Dáil Éireann díospóireacht -
Wednesday, 16 Oct 2002

Vol. 555 No. 3

Written Answers. - Air Services.

Ruairí Quinn

Ceist:

114 Mr. Quinn asked the Minister for Transport the Government's proposals for the future of Aer Lingus; the Government's view on the results for 2001 and the preliminary figures for the first half of 2002; the progress made to date with regard to the implementation of the company's survival plan; and if he will make a statement on the matter. [18242/02]

Bernard J. Durkan

Ceist:

235 Mr. Durkan asked the Minister for Transport the position in regard to the future of Aer Lingus; and if he will make a statement on the matter. [18579/02]

Minister for Transport (Mr. Brennan)

I propose to take Questions Nos. 114 and 235 together.

As I indicated in my response to Parliamentary Questions Nos. 1260, 1261 and 1288 on 9 October last, I am pleased to note that, barring some unforeseen events, Aer Lingus is on track to make a profit of around €40 million this year, compared to its original projection of losses for the year of €27 million in the survival plan and an operating loss of €50.4 million before exceptional items in 2001. This performance in 2002 is a reflection of the successful implementation of the survival plan measures required to achieve significant cost reductions. These included a reduction of over 2,000 in staff numbers since last September; extensive work practice and other changes; a pay freeze in 2002 and 2003 and the sale of non-essential assets and non-core subsidiaries. This turnaround in performance is a direct consequence of the very clear and committed efforts of the board, management and staff in addressing the serious situation which faced the airline in 2001. I want to put on record my appreciation of all their efforts.

However, I must stress that the competitive and changing nature of this industry requires the airline to continue to focus on cost reductions and efficiency improvements. In this regard, the airline has already embarked on a further series of cost cutting measures which are essential to its future performance potential. Unless this effort continues unabated and the airline builds up its reserves, it will remain vulnerable to market forces and particularly to unexpected economic and other external shocks. I am optimistic, however, given the new focus in the airline combined with the lower cost base and greater flexibility that the airline will be in a better position to respond to market opportunities which may arise.

We have seen clear evidence of this in the fact that, despite the difficulties of the past year, Aer Lingus has commenced operations on five new routes, with a further four planned to commence from end October 2002, all from within existing resources. I am assured that the company will continue to monitor opportunities for new and profitable services going forward. In addition to lowering fares for the leisure market, the airline has recently announced a further major reduction in the cost of air travel to benefit business travel lers to the tune of €65 million. Aer Lingus advise that this will involve the provision of a product to its customers, at a price they are prepared to pay, for a service better than its competitors in terms of quality, punctuality and airport locations.

With regard to the future of Aer Lingus, the Deputy will be aware of the previous Government's decision in October 2001 to facilitate private sector and staff investment in the company to support its future development provided the survival plan was fully implemented. In the context of the survival plan, a framework was agreed between all parties last December in relation to an increased staff shareholding. I am hopeful that talks in relation to this matter can be successfully concluded in the near future. My primary concern in recent months has been to see a viable and flexible Aer Lingus taking shape which is able to compete in the volatile and changing aviation market. In the near future, I will be looking at the funding requirements of the airline taking account of the Government decision on investment in the company. I will be meeting the board later this month to review the airline's performance.

Question No. 115 answered with Question No. 78.

Question No. 116 answered with Question No. 104.