Vol. 551 No. 4
3 Mr. Higgins (Mayo) asked the Minister for Public Enterprise if she has had discussions in the past two months with Aer Lingus in order to receive an update on the Aer Lingus rescue plan; and if she will make a statement on the matter. [10655/02]
Both I and my officials remain in constant contact with Aer Lingus on matters relating to its survival plan. I met the chairman last week for an update. He advised me that while a degree of stability has emerged, market conditions continue to be difficult in the international aviation sector and the airline remains vulnerable to external shocks. The challenge to remain competitive is ongoing and unrelenting in this difficult sector.
The chairman also advised me that significant progress summarised as follows has been made in relation to the plan: the 25% reduction in capacity came into effect with the introduction of the winter flight schedules and will continue into the summer season; the voluntary severance/early retirement programme is proceeding satisfactorily; extensive work practice and other changes as set out in the survival plan are being implemented to yield the required cost savings; and a number of non-essential assets have been sold.
Furthermore, the survival plan has been assisted by aggressive cost management and a recovery in the volume of sales due to fare promotion initiatives and the upgraded Internet facility. The board will consider the 2001 accounts at its meeting today. I understand that due to the progress on survival plan measures outlined earlier, the results for the year will show an improvement on the projected substantial loss at the operational level in the survival plan. However, I am also advised that significant exceptional costs arose in 2001 with the result that a large overall loss will arise for the year.
In relation to performance in 2002, I am advised that there has been a recovery in traffic volumes on the transatlantic route, but yields are considerably below budget projections and previous year levels. In addition, market conditions on some European routes are reported as difficult. On the other hand, notwithstanding the current difficulties, Aer Lingus continues to monitor opportunities for new and more profitable services within the constraints of existing resources.
The Minister's time has expired.
I understood one could speak for as long as one wished.
The reason Ministers are allowed only two minutes is to discourage them from giving unnecessarily long replies in order to use up time.
The Chair is very sharp.
The Minister now realises how much she will miss me.
(Mayo): God bless the days when one could speak ad nauseam.
Am I allowed to speak again?
The Minister is allowed to reply to a supplementary if she so deigns.
Additional information.It was in this context that the company recently decided to introduce new services to Malaga, Barcelona, Alicante, Nice and Faro through the redeployment of aircraft from other European routes where the number of daily services had been reduced due to lack of demand. There is no doubt that considerable management action and initiative will be required in 2002, both to fully implement the very significant changes envisaged in the survival plan in the timescale required and to continue to meet revenue and operating targets.
On the issue of external investment, there is no question, given the company's vulnerability, in particular, the weak balance sheet, that such investment is necessary to support its future development and the Government decision of 23 October 2001 to facilitate private sector and staff investment in the airline still stands. Considerable progress has been made on the increased staff shareholding in the company and I expect talks to resume on this matter shortly after Easter.
Arrangements to give effect to the private sector investment will not be activated pending resolution of the pilots' dispute. The dispute is the subject of arbitration and facilitation processes, as proposed by the Labour Relations Commission, which are expected to be completed shortly.
(Mayo): I thank the Minister for bringing the House up to date on the rescue plan. One of the key and integral components of the survival plan was that a strategic partner was to be found for Aer Lingus. What is the current position in this regard? How many contacts have been made about prospective partners and with which companies? What has been the outcome of these contacts, in other words, is there a strategic partner on the horizon? Is this key aspiration in the plan to be realised?
Clearly this matter is not shelved until the survival plan has been implemented in its entirety. Talks are continuing between employees, management and my Department. A facilitator was appointed to examine ways of dealing with the 80 pilots and it is understood that the reports of both Phil Flynn and John Russell are to be circulated by the Labour Relations Commission after Easter. The Deputy is right in that the Government decided to facilitate private sector investment but until the survival plan is fully implemented that cannot happen.
Considerable progress has been made on increased staff shareholding and we reached a framework on that last December. Talks are to begin after Easter. Until the survival plan is implemented it will not be possible to give any further information on this matter.
(Mayo): In relation to the survival plan, I understand that negotiations have concluded with most of the staff, with the one outstanding segment being the pilots. That is a crucial element, needless to say, as without pilots we cannot fly. Is the company optimistic that negotiations with the pilots will be brought to a satisfactory conclusion and if so, when?
Also, was one of the difficulties highlighted about the company the fact that, regarding transatlantic traffic, there has been a decline in front of plane passengers who are paying top dollar? As a result there will be a substantial loss even based on the figures given by the Minister. Also, can I ask—
The Deputy should stop asking or the Minister will have no time to reply.
(Mayo): When is it anticipated that the survival plan will be concluded?
It is anticipated that the two reports, from Phil Flynn and John Russell, will be reported upon shortly after Easter. One always hesitates to be optimistic about such a matter until the full reports are in but talks were entered into in good spirits and enthusiasm and I hope the outcome will be satisfactory. Regarding the transatlantic routes, it is the higher paying passengers who are not there because companies have cut back on staff travel. Clearly that has had an effect.
Be that as it may, the story is good in Aer Lingus. I thank the chairman, the board and the employees for all their work on the survival plan.
