptions. I have been more than tolerant.
I do not know where the reference to the British Tories came from.
That was Gerry Collins.
Who? Deputy Donal Carey asked for a seminar in Shannon and for cash for Aer Línte. I am quite sure a seminar at Shannon would be helpful. The idea of putting cash straight into Aer Línte would not be allowed. Deputy Neville asked that the implementation of the plan should be made clear to the unions, and that Shannon is vital to the west and mid-west regions. I fully agree that it is. There is no doubt that all the State airports are vital but I know the importance of Shannon to those regions.
Deputy Sargent asked about the pick-up in flights from cheaper fares and, yes, there is a pick-up in flights. However, there is no return to the company from each of those cheaper flights which have been advertised and to which people are responding. They represent an attempt, and I hope a successful one, to attract people back to air transport. Deputy O'Sullivan asked about future privatisation.
I did not ask for it.
No, I know that. It is clear to me that would not be viable, at least for the next three years. The Deputy will understand that I cannot commit myself beyond my own term in Government. It is clear, however, that we are talking about survival, not any quid pro quo.
We are lucky the Minister did not succeed earlier in the year.
I am aware of the workers' fears.
Will there be any involuntary redundancies?
No, I have said that the redundancies should be voluntary and I hope that is what can be achieved.
What about the redundancy notices?
I am not interfering in the day-to-day business of the company.
That is codology.
Deputy Wright asked me to ensure that the Government is seeking to minimise job losses. That is what we are seeking to do.
Is it not in the plan?
When the officials go to Brussels on Friday they will restate all the points we made yesterday and more besides. Deputy Richard Bruton spoke about cash vis-à-vis loans. We are trying to assemble a package which we hope will eventually be palatable to Europe. I have no guarantee of that but we will try to assemble a way of doing it that would be more acceptable to Commissioner De Palacio.
Will it be a combination of loans and grants?
That might be the eventual outcome but I do not know. I am trying to assemble a package which, in principle, would have the best chance. The talks with the officials commence on Friday and I will go to Cabinet on Tuesday. Both matters will proceed in tandem.
Is it not in the plan the Minister brought out yesterday?
Deputy Roche spoke about the importance of Aer Rianta and made a political point which I will not go into.
The Minister is right not to.
Deputy Roche's submission was well made. Deputy O'Flynn asked if I could guarantee the workers' jobs in Cork. Both he and I know that it is impossible for me to guarantee any number of jobs in any place.
Deputies
No.
Do not say that to The Examiner. No interview today.
(Interruptions.)
May I finish the sentence?
Acting Chairman
Please do so.
Cork is a good, thriving airport, as are Dublin and Shannon, and I intend to keep them that way. Deputy McDowell spoke about the financial aid package.
The Minister is talking about the full implementation of the plan.
Yes, that is right.
I presume it entails money and I wanted to ask the Minister how much.
Yes. The plan did not include a request for money. It pointed out that Aer Lingus had no money to pay any kind of redundancy.
Aer Lingus, therefore, has not asked for a specific amount of loan capital.
No, not a specific amount.
Acting Chairman
We are way over time.
Deputy Creed asked if this was the result of earlier sorties by the Minister for Finance, Deputy McCreevy. The Minister played a sterling role at yesterday's ECOFIN meeting for which I thank him.
He was unsuccessful.
The Minister, Deputy McCreevy, has no friends.
The Minister played a strong role.
Sitting suspended at 1.45 p.m. and resumed at 2.30 p.m.