Dáil Éireann díospóireacht -
Thursday, 9 Oct 2003

Vol. 572 No. 2

Aer Lingus Bill 2003: Second Stage.

Minister for Transport (Mr. Brennan)

I move:

That the Bill be now read a Second Time.

The main purpose of this Bill is to give effect to the employee share ownership plan, ESOP, agreed by the Government and Aer Lingus unions and to provide for a legal framework to facilitate a process of external investment in the airline in the event that the Government embarks on such a process. The Bill also includes an enabling provision for the establishment of new pension schemes by Aer Lingus for general employees and pensioners and for amendments regarding the appointment of directors, including worker directors.

While this is a short Bill, before I outline the purpose of each section, I want to make some general remarks. The original employee share participation scheme, ESPS, for Aer Lingus staff was agreed under the Cahill plan in 1993. This scheme provided that employees satisfying certain service criteria were entitled to receive the equivalent of 10% of the issued share capital of Aer Lingus as at 31 December 1995, valued at approximately €30.98 million, earned out of profits of which 5% is by way of shares and 5% by way of cash.

Since the scheme was established in 1996, a total of €15.5 million has been paid to staff in cash and a total of 12.2 million shares in Aer Lingus Group pIc have been allocated to staff. No further shares or cash are due to be allocated or paid under the existing scheme.

Following the Government decision in December 1999 sanctioning an initial public offering, IPO, of Aer Lingus shares, negotiations commenced on an Aer Lingus ESOP to bring the employees share to 14.9% in line with Government policy. The Government's policy for the establishment of ESOPs in semi-State companies is that the total amount of equity which an ESOT can hold is 14.9%, of which up to 5% of equity may be given for organisational transformation and the balance of up to 9.9% must be paid for in cash to the Exchequer. The Government policy envisaged that the full 14.9% is only relevant in certain circumstances such as when the State is exiting from the company.

While progress was made on some of the ESOP issues, negotiations did not conclude due to a number of external and internal difficulties including industrial relations problems in 2000 and 2001, the deepening economic downturn and the impact of the foot and mouth disease, all of which led to the eventual cancellation of the IPO process. These events were quickly followed by the terrorist attacks of 11 September 2001 and the consequent devastating global impact. As we all recall, the aviation sector was badly affected. Some airlines did not survive while others are still struggling to recover from the impact.

The events of 11 September 2001 greatly exacerbated an already difficult trading position in Aer Lingus with the result that the company was on the brink of bankruptcy in late 2001. Faced with this crisis, the Government decided on 23 October 2001 to facilitate private sector and further staff investment in the company. This was contingent on support by Aer Lingus staff for implementing the survival plan in full. The survival plan agreed at that time included the reduction of over 2,000 in staff numbers, a pay freeze, substantial work practice changes and the sale of non-core assets. This plan was the subject of intense negotiations with unions with the assistance of the Labour Court and the Labour Relations Commission.

I want to acknowledge that it was the quick action to cut costs and stem losses, with the co-operation of staff, which resulted in the survival of the airline. The survival plan involved significant pain and sacrifice and the ESOP is the tangible recognition of that contribution. Agreement on a framework for the ESOP was reached in December 2001 following detailed and intensive discussions involving Ministers, unions, company management and senior officials from the Departments of the Taoiseach, Finance and Transport.

I again refer to Government policy on staff shareholdings in State companies. Due to the unique circumstances of Aer Lingus in late 2001 when it was on the verge of bankruptcy, it was decided regarding the 9.9% element, the con sideration would be the pay foregone elements of the survival plan. A judgment was made at the time by Ministers that this was the only course of action to ensure the survival of the company.

During 2002, departmental officials, company management and unions took the basic framework already agreed and together with their advisers negotiated and finalised the necessary legal documentation culminating in the signing of documents such as the ESOP deed of covenant and the trust deed in March 2003.

Existing legislation only allows for the distribution of up to 5% of the share capital of Aer Lingus for the benefit of staff. Full implementation of the ESOP, including the issuing of the additional 9.9% shareholding to staff and the appointment of an ESOP director, can only be completed with the enactment of this legislation.

I will now outline the key elements of the agreement on the Aer Lingus ESOP. An employee share ownership trust to hold shares on behalf of the participants will be established with an equity base of up to 14.9%, including the shares currently held by staff. The existing staff shareholding is open to purchase by the ESOT. Payment for the additional 9.9% will be by way of the pay foregone elements of the survival plan. The implementation of the ESOP is subject to verification by the chief executive of Aer Lingus that the relevant elements of the survival plan have been implemented. The ESOT will be entitled to appoint one director to the board of Aer Lingus with a further director to be appointed by the Minister from nominations submitted by the unions. For as long as the worker participation Acts apply to the company, the aggregate number of worker directors and ESOT directors cannot exceed four. In line with Government policy, for as long as the State holds any shares in the company, the maximum shareholding, which the ESOT and staff can hold, is 14.9%.

As I said earlier, this is a unique ESOP arrangement made in unique circumstances. At the time the ESOP framework was agreed, the company was arguably of very little value. Now, however, that stake is worth a very considerable figure by reference to analysts' valuations which appeared in media reports in recent times. Whatever the ultimate value, it should be acknowledged that staff now have a valuable stake in a valuable company and that all efforts should be focused on strengthening the company financially and operationally so as to increase its value in the interests of all stakeholders. Whatever the future circumstances and policy decisions of Government, the 14.9% will remain the limit of staff shareholding while the State holds any shares in the company.

As already mentioned, Aer Lingus has made a remarkable recovery and return to profitability since the aftermath of 11 September 2001. The board, management and staff have transformed the airline into a lower cost, flexible, efficient business model offering low fares with a quality service. The airline is better placed now to withstand competitive pressures and economic and other external shocks which may particularly impact on the volatile, cyclical aviation sector.

In 2002, Aer Lingus achieved an operating profit of €63.8 million compared to a loss of €52.1 million in 2001. The first half results for 2003 demonstrate that the new focus continues to yield results with an operating profit of €14.3 million against an operating loss of €12.6 million for the same period last year and an operating loss of €38.1 million for the first half of 2001. This significant turnaround was achieved against a tough background including the war in Iraq and the SARS scare. Aer Lingus is on track to exceed its full-year operating profit forecast of €75 million for 2003.

On the operational side and despite the difficulties of the past two years, Aer Lingus has introduced services on 16 new routes, all from greater efficiencies in the utilisation of existing aircraft and staff resources. This brings the current number of destinations served by Aer Lingus to 29. Last week the company announced services on nine new European routes which will commence in 2004. This ability to respond flexibly and rapidly to new opportunities is a reflection of the developing new culture in the organisation since the introduction of the survival plan.

Taking account of the improved performance and the continuing expansion of European services, I am examining a proposal for the upgrading of the European fleet. This will see the airline obtain a single short-haul fleet aircraft type for its European operation with the acquisition of 17 new Airbus A320 aircraft. These aircraft will replace existing but smaller capacity Boeing and Bae146 aircraft. The new aircraft will be on-stream by 2005, maintaining the total short-haul fleet at 27 but with increased capacity from the larger aircraft and lower unit costs. The company proposes to fund this investment from internal resources.

Aer Lingus has also advised that it sees significant growth opportunities on the important transatlantic market if the current bilateral restrictions are eased. I am looking at this matter in the context of the EU-US "open skies" talks and the opportunities for growth in the tourism and aviation market.

The airline has made, and continues to make, a significant and valuable contribution to the economic and tourism development of the country by providing a range of quality services to destinations in Ireland's main markets in the UK, Europe and United States of America. It is the Government's wish that it continue to play this key role for the future. To ensure that role continues, we must be open at all times to examining options crucial to the ongoing and future success of the company, taking account of the global aviation environment.

For this reason, an enabling provision has been included in this Bill which allows both the sale of some or all of the State's shareholdings and for the company to issue new shares. It is now over six years since the Government first decided to explore the ownership issue which led to the decision in 1999 to embark on an IPO of the airline. Since the cancellation of that planned IPO, the board and staff of Aer Lingus have focused on the implementation of the survival plan and more recently, on building on the progress made. I have taken the view since coming into office that the company needed to continue that focus on positioning the airline so that it could compete successfully and grow profitably. This it has done and is continuing to do.

In that context, and taking account of progress in repositioning the airline, I asked the chairman last July to examine and report back to me on future options for the company. The chairman supplied me with that report recently. The company's view is that a private sector investment process should be initiated without delay. I am considering that report carefully and I will bring the Aer Lingus views, together with my own position, to Cabinet in the coming weeks.

I want to refer to the current industrial relations difficulties in the cabin crew area of Aer Lingus. While I accept that change is difficult for all, I hope this matter can be resolved on the basis of the recent Labour Court recommendations, without further impact on customers and without jeopardising the company's progress to date.

I now turn to the main provisions of the Bill. Section 1, the definitions section, is self-explanatory. Section 2 and the Schedule provide for the repeal of provisions, in whole or in part and on different days, of the existing legislation governing Aer Lingus. Section 3 provides for the sale of all of the State's shares in the airline. Provision is also made that any funds received in respect of the sale or disposal of the State's shareholding in the company will be paid into, and disposed of for the benefit of, the Exchequer.

Section 4 makes provision for Aer Lingus to issue and sell new shares. Section 5 makes provision to enable the Minister for Finance to enter into one or more agreements in connection with the sale of shares in the airline, including customary provisions contained in a shareholders' or underwriting agreement as the Minister may wish.

Section 6, in order to facilitate ESOT board representation and, where and when necessary, third party board representation, provides for the full or partial disapplication from the company of the Worker Participation Acts, for the retirement of directors upon such disapplication and for the Minister to appoint new directors to fill vacancies so created. The overall number of directors does not change. Section 7 provides for employee shareholding schemes and their acquisition of shares in the company. Section 8 provides for an exemption from section 60 of the Companies Acts. Section 9 is an enabling provision to provide that Aer Lingus may establish a superannu ation scheme for Aer Lingus employees and former employees of Aer Lingus.

Section 10 is a standard provision in relation to the expenses of the Minister for Finance and the Minister for Transport. Section 11 provides for the repayment to the Exchequer of a loan and outstanding interest by Aer Linte. Section 12 provides for the disapplication of certain acts to Aer Lingus. Section 13 gives the Short Title and commencement provisions.

Before I commend this Bill to the House I want to pay tribute to everybody at Aer Lingus for what they have done. They have turned around an airline which a few years ago was on the verge of bankruptcy, through the sacrifices of the staff in particular, led by the board, the chairman and by strong management. The current chief executive especially has shown great courage and skill in leading that organisation for many years. This House and I understand the sacrifices made by all the staff, the cost-cutting they had to bear and their absolute determination to turn the airline around. What they have achieved is unique because airlines around the world are in difficulty in the aftermath of the attacks on the World Trade Centre on 11 September 2001. When the aviation history books are written it will be a source of some satisfaction and admiration that in the face of the troubles after 11 September and the hopes and aspirations of so many people in Aer Lingus the company was able to reach a point where it is looking at a possible €75 million profit.

The 14.9% is being transferred to staff. That is not just a token, it is a real decision. I am not today going to put a valuation on Aer Lingus but in the financial pages of the press one can read different estimates from €300 million to €700 million or €800 million. Whether it is the former or the latter one does not need to be good at sums to know that 14.9% of that is very valuable, it could be anything from €40 million or €50 million up to €100 million. Through this Bill this House gives effect to that percentage and that is the range of the current valuations of the shares which the staff hold. They deserve that. They worked hard for it and put up with considerable sacrifice to make it happen. They gave up increases in their incomes to pay for these shares and I do not believe this House begrudges the benefit to them. However, it is worth noting, from the taxpayers' point of view, that these are very valuable shares which are being entrusted to the staff at Aer Lingus, who will now own 14.9% of a very valuable company.

Having outlined the main elements of this legislation, I also wish to make it clear the position regarding the enabling provision on possible future disposal of the rest of the shares in Aer Lingus – I should say, rather, the company itself. No Government decision has been taken to dispose of Aer Lingus – let me make that very clear. I have a recommendation from the company, giving me its opinion. As expressed to me by the chairman and chief executive, the opinion of the company is that its future would be best secured by taking on board private sector investment so that it could expand its fleet into the future and secure funds for the airline in that way.

There are arguments on both sides of this question and, no doubt, those will be expressed in the House. There are arguments to the effect that Aer Lingus is a strategic company—

Ms Shortall

Strategic for the Minister, perhaps.

Mr. Brennan

—and that, as such, it is best in State ownership. I understand that point of view. There is also the view which the company put to me, as I have just mentioned, that, into the future, it is best to have access to the marketplace. It is also worth noting the EU situation in this regard, in that, in good times, all is well and, in bad times, it is not possible for the State, in future, to invest funds in an airline because of EU Commission state aid regulations. Accordingly, whatever decision may be taken – I wish to emphasise again that no decision has been taken – must be for the benefit of the airline and for no other reason. It is what is good for Aer Lingus that counts and it is on that basis we should study the future options for the airline, casting our minds forward, perhaps, five or ten years to consider what type of Aer Lingus we will have at that time.

For all those reasons – and, again, I stress that no decision has been taken to dispose of Aer Lingus – I will take the report I have from the company and my own views to Cabinet. At that stage, we will discuss the matter, taking on board points arising from this debate and the state of the global airline industry with a view to reaching a conclusion which will secure the future of Aer Lingus and allow it to grow its staff numbers into the future. I commend the Aer Lingus Bill 2003 to the House.

Mr. Naughten

I move amendment No. 2:

To delete all words after "That" and substitute the following:

"prior to the publication of a White Paper on the privatisation of Aer Lingus, Dáil Éireann declines to give a Second Reading to the Bill.".

I welcome the opportunity to raise some issues on this Bill. First, I wish to make a particular point. When the original legislation was published and debated in the House, that took place under completely different circumstances than are now applicable. As the Minister stated, the company was on the brink of bankruptcy in late 2001. Faced with that crisis, the Government looked at the issue of privatisation of the company. Now, however, the company's situation has been completely turned around. In the first half of 2003, Aer Lingus has shown a profit and its costs have decreased by over 14%. The company is continuing to drive down costs and the resulting savings are being passed on to the consumer.

As the Minister pointed out, this was despite the effects of the war in Iraq, the detrimental effects of 9/11 and a decreased perception of public confidence with regard to travel, particularly air travel. However, in this very difficult financial background, Aer Lingus has actually turned its position around. Its staff and chief executive must be given credit for that.

There is now a very lean operation, unlike the situation when the original legislation was published. Throughout Europe, state airlines had operated on a monopoly basis for far too long. That is the reason many of them, such as Sabena, went to the wall. The cost of a flight from Dublin to either London or France, for example, was both exorbitant and unreal. One state company, Aer Lingus, had moved from being one of the first monopolies in this country to facing the full blast of competition. In 1986, my late colleague and then Minister for Communications, Jim Mitchell, authorised Ryanair to compete with the national airline. As a result, we now have two efficient airline companies.

Although Aer Lingus almost failed to survive the effect of competition, it has now emerged as an efficient, State-owned company. This is due, in no small part, to the current management team and staff of the company. Clearly, Government policy and other semi-State companies should follow that example. The recently reported financial results from Aer Lingus confirm that the airline has transformed itself into a profitable enterprise. The chief executive, Mr. Willy Walsh, the management and staff have made great strides in reducing the cost base and increasing revenues through the adoption of their low fares strategy.

Aer Lingus is now on track to make profits of between €75 million to €80 million this year, against the difficult environment for air travel, which was depressed by the war in Iraq and the impact of the SARS virus. There is still further scope for Aer Lingus to cut costs across its operations. For example, it is aiming for a sharp increase in the proportion of bookings made over the Internet. If successful, that could reduce its cost base by a further €40 million. Clearly, the background and current status of the company have changed dramatically and that is a very positive development.

The Minister referred to section 7 of the Bill regarding the employees' shareholding. It is true that the employees have played a critical part in turning the company around and, undoubtedly, recognition should be given for that. I note the Minister's statement that the implementation of the ESOP is subject to verification by the chief executive of Aer Lingus that the relevant elements of the survival plan have been implemented. It is critical that that is tied into the legislation. I am glad the Minister commented on the industrial action which is currently taking place. In the past, there have been concerns that a great deal of the industrial action which took place has been to the detriment of the company. I hope the situation can be resolved through the LRC so that we can ensure the continuation of a lean operation, with a good relationship between staff and management of the company.

In my view, section 5 is the critical element of the Bill, which provides for the privatisation of Aer Lingus and gives the green light to Government to seek a purchaser for the national airline. With regard to the future control of Aer Lingus, we must think strategically and identify any potential future problems. In the past, there may have been merit in the sale of Aer Lingus on the grounds that the company was inefficient and constituted a burden on the State. Now that the company is competing successfully in an open market, we must ask why privatisation is being considered. This may be viewed in the future as a short-sighted decision that could threaten our national interests. The Minister deals with this major element of the legislation in four sentences in his script without outlining any business-based case. He said we should consider this legislation with the best interests of Aer Lingus in mind – we should consider it with the best interests of the State in mind.

Due to Government reform over the years, competition and deregulation within the industry are not problems, but our future access to Britain and other destinations could be threatened under such a proposal, particularly in light of the Minister's view on it. I have yet to be convinced that this is the way forward so I want to hear the Minister's strategic plan for the company. The likely purchaser of Aer Lingus is British Airways, which could make more money by re-allocating Aer Lingus's valuable slots at Heathrow Airport to its long haul services out of London at the expense of the crucially important access to and from our country via London's principle airport. These slots are a strategic national asset, not just an asset to the company, which have been built up with taxpayers' money over a long period of time. Any decision on the sale of such an asset must be made by this House on behalf of the taxpayer and not solely by the social partners. This is a potential cash cow and should not be used by this Government to fatten its pre-election coffers to buy another election victory. Ireland is dependent to an almost unique degree on air services for access to and from the rest of the world and, from a purely economic point of view, it is vital that these slots are retained to ensure we have key links to Europe and the rest of the world.

We do not want to repeat the mistake of Eircom, where the company was sold off for short-term gain and not in the strategic interests of the State. Eircom now has no interest in developing its network, the company is only interested in the cash generated by its assets. It cannot be blamed for this, as it is the objective of its shareholders. However, it is not in the national interest to have public policy which runs contrary to that of the private company. In light of what happened with Eircom, no one should be taken in by the assurances on issues of national concern that may be sought and given at the time of privatisation.

The Government justifies the sale of the company by suggesting that EU law prevents it from investing in the future growth of the national carrier and that it is only through privatisation that Aer Lingus can grow. This is false and misleading. While the Government is not permitted to subsidise losses by Aer Lingus, the company is no longer loss making. It is important to clarify this myth about the EU ban on State investment in Aer Lingus and other competitive State enterprises. The Government's plan to sell off Aer Lingus has nothing to do with the European Union. Speaking in Dublin recently, the EU Commissioner for Competition made it clear that the Government, as the shareholder in the airline, retains the right to make genuine investments in Aer Lingus that are needed to secure its continued expansion. The question for Government is whether it is prepared in the future to provide such investment and secure the slots which are in Ireland's economic interests.

We must tread carefully and not dispose of Aer Lingus for short-term gains. The privatisation of Eircom is a salutary warning. It was badly managed because it was undertaken for the wrong reasons – partly ideological and partly to maximise the amount of money the Government would receive. The Government's attitude to public sector companies is being distorted because its only interest is in relieving the pressure caused by public sector borrowing through selling off State assets. This would be a lucrative way to achieve that objective. The question of whether a particular service to the public should be provided by the State or private enterprise should be decided on a case-by-case basis where the merits of each case, not the self-serving interests of the Government, are clearly evaluated. The Government must clearly set out the conditions under which the company should be sold and the policy objectives it will achieve by such a sell off.

In his speech, the Minister said we have a bit of this, that and the other, but we do not know what he is talking about. There is a report on his desk from the chief executive of Aer Lingus but we do not know what is in it. We do not know what proposals the Minister will put to Cabinet yet he expects us to adopt this legislation without any indication of his intentions. Will there be a partial sale? Are we putting mechanisms in place to ensure we can secure the slots in Heathrow Airport which are a critical national asset? We do not know what his plans are but he expects us to rubber stamp this Bill. We need a strategic view set out in a White Paper that states the terms of any sale or partial sale of the company. This has not been set out so far and four sentences in a speech did not throw any further light on the matter.

It would, therefore, be irresponsible for Members to pass this Bill without any detail on the circumstances surrounding the sale when this matter will not come before the House again prior to its ratification. I await the Minister's response on this because it is pointless talking about the legislation unless he elaborates on his plans. The Opposition is not prepared to rubber stamp something without knowing what it is and it is in that context that I have tabled amendment No. 2. The Minister should set out his plans when he responds at the end of this debate and a White Paper should be published to state the conditions under which certain measures will take place. That is imperative if we are to ensure that the sale of Aer Lingus is not the same as the sale of Eircom.

Everyone would agree that a bad decision was made in respect of Eircom. I was in favour of that sale at the time but I admit my mistake. Eircom cut back on investment in infrastructure throughout the State after the sale. The Minister for Communications, Marine and Natural Resources now has to invest in it because there is no private capital available. There are road hazards because Eircom refuses to remove telephone poles that are virtually in the middle of the road. The sale of Eircom did not serve this State, we went from a public monopoly to a private duopoly. I want, therefore, to see how the sale of Aer Lingus would serve the consumer and the State and not just the company itself, which seems to be the Minister's sole interest.

The Minister mentioned Aer Lingus's policy. It is currently examining its entire fleet with a proposal to operate a single make of aircraft as a further cost-saving measure. The company has opted for Airbus to modernise its short haul fleet by acquiring 17 A320 aircraft. I have a basic question to ask the Minister in relation to this policy. What happens if a flaw comes to light in the Airbus A320 fleet? Should Aer Lingus convert its entire fleet to the A320, the discovery of a flaw would leave the airline grounded until that flaw was addressed. Was this risk evaluated prior to the presentation of the proposal to the Minister and the board of the company? What protection is in place to ensure that the company would still fly if a flaw were found in the context of a single type fleet operation? This is a genuine and practical concern. In the past we have seen particular Airbus and Boeing models grounded after air incidents. Especially in the immediate aftermath of an air accident, it is standard practice to ground other aircraft of the relevant type which are flying throughout the world. If there is a serious disaster involving an aircraft of the A320 fleet, our entire short haul fleet will have to be grounded.

As I am not an aviation expert, perhaps the Minister will look into the following matter for me. I am told that it is substantially more expensive to run the Airbus fleet than it is to run the Boeing fleet despite the fact that the A320s contain an extra row of seats. As that should be a consideration for a low cost airline, the Minister should examine the matter in the context of his review. This concern must be balanced against the cost savings involved.

When the contract with Airbus was negotiated, was any consideration given to an offset obligation? When the purchase of 64 aircraft was agreed between the Finnish state and McDonald Douglas in 1992, an offset obligation was tied into the contract. Over a 13 year period the company agreed to invest US$3 billion and to date Finland has received over US$2 billion of that sum in economic benefit well in advance of the return payments for the aircraft which it has purchased. This has created additional investment and jobs in the country. Offset programmes can significantly contribute to a country's industrial and economic base. The Finnish government seems to be a leader in this field with about 170 Finnish companies currently participating in more than 400 projects. In light of our current difficulties in obtaining private funding for public private partnerships and other measures, we should consider this success. A flight by the Minister or some of his officials to Finland to examine the manner in which they are operating these programmes would be very worthwhile. Whether money comes from State or semi-State funding, there should be some form of offset obligation to allow us to get at least some of that money back to benefit the economy generally.

State airports are critical to the development of Aer Lingus and the chief executive of the company has made a number of comments in this regard. Independent airports at Cork, Dublin and Shannon represent great potential for Aer Lingus to compete for new air traffic. They could also facilitate the involvement of local commercial interests in the development of airport services. There is an opportunity in this to begin to develop a regional policy. It is the contention of those opposed to the break up of Aer Rianta that the airports at Shannon and Cork are inherently loss making, surviving only on cross subsidisation from Dublin. International studies, however, suggest that airports with passenger volumes of 2 million are viable and have the critical mass to make the provision of ancillary retail and franchising services attractive. Shannon and Cork cater for such passenger volumes. While all three airports are commercially viable within their current passenger numbers, they have the potential to increase volumes.

It must be remembered that publicly owned airports primarily constitute strategic infrastructure which serves local economic development. Their purpose is not to create State assets. These airports can become the engines which drive the implementation of a policy of regional development. While there are risks associated with such a policy, there are also major benefits which is why we want to see the Minister's plans for the airports and their boards. We await, however, any detail in respect of his proposals. If properly structured, a regional policy should tip the scales in favour of the air traveller and the consumer. It is imperative that the Minister publishes the new business plans for each of the three airports. The Minister has had discussions with the trade unions in Aer Rianta in relation to threatened industrial action over the break up of the company and their demand for an independent chairman. If, as it should, the Minister's argument stands up, I do not see why an independent chairman cannot be appointed to facilitate talks. I ask the Minister to review the matter, to put the details of his proposals on the table and to make a clear and concise argument as to why he believes the airports at Shannon, Cork and Dublin can stand on their own feet.

What will be the mandate and criteria of the airports in the future? Are they to be profitable and must they pay a dividend to the State? What business direction will be given by the Government? I presume the airports will have to break even. There is a need for high capital expenditure at our airports. The airports at Dublin and Cork have major development plans, but the latter will require additional investment to expand its services. Shannon Airport requires major investment to re-lay its 50 year old runways. Will the Government guarantee any loans airport boards require? Under the current Act, Aer Rianta is provided with an upper limit to the level of borrowing it can incur thus giving the company a guarantee should it approach a financial institution to obtain a loan. Will the new boards be provided with this facility? There are ongoing requirements for capital investments to maintain existing facilities and to upgrade emergency, safety and security provisions. It is envisaged, based on international comparisons, that simply to cater for existing traffic and passenger numbers Dublin Airport will be required to spend approximately €100 million per annum while Cork and Shannon will be required to spend €50 million per annum.

Has the Minister presented his plans on the proposed break up of Aer Rianta to the European Commission? If so, has he received a response regarding compliance with EU state aid and competition rules in the context of the proposed transfer of debt from Shannon and Cork to Dublin Airport? I demand that the Government furnishes the Commission with these details without further delay and that it publishes its proposals.

The Minister must look at the bigger picture when in the next week or two he appoints members to the new airport boards. He must discontinue the standard practice of appointing people on the basis of party political affiliation rather than suitability for the post. We must look outside the box to adopt a fresh and creative approach to the appointments of the new airport authorities. For far too long appointments to State boards have constituted political sinecures. In light of the significant reforms at the State airports, the Minister must look to international expertise as well as to home grown individuals when making these appointments. It has been the practice in this State for far too long to examine the party political affiliation of a particular individual. I could not care less what the party affili ation of any board member is once he or she has the competence and ability to ensure that the new companies are run effectively. I urge the Minister to ensure that happens.

I hope, at a minimum, that at least one member of each board is an international expert as it is critically important that they have the opportunity to adopt a completely new perspective on the development of our airports. While some of those already mentioned are highly successful in their own business ventures, it is time to take a leaf out of the Competition Authority's book and consider the inclusion of international experts in the appointment process. If we are to see our State airports, Dublin, Cork and Shannon, continue to develop on a strong commercial footing, it is imperative that the best expertise is made available to those boards.

Earlier this year, my colleagues, Deputies Enda Kenny and Pat Breen, met the European Commissioner for transport in Brussels where they discussed the implications of the open skies policy and the proposed break-up of Aer Rianta. During the meeting the Commissioner confirmed that the Commission recognised the importance of Shannon Airport for the development of the mid-west region. She also confirmed that the Commission would consider any proposal for special arrangements for Shannon, provided they were transparent and non-discriminatory.

I call on the Minister for Transport to bring forward his proposals on the future of Shannon so that they can be considered in the context of the negotiations on the open skies agreement, which has just commenced. It is imperative that the Minister should outline his position in respect of the proposals on the open skies policy to allow it be debated in this House. We can either agree or disagree with them but at least we will know the Government's position on the issue.

On section 9, will retired Aer Lingus aviation staff be covered in the context of this legislation? I understand their pensions have fallen by 25% behind their public service counterparts over the past ten years. We are talking about 4,500 people, between Aer Lingus and Aer Rianta, who had similar pension rights up to 1969 until a directive issued from the Department of Finance which was implemented by both Aer Lingus and Aer Rianta but not by other semi-State companies such as the ESB, Bord Fáilte and An Post. As a result of that, the aviation companies made a contribution of only 6.375% to the pension fund. That has remained static. It means that an aviation worker who retired on a pension of £5,000 or €6,350 per annum ten years ago has had that pension increased to €8,000. If it was linked to the wage movements within the public service, it would now be worth €10,060.

The retired aviation staff are seeking a capital injection and that should be considered in the context of this legislation. Over many years those people built up Aer Lingus as a State asset. The point can be argued on the efficiency of the com pany over the years but the fact remains that we had some of the most valuable slots available at Heathrow Airport. As I said in the context of the debate on privatisation, these staff were involved in building up that asset over many years and I ask the Minister to consider addressing some of the concerns of these employees in the context of Committee Stage. They were raised in the context of the previous legislation but very little was done at that time. Now that we have the opportunity and I ask the Minister to address them when replying to the debate.

Will he outline clearly his plans for the sale of part or all of Aer Lingus and the conditions under which that will be done? He should at least give us an opportunity to make a decision on what he is talking about rather than telling us in four sentences that he is considering this or that. We want to know what the Minister is talking about before we can agree this legislation.

Ms Shortall

The Labour Party opposes the Aer Lingus Bill for one principal reason, namely, the Bill gives the power to Government to privatise Aer Lingus without any economic case being put forward, without any policy in this area or any proper debate in this House about the future of Aer Lingus. To that end, I want to move an amendment to the Bill—

An Leas-Cheann Comhairle

As an amendment has already been moved, the Deputy cannot move her amendment but she can speak to it.

Ms Shortall

This amendment was the first amendment submitted. Will you allow me to read it, a Leas-Cheann Comhairle?

An Leas-Cheann Comhairle

The Deputy may read it but she cannot move it.

Ms Shortall

The Labour Party has tabled an amendment which states:

To delete all words after "That" and substitute the following:

"Dáil Éireann:

–noting that while the Aer Lingus Bill 2003 has been presented as a vehicle to give effect to the welcome Employee Share Ownership Plan (ESOP);

–believing, however, that the primary purpose of the legislation is to facilitate the privatisation of Aer Lingus, a move for which no convincing case has been made; and

–conscious of the national airline's importance to Ireland as an island nation and a valuable tourist destination;

declines to give a second reading to the Bill.".

The Labour Party believes that while this Bill has been presented by Government as a means of giving legal effect to the agreed ESOP, it is clear that the primary purpose of the legislation is to give a carte blanche to the Ministers for Finance and Transport to do whatever they like with the Aer Lingus company without reference to this House or anybody else.

I strongly object to the outrageously dishonest manner in which this Bill has been presented and portrayed. It was flagged as a Bill merely to give effect to the ESOP. The Minister devoted 95% of his contribution earlier to the ESOP and the sacrifices that had been made by staff in Aer Lingus. We all agree with that, and a remarkable turnaround has been achieved.

The Minister gives a mere nine lines in his speech to what is, essentially, the main purpose of the Bill, that is, to get a free hand to do with Aer Lingus whatever he wishes without having any debate on it. This is the Minister, Deputy Brennan, up to his old tricks again, saying one thing but intending to do another. He does not even pay this House the courtesy of coming in here and being honest about his intentions. He went on with the rigmarole about the great work done by the workers in Aer Lingus. Nobody is denying that. He went on about the ESOP, which should have been dealt with long ago. At no stage did he go into any detail about his real intentions in regard to the Bill. He has used the ESOP as a cloak to cover his intentions to sell off Aer Lingus as quickly as possible and with as little public debate as possible. It is extremely disrespectful to this House to treat it in this manner and it is a dishonest way of doing Government business.

I have little doubt that the purpose of the Bill is to allow for the privatisation of Aer Lingus, most likely by way of a trade sale and probably to a buyer who is waiting in the wings. The Minister referred in passing to bringing proposals to Cabinet next week or shortly. I am sure he knows the name or names of the people at this stage and he should have the guts to tell us what he has in mind for the company. He should tell us who the predators are who want to get a share of it. What is their view of the board members, the directors and management? He should allow a decent debate on the future of the national airline and not come in here in this sneaky way and try to slip in major changes which will give him major powers by the back door route by suggesting that this Bill is only about the ESOP. He should be honest about it and be prepared to have a full and frank debate on what he is really trying to do. The Government is attempting to take on this power to itself despite the fact that no case has been made for the sale of a critical State asset which has performed remarkably well in recent years.

Aer Lingus has made a truly remarkable recovery from the problems that beset it and other international airlines in the 1990s and in the early 2000s with 11 September, foot and mouth disease and other difficulties. The company is now in a very healthy position and is expecting profits of somewhere in the region of €75 million by the end of this year. The company, as we know, has plans to purchase additional aircraft to provide additional services and meet the demand there. It has said it is not looking for a handout for that. It is in a position to provide those aircraft from its own resources, so the situation is looking extremely healthy for Aer Lingus.

All of this is thanks, in the main, to the hard work of the management and the employees of the company over recent years. Workers have made enormous sacrifices to assist the company's recovery. Staff numbers have been cut, productivity has increased and pay increases were deferred. In return for these sacrifices, agreement was reached on an ESOP. This agreement was central to the success of the survival plan for the company. That plan was delivered by staff and management and it is only right that the company side of the deal should be honoured in full. The Labour Party fully supports the sections of this Bill dealing with the ESOP.

This legislation providing for the ESOP is long overdue and should have been prepared long before now. It was straightforward legislation, as the Minister well knows, which could have been dealt with in three or four pages. We should have had this legislation at least two years ago. Negotiations should have been completed but the Minister's Department dragged its heels for obvious reasons, as we now know. A Bill should have been brought forward as standalone legislation to deal with the ESOP and get it out of the way but it is now clear that the Minister and his colleagues in Cabinet saw an opportunity with the legislation for the ESOP to use it as a cloak for their real intentions regarding Aer Lingus. On the list of legislation circulated over the past couple of sessions, the explanation of the Aer Lingus Bill is to provide a legal basis for the ESOP. There is no mention of providing a legal basis for the Cabinet to flog-off Aer Lingus. Again, this is no more than we expect from the current Administration and the current incumbent in the Department of Transport.

It is now patently clear that the real purpose of the Aer Lingus Bill 2003 is contained in sections 3 and 5. These sections will allow the Minister for Finance and the Minister for Transport to sell off the airline, our national airline, in whatever way they want, to whoever they choose and on whatever basis they decide, without any further reference to this House. This is being attempted under the cover of the ESOP and it is a shameful way for the Minister to deal with important matters of public policy.

In a further attempt to deceive, the briefing note attached to this Bill states that it mirrors the Aer Lingus Bill 2000 which was passed by the Seanad but was subsequently abandoned. The clear function of that Bill was to provide for an initial public offering but that is not what is being provided for in this legislation which is an entirely new Bill. I fully subscribe to the proposal made this morning by Deputy Kenny and supported by my party leader, Deputy Rabbitte, that we need a White Paper on the future of our national airline. We do not want any strokes or back door approaches to this – we want a full public debate on what is in the best interest of our national carrier. No convincing case has been made to date for the privatisation of Aer Lingus and there is a very strong case for retaining it in public ownership.

Aer Lingus is of crucial economic and strategic national importance to this country as an island nation. We are heavily dependent on the tourism industry. Ireland is the only current member of the EU without a land link to the European mainland. There has been no debate on the strategic importance of the national carrier and the critical issues facing the company in the future.

Some of the issues we need to debate are as follows. What are the company's capital needs in the coming years? How can these best be met? Is there a case for a strategic partner and on what terms should that partner be sought? What are the implications of an IPO? It was interesting to note in the media this morning that management sources in the company have suggested that an IPO might now be the way to go. What are the arguments for and against the State retaining a golden shareholding? Where does Aer Lingus fit into our national spatial strategy? Does the Minister remember that? Does he see himself having any role in it? Does he see transport policy have a role in that? Will he make any changes to transport policy on foot of the spatial strategy? Does he see himself having any responsibility to put in place the kind of critical transport links and infrastructure required if we want to achieve some kind of balanced regional development?

Is the Minister going to continue to sit on the sidelines, take a hands-off approach to all of this and leave it to the market to decide? The Minister should at least be honest and tell us what his intention is. He should not pretend he has the remotest interest in balanced regional development and delivering on the spatial strategy when all of his actions indicate he has no interest in them and has more interest in flogging-off anything he can within the responsibility of his Department.

What role should Aer Lingus have in the context of a national transport policy? Of course, we do not have a national transport policy. The Minister hints at this and at that, issues press statements to beat the band and flitters from one issue to another, but there is no overall framework, policy or vision about transport. If there is a policy vacuum, how can we talk about the future of Aer Lingus and the role it should play in the context of transport policy? All of these questions need open public debate but that debate is being denied. The Minister is denying the Dáil and the public the opportunity to debate these issues and to come to conclusions based on objective facts. The Minister is expecting Members of the Dáil to buy a pig in a poke regarding this legislation. He is looking for us to give him power to do what he likes with Aer Lingus. We are not prepared to do that.

If Aer Lingus is sold off, even to Irish owners, there is no way to guarantee that it will not be sold on to other owners who would have no loyalty to this country and no commitment to maintaining routes of strategic value. We desperately need to have a calm and reasoned debate on what should happen to Aer Lingus, on what is in the best interest of airline passengers, primarily, of the tourism industry and of the Irish airline industry.

The Minister is asking us in this Bill to give him a free hand to do whatever he wishes. He is asking us to trust him. I assure him that, based on his record to date and that of his Cabinet colleagues, the Labour Party will not trust this Government on anything. It is entirely inappropriate and, indeed, underhand to bring in major changes which could potentially do serious damage to Aer Lingus by a sneaky back door route.

The provisions of section 3 of the Bill are wide-ranging and it is clear now that it would be crazy for this House to agree to such provisions. They are essentially saying that the Minister for Finance, in consultation with his colleague the Minister for Transport, can sell off any or all of the State share in Aer Lingus. One can only think of the pressures on the Minister for Finance, Deputy McCreevy over the next few months coming up to budget time.

When one thinks of the growth in the economy over the last few years and the resources available to tackle problems, and then one considers how these resources were frittered away by the Government, there was serious mismanagement of the economy, particularly by the Minister for Finance, Deputy McCreevy, assisted by his Cabinet colleagues. The economy was in tip-top shape when it was taken over by the Government in 1997 and now it is in serious difficulties. When we think of these factors, we can imagine the pressures on the Minister for Finance. He sees he can flog off Aer Lingus to raise €600 million to €700 million. Selling the family silver to help him in his desperate attempts to balance the books. I am not prepared to trust the Minister for Finance, Deputy McCreevy, or the Minister for Transport, Deputy Brennan, to do what is in the best interest of the national airline industry and those who depending on it.

What about the rights of the taxpayer? It was the taxpayer who invested the £175 million in the company in the early 1990s at a time when it was in serious difficulty. It was the taxpayer, through that contribution, who ensured that the national airline survived as a public company. That investment was put to good use as Aer Lingus has now returned to profitability. Is the value of that investment now to be flogged off at the whim of the Minister for Finance, Deputy McCreevy, or the Minister for Transport, Deputy Brennan?

Both Ministers are ideologically hostile to the very notion of public service. It has been the ambition of Fianna Fáil and the Progressive Democrats Party to sell off Aer Lingus for some time. Plans by the previous Administration to sell off the company had to be abandoned as a result of the crisis faced by the international airline industry in 2001 and following the major fiasco of the Eircom sell-off. They are now clearly determined to push this through again in an obvious trade sale. This is not in the interest of the economy or our tourism industry. This is also a grave act of deception, pretending that we are talking about the ESOP when, in reality, we are flogging off a major State asset. This Bill is asking for carte blanche to be given to the Ministers for Finance and Transport to do whatever they wish with our national airline. There is no case for it.

The Minister for Transport has put forward no proposals. He has said that he will be examining the situation, the report from the chairman of the company and giving careful consideration to it. His general response to problem issues within his Department is to "look at it", whatever that means. He says in his speech, "I am currently giving careful consideration to the report and I will be bringing the Aer Lingus views, together with my own position, to Cabinet in the coming weeks." The Minister owes us the courtesy of outlining his own position to the House. He has come to the House asking for the power to do whatever he likes with Aer Lingus, without the House knowing anything about his intentions. What about spending some time outlining his position? If he is not prepared to do that, then under no circumstances are we prepared to trust him and support this Bill.

The Labour Party supports the proposals on the legal effect of the ESOP which was agreed with staff. However, we will strongly oppose this rash and unjustified move to sell off Aer Lingus. To that end we have tabled this amendment and we oppose the taking of this Bill at the end of Second Stage.

Mr. Crowe

While Sinn Féin will be opposing this legislation we are not doing so because we disagree with workers owning 14.9% of the company. If that was the only purpose of this legislation, we would be delighted to support it, though disappointed that the Government saw fit to reward the sacrifices and hard work of Aer Lingus employees with a relatively small share of the company they have done so much over the years to build.

Regrettably, however, the Minister for Transport, Deputy Brennan, has put two separate and distinct issues in the same piece of legislation. One is the ESOP agreed by the Government and the Aer Lingus group of unions and dealt with in section 7 of the Bill. The other is what can only be described as the Government's enabling blueprint for achieving its long held objective of privatising our national airline. As much as I support the ESOP deal, we must reject the Bill as it cur rently stands and support the amendment put by Deputy Shortall.

Sinn Féin remains adamantly opposed to the privatisation of Aer Lingus. This company has been built up over decades to become one of the cornerstones of the Irish economy, earning international respect for itself and for Ireland. It was founded at a time when the private sector did not have the will, the capacity or the courage to build such a vital strategic infrastructure. It was built up in difficult times and, when it prospered, it repaid the investment. It is an Irish company and should remain so.

For the last few years, Aer Lingus has been under sustained attack by the kind of negative thinking that now sadly seems to dominate the Government. This drive for privatisation is not motivated by concern for the workers or customers of Aer Lingus. It is another example of the blinkered viewpoint that wants to break up CIE and Aer Rianta and part-privatise Dublin Bus. Opposition to public ownership of any kind now seems to be a core principle of this Government, regardless of the economic and social consequences of such actions.

A number of years ago, economic commentators were circling Aer Lingus like vultures, predicting its imminent demise in the aftermath of the foot and mouth crisis and the events of 11 September 2001. Their only real concern was whether the Government would be able to get a good price for it, particularly if the company was sold at rock bottom, fire sale levels. We were told its collapse was inevitable and it had to be sold.

Those economic gurus did not worry about the thousands of Aer Lingus workers who stood to lose their jobs, the consequent loss of revenue in our airports or with the implications for other airport employees and the wider community in the hinterland of these airports. Like this Government, they were concerned only with profit and what could be made out of the airline.

Aer Lingus rubbished their predictions and turned the company around. In 2001, it made a loss of €139.9 million. A year later it turned around a profit of €35.3 million. Not only has Aer Lingus survived, it is thriving, set to acquire 17 new planes for short haul routes, seven of which will be purchased outright at a cost of €300 million. This will mean, if the deal is approved, 15 new routes by summer 2005, bringing to 30 the number of new routes opened since the end of 2001. Recent results for the first half of 2003 point to an operating profit of €14.3 million for the first six months against an operating loss of €12.6 million in the same period last year. Passenger numbers are also up since 2001. How do the stereotypes of lazy, inefficient public sector workers propagated by right-wing elements in the media and Government match the reality of successful companies like Aer Lingus? This profit and growth came about through new approaches, new ideas, hard work and sacrifice.

The employee share option plan is intended as the Government's reward for the accomplishments of the men and women employed by Aer Lingus. It is little enough reward for their achievements. Costs have been cut by 20% – a couple of thousand workers are gone. Difficult choices were taken which involved greater flexibility, productivity and hard work. It is a pity the Government could not bring itself to properly recognise this.

There is a clear danger that if this legislation is passed the Government will use it to further its privatisation agenda. This could mean the break-up of a successful company, the loss of thousands of jobs and the destruction of a strategic pillar of the Irish economy. Instead of being a gateway to Europe and a bridge to North America this country could become a backwater in aviation terms. This must not be allowed to happen.

Sections 3 and 5 of the Bill give the Minister for Finance the power to dispose of his or her shares at any time, to sell the State's shareholding in Aer Lingus. It is clear that the money received in respect of any such sale will be paid into and disposed of by the Exchequer. How can we trust the Government to spend it properly?

The Minister, Deputy Brennan, told Cabinet he has no plans to sell the company in the immediate short-term during the aviation downturn, but the Bill leaves the way open for the likely sale in the future, and has been deliberately crafted to do so. The Government remains committed to selling off this company without regard for the disastrous long-term implications of the sale of a strategic national asset. It is nothing more than an act of ideological vandalism. What kind of short-sighted thinking argues that Aer Lingus, and the Irish people to whom it belongs, would be better served if the company passed into the hands of private enterprise whose aim is profit and cost-cutting rather than the development of the country?

We have witnessed this with Irish Shipping and Eircom. This threat also faces the ESB where a lack of investment in the development of infrastructure may, inevitably, lead to the selling off of another vital national resource. Aer Lingus must stay in public ownership.

We need only look to the Eircom debacle to see the effects of ideological privatisation. In 2003 the company made a profit of €357 million and paid Valentia over €500 million in dividends. At the same time, we are crying out for investment in broadband access. Belgium has over 48 times the broadband penetration of this State. According to the World Economic Forum, we are 51st out of 82 countries in terms of broadband access, behind the economic powerhouses of Guatemala and Botswana. Rather than have a State-owned telecommunications company investing in broadband and the telecommunications industry, Eircom is paying hundreds of millions of euro in profit to Valentia. The Government made a big mistake then and it seems set on making a similar mistake with Aer Lingus.

It is a dangerous precedent for the State to lose control over key elements of its infrastructure such as transport and telecommunications, particularly to foreign companies whose only concern is their balance sheet rather than this country's national interest. These are dangerous times and there are few Ministers who will take actions more dangerous to the infrastructure of the State than the Minister for Transport with his daft plan to break up Aer Rianta, privatise parts of the public transport system and break up CIE.

Currently trade agreements between the US and the State protect Aer Lingus from being majority owned by a foreign airline. If this legislation is passed, however, the Minister could sell 49% of the company to any airline or investor looking for a quick profit. Such investors will take a short-term view, aiming for the biggest profit in the shortest space of time. Are these the people the Minister thinks should be running our national airline? What if we sell it to another airline and that airline should encounter difficulties? It would run down Aer Lingus and any other subsidiary companies rather than its own core services and routes. In such circumstances we could see our national carrier reduced to the level of a feeder service while London or some other city would become the hub of international transatlantic flights for Irish people. In short, Aer Lingus would be run in the interests of a foreign company and not in the interests of the Irish people.

What difference would it make if the company remained in the hands of Irish investors? It would be likely that a cabal of Irish tax exiles of the sort who always take an interest in such privatisation schemes would snap up Aer Lingus. The company should not be privatised. It does not require third party involvement. Consequently, we oppose the Bill and support the Labour Party amendment.

An Leas-Cheann Comhairle

May we clarify who is sharing time?

Mr. Crowe

Gabh mo leithscéal.

Mr. Eamon Ryan

I intend to share time with Deputy Connolly.

An Leas-Cheann Comhairle

The Deputy has ten minutes.

Mr. Eamon Ryan

I am pleased the Minister has been joined by two of his colleagues, Deputies Glennon and Killeen – two wings on the backbenches to add to the ministerial launch of the Bill. What we need, and what I hope we will have today, is a debate on whether we should privatise Aer Lingus. I do not expect anyone will argue against the ESOP deal. I would be interested to hear anyone who would put an argument against the 15% reward. The question is whether Aer Lingus should be privatised. I look forward to hearing the contributions of Deputy Glennon and every other Government backbencher on this issue, if they have not already departed the House at this late stage on Thursday afternoon.

Deputy Shortall accused the Minister of dishonesty, duplicity and not being up front. In his speech the Minister said that Government policy envisages giving 14.9% in certain circumstances, such as when the State is exiting from the company. I welcome this proposal. In his response, will the Minister indicate if there are other circumstances where we would give 14.9%? If there is not, we are clearly in the business of selling the State airline.

It is correct that, in a sense, we are paying for the savings which the staff have foregone in recent times. It is regrettable that share ownership is not proposed as a positive contribution because we believe in the contribution of worker directors and the role workers have to play in the strategic development of a company. Apart from that, I do not expect anyone in the House to question the provisions in the Bill regarding the increased share ownership for the staff.

The Minister referred to the role of Aer Lingus in terms of making a significant and valuable contribution to the economic and tourism development of the country by providing a range of quality services. He then said that to ensure that role continues he believes we must be open to examining all options crucial to its ongoing success and for this reason he is introducing legislation to allow him to sell the company. Will the sale of the company to the private sector continue the role referred to by the Minister? He does not back up his assertion that to maintain that role we need to sell Aer Lingus. I am keen to hear the evidence as to why he thinks the private sector would be better at providing for the economic development of the country than the public sector has been.

This company has been an example of the remarkable success of public enterprise. The staff we are in the process of rewarding and complimenting have been working in a company which has been under public ownership for the past two years, a period in which, in the words of the Minister, it has been one of the most successful airlines on the planet. That would seem to counter the argument he makes for the sale of the company. I do not understand why he feels that public enterprise cannot deliver this good strategic development and the economic, social and tourism benefits that Aer Lingus has been providing in recent years.

The Minister went on to say that he has a report from the company advocating closure. That is not unusual in that it seems inevitable that management would wish to see itself freed of the shackles of some of the State intervention from Governments and boards. We should take such a recommendation with the proviso that the private sector is always seen as a more attractive option by management. The Minister made the following crucial statement in his opening speech, "We make the decision on what is best for Aer Lingus." I argue that any Minister in any Govern ment should always base his or her decisions on what is in the best interests of the State. That is a Minister's job, not deciding what is in the best interests of a corporate entity which can vary dramatically, depending on circumstances. Surely the role of the Minister and of the Government is to decide what is in the best interests of the State.

The Green Party strongly contends that as regards Aer Lingus, the best interests of the State is to keep it in public ownership. We are an island nation which is cut off from the rest of Europe and there is a significant strategic interest in Ireland having a good air transport connection to the rest of Europe and North America. It is ultimately better for the State to have some say and some control over that transport connection. The Minister should take into account the interests of the State and not just the interests of a corporate entity such as Aer Lingus.

The Minister has stated that he is giving careful consideration to the report and he intends to bring the issue to Cabinet and express his personal position in the coming weeks. I have heard the Minister state a number of times over the past year that something will happen in the coming weeks. I now tend to regard his references to "coming weeks" as meaning it will happen in the coming months or even years. I would like to know when exactly the Minister will present the report to Cabinet. If it is to go to Cabinet in the next couple of weeks the Minister should make the report available to the House so that all Members can debate on an equal footing some of the arguments being advanced by the company. It is a very significant strategic decision for the State and it is only right that this House has access to the same information as the Minister in formulating his decision.

If I was a backbencher in the Minister's party, I would be scrambling to obtain a copy of the report. If I represented a constituency where there was a significant number of Aer Lingus workers I would want to read that report to find out how it would affect my constituents and the airline's customers. The Minister should make the report available prior to the end of this debate so that the House can have an informed debate on the sale of the company.

The Minister should also inform this House of his position on this issue during the course of this debate so that we are aware of his stance. The Cabinet may take a different view but I do not believe that if the Minister is presenting this report to Cabinet within the coming weeks, he does not have a personal view on the possible sale of the company. It is unfortunate that the Minister did not avail of the opportunity in this debate to say what he believes is the right course of action, whether his Cabinet colleagues agree with his view or not. I agree with Deputy Shortall that if the Minister for Finance was asked his opinion he would say it should be sold tomorrow.

The most interesting part of this debate will be listening to the soldiers of destiny sitting behind the Minister. The Fianna Fáil Party has an honourable record. Historically there were members of the party whose faith in public enterprise was of benefit to the State. They were people who did not seek private profit or gain but who believed that this was a country where we could work together and provide for our future, and that this could be organised by means of public enterprise. I do not regard that as an old-fashioned or out-of-date virtue. When one sees the stock market scandals and the mistakes made by companies that chase short-term stock market gains rather than long-term strategic interests, I believe the concept of public enterprise achieving good strategic development is the right way forward.

I wish to make a point about the aviation business and the environment. In the last two years the company has been very successful in developing a low fares policy. In terms of the strategic development of airlines we must be aware that a low fares policy will not always be possible given the cost to the environment as a result of the aviation business and jet travel in particular. There will be significant changes in the aviation business and there are environmental implications as a result of the pollution caused by the industry. The business strategy that works today may not necessarily be the best business strategy tomorrow. I suggest that Aer Lingus management and anyone involved in the aviation business should be aware of the significant environmental implications around the corner. I suggest they read the UK royal commission survey on the environmental effects of aviation.

The issue is whether or not the company should be sold. I look forward to listening to the speeches by Government backbenchers to hear how they would advise the Minister. I wish the Minister was straight in giving the House his own view on the issue.

Mr. Connolly

From its modest beginnings in 1936 when the six-seater Iolar made its inaugural flight from Baldonnel to Bristol, our national airline has developed beyond the wildest dreams of its founders into one of the most respected and successful airlines in Europe and the world. In the emerging aviation situation after the Second World War, Aer Lingus adapted to the evolving market through judicious management and gained a reputation for friendly and efficient service. The fledgling airline graduated from turbo-prop to jet aircraft in the early 1960s and adopted wide-bodied aircraft in the 1970s. It catered for the Irish diaspora throughout the world. Aer Lingus successfully responded to Ireland's first low-cost airline, Ryanair, by restructuring its operation to become a low-cost airline itself, operating from a principal hub in Dublin to both Europe and North America.

This Bill seeks to facilitate the employee share ownership plan which was agreed between Government and the trade unions in Aer Lingus, with an arrangement for private sector involvement in the future. Under the proposed statutory ESOP, Aer Lingus staff are entitled to 14.9% share in the company with the way open for a possible sale of the airline in the future. There appear to be no immediate plans to seek a buyer for the company, with many large carriers on both sides of the Atlantic facing bankruptcy, merger or entering strategic alliances or partnerships.

The aftermath of 11 September 2001, rising levels of terrorism, economic slowdown and the SARS virus outbreak, have placed many airlines under severe financial pressure and the current economic climate is not conducive to seeking potential buyers.

Corporate financial restructuring appears to be the order of the day. Companies such as Aer Lingus, which were once viewed as relatively insulated from financial problems, have been forced to seek cost reductions to remain competitive or merely to survive. Facing the real or perceived need to improve competitiveness, the Cahill plan proposed reductions in costs and employee share ownership plans became part of that solution. As participants in an ESOP, employees are able to enjoy the benefits of stock ownership in their employer and when the company is financially successful the value of the stock should increase. When employees leave the company they may sell their shares at market value either to the company or to the ESOP.

From the viewpoint of fending off hostile takeover attempts, the allocation of 14.9% of shares appears to be somewhat conservative since employees would be less likely than other shareholders to support corporate raiders because of the potential for redundancies and other job-cutting measures. By placing a sufficiently large proportion of shares, for instance 40%, in the hands of employees, Aer Lingus would create an additional hurdle for potential corporate raiders and would make itself somewhat less attractive as a candidate for a hostile takeover.

In the United States, the growing incidence of ESOPs is particularly evident in the airline industry. Employees at United Airlines successfully structured a transaction in which they received a majority of the company's shares by way of an ESOP. In exchange they agreed to accept rule changes and changes in work conditions and practices and other concessions worth billions of dollars over a four-year period. Employees at Northeast Airlines were also given share ownership through an ESOP in exchange for concessions. As a result of the concessions and an ESOP tax shelter, Northeast Airlines was able to renegotiate its debt and avoid filing for bankruptcy protection.

In these and many similar situations, an ESOP in return for concessions is simply the best alternative for employees. Without such an arrangement there would be a temptation for the company to opt for laying off workers and creating redundancies. Employees can improve the viability of the company and increase the odds of keeping their jobs by agreeing to the ESOP balanced with concessions. They will have the opportunity to recoup all or part of their work concessions if the company is financially successful. They can view their concessions as an investment which has the potential for future value rather than seeing it as a sacrifice.

Section 3 provides that the Minister for Finance may dispose of his shares in Aer Lingus plc, thereby opening the way for a possible merger with other carriers, with national identities being submerged in the process. The facility for the Minister to dispose of his shares in the company clearly signals that the era of privatisation of the national airline has dawned. Aer Lingus will be viewed in a different light by the public in the future.

Now that the airline has returned to profitability its acquisition will be seen as a more attractive proposition by prospective suitors. With the opening of new routes and the purchase of additional aircraft, shareholders will be in a significantly stronger bargaining position. Last week's merger agreement between KLM, the Dutch airline, and Air France is perhaps a landmark in the continuing integration of European aviation. It is perhaps just as difficult for a country to give up its gleaming airbuses or 747s which fly the national colours as it is to subsume its currency in a monetary union. The Dutch willingness to surrender KLM to a company based in Paris is a consequence not only of European integration but also of the promised and long overdue deregulation of the transatlantic market. Both airlines feel they can best capitalise on this prospect if they can offer a more extensive network to travellers, which such a merger would create.

The rationalisation of Europe's aviation industry will probably cause a reduction in the number of national flagship airlines, but an expansion in competitive airlines. Successful low cost niche players, such as Aer Lingus, will be free to fly anywhere. Recently we saw a spate of cash strapped carriers, such as Sabena, Swissair and American Airlines, either going under or seeking protection from creditors. The conventional wisdom is that having a national airline is not a guarantee of being on the world's flight map.

Last June tight restrictions on cross-border mergers and acquisitions in the aviation industry were eased and the world's leading airlines made an unprecedented and unanimous call for the abolition of foreign ownership restrictions. They urged Governments to allow overseas take-overs of struggling national airlines. Some 273 airlines, including Aer Lingus, which amounts to 98% of the industry, argued that liberalisation was essential to the industry's recovery in what was called the Washington Declaration. They also gave the European Commission the leading role in the negotiation of thousands of air traffic agreements which member states have with other non-EU countries. The decks were thus cleared for a wave of consolidations or mergers among European carriers. Apart from the aforementioned merger between KLM and Air France, two other national flag carriers, Alitalia and Olympic Airlines of Greece, are available for take-over.

Europe is likely to have three major carriers – British Airways, Air France and Lufthansa – all of which are becoming increasingly dominant. There are indications that British Airways may target Iberia Airlines in which it already holds a 9% stake. In such a scenario, Aer Lingus would be best served by remaining a low cost airline and developing a variety of new routes, such as the nine announced within the past week.

I welcome the provision in section 9 to establish a number of superannuation schemes for the employees and pensioners. I also welcome the amendments in section 6 in relation to the appointment of directors, including worker directors. I trust that the restructuring and streamlining of Aer Lingus, which this Bill encompasses, will enable the airline to continue its development and expansion in a rapidly evolving world aviation market. The airline will thus be ideally placed to successfully meet and surmount the aviation challenges of the new century, as it has done for the past 67 years of its existence.

Mr. Killeen

This Bill advances a number of processes which have been under way for many years, particularly in relation to the employee share ownership scheme which has been under way since the Cahill plan in 1993. The IPO procedure began in 1999 and was considerably advanced before a number of factors, which were outlined by the Minister, forced a rethink and a postponement. Many people will have mixed views on the ultimate outcome of the changes proposed for the national carrier.

Mr. Eamon Ryan

What is the Deputy's view?

Mr. Killeen

If the Deputy had the manners to wait, he would hear my view.

Mr. Eamon Ryan

I apologise.

Ms Shortall

Has the Minister a view?

Mr. Killeen

There are many views. It was important to have a nationally owned airline when the national carrier first started. There has been considerable change in the world of aviation. The pace of change, as in many other areas of life, has quickened appreciably. It is also notoriously cyclical. The strategic advantage of having a national airline has diminished in the context of the forces affecting the airline business at present. There is possibly some ongoing strategic value, but that has been so diminished by the effect of other forces, it is not what it used to be.

In recent years one would be forgiven for thinking that the national airline had been bedevilled by a history of financial difficulty. When one looks at the aviation industry and its cyclical nature, it is not surprising that the airline seems to lurch from crisis to crisis. However, there have been some encouraging improvements in its financial standing. How is it possible for an airline or any employer or operator to manage without the services of up to 2,000 of its employees and without appearing to diminish its level of service? That question must be addressed to management. There have been enormous weaknesses in the management of Aer Lingus. It has always taken an immediate crisis to force everyone in the company to address it, although it is usually done under pressure from the Government. While one would love to be a proponent of the public service operation in this area, one must face the fact that enormous difficulties have arisen which have had to be addressed in a painful manner, particularly in recent years with the Cahill plan and more recently with the current survival plan.

One element of this legislation, which was effectively agreed with the unions in March this year is the employee share ownership provision. I am happy with the provision in the Bill for the employee share ownership trust. I strongly support the principle of involving employees in the ownership of the company. This move has had positive results where it was done in a meaningful way. The right of workers to board representation is a step forward.

Any debate on the future of Aer Lingus must look honestly at the difficulties which have beset the airline in recent years. While the difficulties arose in some instances because of international events, such as 11 September, foot and mouth disease and SARS, there is also an inclination to put up with weak management during times when there is less economic pressure on the airline. That has done Aer Lingus enormous damage.

Even if it had not done such damage, there are other compelling reasons for the two principle objectives of the Bill – the employee share participation scheme and the investment of private sector finances in the airline. I was interested to hear the Minister say that the existing employee share participation scheme under the Cahill plan has already resulted in the payment of more than €15 million to employees and €12.2 million in shares. Many people will have forgotten that the original move in this direction had gone quite so far. People also conveniently forget that under EU rules it is effectively impossible for the Government to put further financial aid into the State airline or to invest in it further at this stage.

As has been said previously, a substantial amount of taxpayers' money was invested under the Cahill plan – a total of £175 million. It must be conceded that the changes in work practices and other areas undertaken in tandem with the investment had the effect of restoring the airline to good health. People who were not in the House at that time may not have been aware of what the prognosis was and how much more negative it was than the fears expressed over the last year and a half. It was a real crisis for the airline at a time when the country was less well positioned to address it. To be fair to those involved in the plan, very considerable progress was made. Nevertheless, as a public representative from my part of the country, I must point out that there was a widespread view that the changes made to Shannon Airport were more far-reaching and potentially more damaging than those made in other parts of the country. Although the ultimate outcome happened to be quite positive, what was originally intended would have had far more damaging consequences.

In the context of considerations such as those before the House, it is well to consider the possible effects of these changes at national level, on the airline itself and its employees and on the regions, which have traditionally played a central role in aviation. The view that Shannon has historically been required to pay a higher price than elsewhere is widely held in the mid-west. It is acknowledged that the eventual outcome of the events of 1993-94 was nowhere near as bad as it would have been had the original plan gone ahead. The very same case could have been made by Deputy Breen's and my constituents in the aftermath of the events of 11 September 2001.

There was a strong perception that when Aer Lingus was wielding the axe it did so with abandon in the mid-west but with considerable care in Dublin and, to a lesser extent, in Cork. There is evidence to support this view. Some services that were discontinued at that time have not yet recommenced. I am thinking in particular of the Paris service, but there are others. Fortunately, the airport management was able to attract other carriers on the transatlantic route and some European routes at exactly the same time as our national airline, with its concern for the national interest and for regional interests, was doing exactly the opposite. In the face of that kind of experience of the national airline, one tends to look on a debate such as this with a far wider focus.

The Minister indicated in his speech, as he has done previously in the House, that Aer Lingus is about to embark on another significant expansion in its transatlantic routes. This may well be the case and if it is, it is a valid exercise for the airline and one that deserves some support. It is not an exercise, however, on which the airline should embark to its own advantage and to the detriment of interests in and around Shannon Airport. If changes are to be made to benefit Aer Lingus, one must consider where those benefits will eventually accrue. If Aer Lingus were to remain the national airline the benefits would accrue to the nation. One's view could be coloured by that. However, in the context of this Bill and the 1999 decision, which was postponed for financial rather than strategic or ideological reasons, one must face up to the fact that the benefits in terms of immediate financial return will be to the airline, which is no longer entirely the State airline. That may be no bad thing.

One must acknowledge that if the additional routes resulted in the delivery of a substantial increase in numbers of passengers to Ireland, that benefit would have to be put into the equation. One must also admit, however, that should the changes affect Shannon Airport negatively, it would be incumbent on the State that facilitated or promoted such changes to ensure that what is lost is replaced.

Mr. Eamon Ryan

Will the Deputy yield for a short question?

Mr. Killeen

By all means.

Mr. Eamon Ryan

Does the Deputy think the State should sell the airline, yes or no?

Mr. Killeen

If the Deputy had been listening he would be aware that I have already addressed this question at considerable length. He has clearly been distracted. I apologise if I have not been sufficiently entertaining to hold his attention.

Mr. Eamon Ryan

I have been listening intently while the Deputy has made cases for both sides. The Cabinet will have to decide on this issue. Would the Deputy advise the Cabinet to sell the airline or not?

Mr. Killeen

The Deputy had considerable time to make his own contribution, most of which he spent wondering what Deputies on this side might say.

Ms Shortall

What is the answer?

Mr. Eamon Ryan

I am waiting to hear what the Deputy will say.

Acting Chairman (Cecilia Keaveney)

The Deputy has little time to give his opinion. It is important that we let him have his say.

Mr. Eamon Ryan

I do not believe the Deputy answered the question.

Acting Chairman

People are entitled to their 20-minute slots. We should let the Deputy continue.

Ms Shortall

He said he would answer the question.

Mr. Killeen

I have already answered some of the question. Had I not been interrupted I would have gone on to expand further on the fact that there are implications for places beyond Dublin, which is clearly the only concern of the Deputies who have been interrupting. There are implications across the wider nation.

Ms Shortall

Yes or no?

Mr. Killeen

I have been outlining specifically the implications for Shannon Airport. Unfortu nately, the Deputies opposite find it necessary to continue to interrupt.

Mr. Eamon Ryan

The private sector might not be so interested in Shannon Airport.

Ms Shortall

What does Mr. Des Richardson say?

Acting Chairman

The Deputy has lost some of his time to interruptions. Can we let him conclude?

Mr. Killeen

I was making the point that in the event that Aer Lingus is facilitated in its current push for additional gateways to the USA, and if this involves changes at Shannon, the downside of such changes must be addressed and alternatives must be provided for people in the mid-west. There was a specific question about the IPO. It does make sense that the Government should pursue this at a time when the return to the taxpayer would be highest. The 1999 decision was a sensible one and the approach of the Minister in section 3 of the Bill in facilitating the sale of the State's shares is also sensible.

The Minister also made reference in his speech to changes in provisions for the pension scheme. Nobody has adverted to the enormous difficulties that exist for some current pensioners under the various aviation scheme pensions. In the past, opportunities were lost to address this difficulty for people who had dedicated their working lives to Aer Lingus and Aer Rianta at Dublin, Cork and Shannon airports. Their pension arrangements are truly appalling and reflect no credit on the State. It is unusual to have such an opportunity when the State will benefit financially from this legislation and it should not be lost. It would be a scandal if the State were to proceed without taking account of the difficulty in the existing schemes. I welcome the fact that some provision has been made in the Bill in this regard.

The superb work record of Aer Lingus employees over the years should be acknowledged. I know a great many of them at Shannon Airport who have worked proudly for the airline and the provision extending the employee share participation scheme is an acknowledgement of that effort. It must also be recalled that these employees have dealt with pay freezes and enormous changes in work practices, by and large without a glitch, which is to their credit.

One of the real weaknesses in strategic aviation policy has been that the State has not addressed the question of access to airports. To be fair to Aer Lingus and other companies operating into and out of those airports, this point has militated strongly against their ability to be profitable. Regardless of who might be involved as future players in the airline sector, better access to airports will be of key importance. I welcome the report on rail access to Shannon, which was presented to the Minister at the weekend and which indicates a willingness to provide considerable private sector funding.

Aer Lingus has experience in alliances, such as One World, from which benefits have flowed both to the national airline and the economy generally. Huge changes have occurred, however, and some of the great names in aviation have either run into difficulty or exist no more. Swissair and Sabena, for example, used to be among the premier European airlines but they are no longer operating. The likely take-over of the Dutch flag-carrier, KLM, by Air France is currently being considered. Enormous changes are taking place in aviation worldwide, particularly in Europe. In the context of this Bill, we need to face the fact that Aer Lingus, as it is currently constituted, would have enormous difficulty in fending off some of the potential predators currently operating internationally.

The outcome of the Telecom Eireann-Eircom flotation experience has not been positive for a great many people. There were positive experiences for those who benefited in the short term during the IPO process but, at a later stage, the experience was negative for the small investors who thought they had made a good long-term investment but were wiped out by the take-over. If the Government is proceeding towards an IPO for Aer Lingus, lessons should be learned from the Eircom experience. The model employed on that occasion, from relatively early on, is not one that I would favour now.

Mr. Eamon Ryan

Does the Deputy favour a trade sale?

Mr. Killeen

We must face the fact that there is a huge level of rationalisation and a central role for low-cost airlines. I welcome the Bill.

Mr. P. Breen

I welcome the opportunity to speak on this Bill, which gives effect to the employee share ownership scheme agreed by the Government and the Aer Lingus unions. It also provides a legal framework to facilitate private sector investment in the event that the Government embarks on such a process.

As most speakers have said, the aviation industry has changed dramatically since 11 September 2001. Deputy Killeen mentioned large carriers that have gone out of business, such as Sabena and Swissair. Both companies were major business concerns, yet they were lost in the upheavals affecting the international aviation business. A new, smaller airline called Swiss is now in operation out of Switzerland.

Aer Lingus is a small carrier in world terms, catering for a population of four million. The airline has had to face a number of problems, including a difficult trading year in 2001, particularly in the early part of that year during the foot and mouth disease outbreak, and a number of industrial disputes that have affected the airline from 2001 onwards. However, Aer Lingus rose to the challenge in 2002 and responded quickly. Last year the airline improved its performance, with profits rising to €49 million. This was achieved by shedding nearly 2,000 jobs, radically changed work practices and cost reductions of approximately €190 million. The group returned operating profits in 2002 of €63.8 million. One must compliment the Aer Lingus management on this achievement and this year the airline is expecting profits in the region of €75 million to €80 million.

This achievement has come at a high cost, however, particularly for balanced regional development. Shannon Airport has been one of the major casualties of the Aer Lingus cuts. I was disappointed this morning to hear the Minister saying that what is best for the country is best for Aer Lingus. He should have said that what is best for Aer Lingus is best for the country. The mid-west has been a major casualty in the restructuring of Aer Lingus, losing the early morning and late evening services from Shannon to Dublin. These were important links for the business community in the Shannon region, linking up with corresponding continental flights. The closure of these flights constituted a major loss to the region.

Aer Lingus also shed its only continental link to Europe, which was the Paris service mentioned earlier by Deputy Killeen. The airline does not provide any service to continental Europe at the moment – the only overseas services remaining are those to North America and London. The loss of a continental service was a tremendous blow to the region but Shannon Airport's management got other low-cost carriers to take on new routes.

Aer Lingus's transatlantic business has been the cornerstone of Shannon and is the reason the airport has been so successful over the years. It has been particularly important for tourism and related businesses on the west coast. One only has to look at the success stories in the region, such as Shannon Airport's duty-free shop, the Shannon free enterprise zone, the first pre-immigration clearance service and the medieval banquets and folk park at Bunratty Castle, to name a few. Yet, for a number of reasons, I have to question Aer Lingus's long-term commitment to the future of Shannon.

Aer Lingus's management is on record as having stated earlier this year that it was anxious to change the current bilateral agreement, thus opening up new routes to the United States. The routes they had in mind were San Francisco and Miami, or Orlando. They have ordered new planes and last week Aer Lingus announced eight new continental routes – again to Europe, all out of Dublin. Despite the events of September 2001 they have opened up 28 new routes and not one new European route has commenced out of Shannon Airport. As Aer Lingus now emerges as a low cost airline, what kind of commitment has the national airline to our region? Ryanair at least has proven one thing. It has three continental routes out of Shannon, Brussels, Paris and Frankfurt. Michael O'Leary has shown that a passenger will go anywhere if the price is right. An exception is SkyNet, which now operates an Amsterdam service to Moscow. That is going to change shortly as SkyNet concentrates its services to Moscow out of Dublin.

I mentioned already the loss of the early service from Shannon to Dublin. Aer Arann took up the route after Aer Lingus had left. Unfortunately, it proved uncommercial because it was competing with Aer Lingus on the morning service. Also, they had poor time schedules and again, they had to compete with Aer Lingus on the transatlantic morning service. At this stage one cannot get from Dublin to Shannon Airport after 2.15 p.m. What kind of service is that? Earlier this year Aer Lingus pulled out of the Cork domestic service as well, ending a 42 year link with Cork city.

Another example of Aer Lingus's commitment to Shannon was the changing of its winter schedule last year with regard to flight EI 111, the only scheduled New York flight Shannon had. Aer Lingus changed that flight so that it started from Dublin where it took on 25% of the passengers, and in this way cut down on the numbers embarking from Shannon. It has been very hard over the last year to get a flight with Aer Lingus from Shannon to New York, because we do not have the capacity. I acknowledge the facts as well, of course. Aer Lingus did put on a twice weekly service to New York for the summer.

Could the Minister put pressure on Aer Lingus to keep EI 111 on a direct service from Shannon? It is important that we have full capacity from the airport for the winter. There is no doubt that service can operate profitably.

Section 5 of the Bill provides enabling powers to facilitate a sale of Aer Lingus, or part of the State's shareholding in the national airline. I believe the Government, which has an 85% share in Aer Lingus, should be wary of trying to sell the company at this stage to try to solve any short-term budgetary crisis. We know that the Minister for Finance, Deputy McCreevy, is in favour of selling Aer Lingus to get more money into his coffers for the forthcoming year. I think, however it would be a terrible mistake. SIPTU, which represents over 3,000 Aer Lingus workers, has stated it does not want this to go ahead. We take pride in our national airline and given the current EU-US agreement I believe it is important to recognise that small airlines like Aer Lingus could get gobbled up by the megacarriers. Other speakers have mentioned the recent merger of Air France and the Dutch airline, KLM. There are now indications that British Airways may be making merger overtures to American Airlines, again. That is, if the regulator approves the Air France-KLM arrangement. I know Aer Lingus wants to move into the US and open new routes. It is a very small carrier, however, in terms of overall transatlantic business. The current population of the European Union is 600 million. That is a huge figure, given the Irish population of four million. Aer Lingus, therefore, is not a big player. The current bilateral agreement has worked well, I believe, for Aer Lingus, because it does not have competition.

The European Union is negotiating an open skies agreement that would improve competition. There is a danger that competition might be reduced because of mergers on the north Atlantic route. There is also a danger that Ireland could end up with no direct service to the US and that we would only have a back tracking service from Britain or mainland Europe. It is important therefore that Aer Lingus markets the Irish business equally between Dublin and Shannon to trap the huge US tourism potential that has not been availed of up to now. Shannon Airport, as a hub, has an important role to play in that. I know the Minister is a west of Ireland man and that he has said on numerous occasions he is committed totally to Shannon Airport. Given the current negotiations that are under way could he not try and develop Shannon as a hub airport at European level? Shannon could act as a hub where US flights would terminate and low cost feeder services could link European cities that do not have direct access to North America.

The mid-west airport has many advantages over its rivals. A new terminal building was opened in recent years. This can cater for 5.5 million people and if necessary can be expanded. There are currently up to 2.2 million passengers going through the airport annually. So it has spare capacity and the infrastructure is in place. The airport has one big advantage – it does not have congested skies like London, Frankfurt or Paris. It has the US pre-immigration clearance that I mentioned earlier. It has easy parking and there are plenty of vacant slots. These are all very important. Shannon is also ideally located in geographical terms. The road infrastructure is improving, particularly on the Clare side at present. There are new stretches of bypass such as the recently opened one at Newmarket. The Ballycasey stretch is open now and will be an improvement. A huge amount of money has been spent on infrastructure in that area.

The long-awaited Ennis bypass will be going out to tender shortly and this will improve access from the west, which is so vital for business in Shannon Airport. Not only would this concept contribute to the airport, but it would have huge benefits for tourism in the west and south of Ireland. Again I would plead with the Minister for Transport to put this concept in place. The current bilateral agreement has worked well and it must stay in place, I believe, until something better is found for Shannon Airport. Another benefit for Shannon could be the development of the air control base to serve the single skies agreement. Ministers should make sure that Shannon is chosen as a base arising from this.

Some time ago, with other members of the Oireachtas Joint Committee on Transport, I met Mr. Van Hasselt, the head of the EU air agreement section of the European Commission in Brussels to discuss the EU and US open skies agreements. He was very supportive of including Shannon in any arrangements in the open skies agreement. Later with Deputy Kenny I met Loyola de Palacio in Brussels, who also expressed support for making a special case for Shannon. She pointed out that there were a number of other airports in Greece and Portugal which were in the same situation as Shannon Airport.

I have questioned Aer Lingus's commitment to Shannon Airport and to the mid-west and west. When booking a flight from America on the Internet, the Aer Lingus website will lead one to Dublin first. There is a huge market that must be tapped.

I welcome the Minister's appointment of independent boards for Shannon and Cork airports and particularly his appointment of Pat Shanahan as the chairman of the Shannon Airport board. Mr. Shanahan has many qualities and will be of great benefit to the board. It is good that Shannon will have its independence. The service between Shannon and Frankfurt-Hahn was reduced from four days per week to one day per week because the local management could not make a decision without getting permission from the board of Aer Rianta.

I hope the Minister will soon announce the new board and that it will be made up of people with experience in the aviation sector and particularly in marketing which is required to encourage people to come to the country. This applies equally to airports and airlines. The more people we bring in, the greater will be the profits for the airline and the money being spent in the country. The appointment of the board of Shannon Airport will complement the infrastructure that has been installed throughout the airport.

The Shannon Railway Company has submitted a document to the Minister, which I hope he will review. Now that we have people with confidence in the area who are willing to spend their own private money, I hope the Minister will give his backing to that proposal so that there can be equal opportunities for our airports. We have three international airports to which Aer Lingus should be committed and not just to the one major one.

I welcome certain sections of the Bill, particularly section 7, which provides for an employee shareholding scheme, and section 9, which provides that Aer Lingus may establish a superannuation scheme for Aer Lingus employees and former employees of Aer Lingus. We all know that many Aer Lingus workers had trouble with their pensions some time ago.

Mr. Glennon

I wish to share my time with Deputy Mulcahy.

Acting Chairman

Is that agreed? Agreed.

Mr. Glennon

I welcome the opportunity to speak on this legislation. To listen to the debate so far, one would be forgiven for believing there were only two issues in the Bill, the privatisation of Aer Lingus and maintaining the viability of Shannon Airport. Such a view is somewhat misguided. There are four major purposes, the first of which is a technical one relating to the appointment of directors, including worker directors.

The second purpose, which is of considerable importance and of which we should not lose sight, is the establishment of new pension schemes by Aer Lingus for general employees and pensioners. There has been an issue in Aer Lingus for a number of years in relation to long outstanding difficulties concerning pension arrangements for pensioners, particularly some senior pensioners. The matter has tended to get lost in the more urgent issues of the day for the company. We all know that Aer Lingus has been through a difficult period in the past ten years, particularly in the past two or three years.

There are major outstanding issues, which have been the subject of significant representations and lobbying by successive committees from the Retired Aviation Staff Association. I know the Minister will consider these in processing this legislation. It would be remiss of me as a Deputy for the constituency where Dublin Airport is located not to avail of the opportunity to mention the issue and to urge the Minister in the strongest possible terms to take account of the representations that have been made for the best part of ten years' and to see if he can find a mechanism to address these genuine issues which in some cases are leading to genuine hardship.

Employees of Aer Lingus brought the company from being a very minor player – basically an island airline – to what it is today. Over many years the employees took immense pride not only in their airline but also in the identity of their airline as a flag carrier for Ireland abroad when flag carriers for our country abroad were not nearly as numerous as they are now. For decades Aer Lingus was the principal standard bearer for Ireland abroad. I have spoken to the Minister about this issue and I know he is aware of it. I look forward to the implementation of that aspect of the legislation as it is of particular importance to look after that group.

The third purpose of the legislation is to provide the legal framework to facilitate a process of external investment in the airline in the event that the Government embarks on such a process. That has been the subject of the bulk of the debate thus far and I will come back to it.

The final purpose of the Bill is to give effect to the employee share ownership plan agreed by the Government and the Aer Lingus unions. The origins of the share ownership plan are worthy of discussion as it is vital that we know where we have come from. It is relatively easy to forget that three years ago Aer Lingus was in serious trading difficulty, with in excess of 6,000 employees. In the opinion of many it was an unrealistic workforce when compared with the workforce at the company's principal competitor, Ryanair. With the emergence of several additional and unexpected factors, particularly the catastrophe of 11 September 2001, a series of events conspired to produce the situation in which we now find ourselves, tidying up the loose ends of what was a survival plan.

Since coming into the Oireachtas three years ago, I have noticed the grand titles given to many of the projects we discuss. However, the word "survival" in the context of the Aer Lingus business plan of recent years is probably the most appropriate, and one of the milder titles. We gave our customary knee-jerk response to extraneous events over which we have no control, and looked to Brussels to dig us out of the hole. Brussels did not have a shovel at that time and left us to dig ourselves out.

To the eternal credit of the Aer Lingus workforce, it dealt with this crisis despite considerable pain and difficulty in negotiation. This has been a feature of the company throughout its history. Not only did it survive but it moved on, using the survival plan agreed by the workers and management, to emerge under the highly creditable leadership of Willy Walsh and his colleagues as a serious commercial, viable, and profitable entity. It is again leading the way for Ireland internationally and still has major scope for further improvement and profitability.

I am proud to say that I was born and reared within 15 miles of Dublin Airport. Some of my colleagues may think it unlikely but my first recollection of Aer Lingus is of being carried on my father's shoulders, across a cornfield, for about a mile because the roadway, which was the main Dublin-Belfast road at the time, did not provide direct access to the old Collinstown terminal building. That was only about 35 years ago but the changes that have occurred at Collinstown since then have been dramatic, and they reflect the changes in Irish society over the same period. Aer Lingus has been one of the major contributors to those changes, in line with the changes that the company has undergone. It gave Ireland an international dimension when that was badly needed. There was the Cahill plan, the difficult times of ten years ago, and the survival plan of the past few years. The outstanding feature of each of those plans was the ability, capacity and willingness of the staff of Aer Lingus to give tangible expression to their pride in the company and to make the sacrifices necessary to ensure its ongoing viability.

Mr. Eamon Ryan

Will the Deputy take a short question?

Mr. Glennon

I will always take a short question from Deputy Ryan but I do not know that the answer will be as short as the question.

Mr. Eamon Ryan

Given that the Cabinet will decide within weeks whether we should sell our stake in the company, how would the Deputy advise the Government in that regard?

Mr. Glennon

I would never be so bold as to advise the Cabinet on a transaction without having been party to its detail. On the principle, which is no doubt Deputy Ryan's point, this State set up Aer Lingus under a Fianna Fáil Government driven by Seán Lemass. The State owns the company. We are discussing legislation providing for the legal framework to facilitate a process of external investment in the airline.

An Leas-Cheann Comhairle

The Deputy has only eight minutes remaining for his colleague.

Mr. Glennon

Go raibh maith agat, a Leas-Cheann Comhairle, but I will continue to answer the Deputy's question, with my colleague's permission. We, the people, own Aer Lingus. The people appoint different Governments from time to time to mind their interests in running the affairs of the country. In principle, a Government should be fully facilitated to sell any interest in any State company in which it has a direct interest, when such a situation arises. On a personal level, I have major difficulties with privatisation generally. We all agree that the Eircom experience was not a good one and I am not referring only to the share price. I have serious personal difficulties with the sale of a major national resource into private hands. It is an issue which must be dealt with in the detail of any transaction as it arises. We have no specifics before us today and I assume that if and when such a transaction is put together we will have an opportunity to discuss it. It will be judged at such time on its own merits. I hope that answers the Deputy's question comprehensively enough.

My colleague, Deputy Mulcahy, is anxious to get in and I will be brief in conclusion. The Government must have not only the power to dispose of the company, as it does in any event, but it also must have the power to dispose of it swiftly and in a commercial light. I acknowledge the views of some of the Opposition Deputies on privatisation in principle but we should leave the question on the detail of the privatisation of Aer Lingus to a specific deal if and when that comes before us.

There is more to this Bill than the possible privatisation of Aer Lingus. It is intended to tidy up the detail of the survival plan which has been so successful. In that regard, I have copies of letters circulated by SIPTU and IMPACT to their members in Aer Lingus, encouraging all their colleagues to take part as fully as possible in the employee share ownership trust. I heartily endorse that. The Bill which is before the House will facilitate private shareholding in the company. If anything else arises, it will, no doubt, be debated fully.

In commending the Bill to the House, I draw the Minister's attention to the provision, which has been somewhat overlooked in today's debate, in relation to pension schemes, particularly the long outstanding difficulties of the Retired Airline Staff Association.

Mr. Mulcahy

I commend the Minister on his initiative and warmly support this Bill. Aer Lingus is, perhaps, the jewel in the crown of State companies. It has an honourable and noble tradition and has been held warmly and affectionately in the hearts of Irish people since its foundation in 1936. I endorse a point made by Deputy Glennon. Survivors of the earlier Aer Lingus era, workers who may have retired five or ten years ago, having put their lives and souls into the company, should also be entitled to some share in the 15% ownership of the company. I see no reason that people who may miss out on the deadline by a year or six months would not be entitled to some percentage share in the company. As the Minister will be aware, many people gave the best of their working lives to make Aer Lingus the great company it now is.

Is Aer Lingus a vital national interest? I believe it certainly was. There is now much more capacity and competition on the Irish routes. I believe there is still a vital national interest involved. It is essential that Irish people, particularly for business travel but also for tourism, are able to access Europe and America without having to go through London. From a business perspective, there is a case for Aer Lingus to service as much as possible of Europe, even if some routes are not particularly profitable. In the national interest, there is a case for cross-subsidisation in certain instances so that Irish people will have access, having regard to our location on the extreme edge of Europe. To that extent, there is a vital national interest in relation to Aer Lingus.

Of course, the airline must be profitable. I wish to compliment the chief executive, Mr. Willy Walsh, and the management and staff of Aer Lingus, who have worked incredibly hard and sacrificed a great deal of time – and money, in some cases – to make Aer Lingus the profitable business it now is. The projected profit of the company for this year is €75 million – last year it made €63 million. In that context, I question the need for fresh capital. I understand that the purchase of new aircraft by Aer Lingus will be funded from current revenue of the company. However, in his speech, the Minister quoted the company's view that a private sector investment process should be initiated without delay. Why is that the case? If the company is in a position to pay for its new fleet out of current spending, why does it need new capital investment?

However, I am in favour of new capital investment if it is required and, accordingly, I fully support this Bill, particularly section 5. This section not only permits the sale of shareholding in Aer Lingus, it also permits the company to issue new shares – there are two aspects to the section. On the question of fresh capital being required, EU rules would, of course, prohibit State subsidy in that regard. However, there is certainly a case for the State to hold on to a golden share in Aer Lingus so that, at least, where vital national interests are concerned, the people of Ireland would retain some control over Aer Lingus. Will the Minister give an assurance that, if there is an intention to sell off a certain shareholding in Aer Lingus, he will come back to the House with full details for approval? I feel sure he will.

I will conclude on a point which some may consider flippant, though I do not consider it such. I note that the colours of four Aer Lingus aircraft were recently changed from the traditional green to white. Having regard to the position of Aer Lingus as part of the international image of Ireland, together with the shamrock and green, did the company have the Minister's consent to change from green to white? Will he tell the company there are to be no more white Aer Lingus aircraft and that our established green image, with the shamrock, should be retained? I consider it a bad business decision to change that image.

Mr. Naughten

Perhaps white paint was cheaper.

Mr. Mulcahy

I ask the Minister to convey the message that the change sends out a mixed marketing signal to the international community. That said, I join my colleagues in warmly commending this Bill to the House.

Mr. Crawford

I wonder whether the level of consultation about painting the planes in Aer Lingus was similar to that in relation to the reduction in DART services at weekends. Is it becoming the norm that major changes are made by semi-State bodies without the knowledge of the relevant Minister or his personnel?

I welcome the opportunity to speak on this Bill. A few years ago, in view of the media hype at that time, there was some concern that Aer Lingus might not be there for us to discuss. In that regard, I congratulate all concerned, from the Minister down, but especially Mr. Willy Walsh and his staff, on having turned around the company in such a positive way within such a short time. Each of us can recall the impact of the foot and mouth crisis on tourism and air travel, followed by the events of 11 September and other developments which created many problems for airlines throughout the world. It is to the credit of Aer Lingus that it has managed to survive the competition from Ryanair which has had a major impact on air access to this country, notably in relation to cost.

My party is concerned that Aer Lingus should remain as an independent carrier within a profitable State structure. As the Minister has stated, a first objective of this Bill is to regulate the situation with regard to share ownership by workers in the company. It goes into detail with regard to the re-introduction of a possible buy-out scheme, which the Government had intended to bring before the Dáil in 1999 but it was withdrawn due to the difficulties which existed at that time. Since then, there has been agreement that the workers should have shareholding in the region of 14.9%. A major involvement by workers in this or any other company gives them the incentive and urge to make the company more profitable. The industrial action and cut-backs of recent months were a worrying development which caused significant problems for passengers. If Aer Lingus is to be a major player that continues to make profits, it is vital that all its workers give a commitment to ensure people arrive at their destination.

Since I started in public life as a member of a farm organisation, I have seen Dublin Airport and Aer Lingus change dramatically. When I started travelling to Europe with IFA delegations, the late T. J. Maher, if he was in a hurry, would pull up in his old banger of a car at the footpath outside the airport and everyone knew who he was and he would carry on to his destination. Now a person must be there two hours before the flight or he is not guaranteed a place. Things have changed dramatically and the airport has grown considerably in size.

The cost of parking at Dublin Airport is scandalous. We are talking about privatising Aer Lingus but we must examine this issue. I hear many complaints about this problem. Between Aer Lingus and Ryanair, it is possible to travel abroad very cheaply and often the car parking costs more than the flight. This must be addressed.

Aer Lingus has gone from making a loss of €52 million in 2001 to a profit of €63.8 million in 2002. It has introduced 16 new routes, raising its number to 42, with a potential profit of €80 million this year in spite of problems in Iraq. The Minister must think carefully about selling off this airline. He stated that the proceeds of any sale will go to the Exchequer, and that is a guarantee to us all, but what is the Exchequer? It is a bottomless hole and there is a danger that this company could be sold off to cover up problems elsewhere in the Government. Fine Gael will not stand for that. If Aer Lingus is to be sold for strategic reasons, we must be clear what they are.

I was part of a group on a short visit to Canada some years ago. My colleagues and I arrived in Toronto Airport at 6 p.m. for a flight at 8.30 p.m. We were told at 8 p.m. that the flight had been cancelled. Eventually we got a flight at 9.30 a.m. the following day. Because there is a monopoly in operation, the staff could not care less. If I had not had my diplomatic passport with me, God knows when we would have got out. I did not want to use it but another member of the group encouraged me and once it was produced prompt action was taken. Experiences like that make me anxious about monopolies operating in their own interests. The staff of Aer Lingus, from the moment a person walks in the door of Dublin Airport to the moment he leaves the aircraft, are hospitable people who make one feel at home. We must not lose that.

If Aer Lingus is sold there is a danger that it could be taken over by British Airways. I have nothing against that company – I have flown with it many times. British Airways, however, would not be committed to this country. The slots available to Aer Lingus in Heathrow Airport are among our most valuable assets. Can the Minister guarantee that if Aer Lingus was taken over by British Airways those slots would not be used for other purposes to earn greater profits? Would the company ensure we have access to and egress from this country?

If we are to build on the success of the tourism industry, there must be direct access to the island. Aer Lingus and Ryanair are building up a portfolio of direct routes that have improved Ireland's image as a place that is easy to get to. I visited Prince Edward Island in Canada recently and it took 24 hours to get there. Such long journey times put people off. We must carefully consider the national interest before we tie ourselves to a group that does not have the interests of Ireland at heart. I urge the Minister to bear this in mind before selling Aer Lingus just to gain money for the Exchequer.

It has been said that if we do not sell Aer Lingus, we have no means of funding it. The EU does not allow us to bail out Aer Lingus, an option we considered two years ago, but there is a difference between bailing out a company and funding it to improve its structure. Under EU rules the potential exists to do that and the Minister should make that clear.

The restructuring of Aer Rianta is welcome, with the establishment of a board for each of the three airports. None of them will be able to claim in future that the other airports are holding it back. That is in the interests of the regions and gives Shannon Airport and Cork Airport an opportunity to restructure and market themselves. I remember when those arriving from Canada and the United States had no choice but to land in Shannon Airport and we had to drive all the way from Monaghan to collect them. While I appreciate the problems of those in Clare and Limerick who wish to retain the status of Shannon Airport, it is equally important to the northern region that there are direct flights to Dublin where possible.

I welcome the participation of the unions and the fact that when this legislation is enacted, they will have 14.9% involvement in the company. We have had monopolies in the meat industry and many other sectors and I strongly advise the Minister that large size does not necessarily mean the best delivery will result. I cannot help but think of the liquid milk business. We were told that when Avonmore received a bigger slice of the various companies it would be able to get a proper deal for farmers and suppliers from Dunne Stores and Tesco. The exact opposite has happened and Avonmore has been the quickest to cave in to the supermarkets. Certainly the producers – in that case the farmers – have been the losers. They are now down to about 35% of the actual value of the finished product on the shelf. The Minister should think hard and clearly before he sells off Aer Lingus solely to prop up the Exchequer. I ask him not to sell off the golden egg but to address needs which should be dealt with in other ways.

Mr. Dennehy

The Minister said at the outset that the principal purpose of this Bill is to give effect to the employer's ownership plan and to provide a legal framework to facilitate a process of external investment in the airline should this or any future Government decide to adopt that approach. A number of speakers have referred to section 9 which addresses the issue of pensions. I reiterate the point which has been made that quite a number of people were affected in this regard in Aer Lingus, Aer Rianta and the aviation industry generally. I would like to see their cases dealt with. All Members of the House have been the subject of lobbying in respect of this matter and it is to be hoped that something practical can be done. This is very important to staff.

The immediate reaction to the Bill was to talk of a total sell off. The last speaker referred to a sell off to prop up the Exchequer which is a knee jerk reaction to the issue. There are many other methods to involve the private sector and to obtain funds from outside the State. A joint ownership approach could be adopted or shares could be sold to accomplish that goal. Options of this sort are being facilitated as it is important to have mechanisms and rules in place when we sit down to make decisions on these issues. There are beneficial ways to conduct a sell off and the rules are right in this deal. It may well be that the public owners – the taxpayers – will decide that this approach is of benefit to the State.

There are good and bad deals and I saw an example of the latter in Irish Steel where I was formerly employed for 25 years. It was sold for £1, but we now face a potential liability of €30 million simply to repair damage to the island the company operated from because of the looseness of the agreement made. I appreciate that four Departments were involved in that case, but it was mismanaged. While I had an emotional interest in the deal due to my attachment to the place, I had a practical interest in that Irish Steel was located in the middle of my constituency. That was the worst possible operation any Government could have conducted and we saw the worst possible result. It did not happen simply because the Rainbow Coalition was in office. As an employee at Irish Steel, I supported the concept of private sector investment which is examined in the Bill before the House. The late Willy Korf, a German and one of the world's great steel industrialists, would have been a most welcome partner in that business, but instead we went for people who were not involved in the industry. We made the worst possible deal. While I draw attention to that example to point out the dangers of making a bad deal, it may still be beneficial to sell off some State assets.

I wonder what kind of offer we would have got for Aer Lingus two years ago. I am sure people would not have rushed from around the world to buy it. The company was a disaster area and ready to go belly up and until the survival plan was put in place it seemed quite likely that we would lose our State airline. After 11 September 2001, the company could not meet its insurance costs. People moved rapidly and I am pleased with what happened. Many people have referred to and complimented the staff of Aer Lingus, but every speaker should add to that given the company's almost miraculous survival. Various reasons for the survival are given, including the shedding of 2,000 jobs and changing work practices, but the driving force came from outside the Government in the person of Mr. Walsh. I do not know the significance of the fact that Mr. Walsh was a former employee of Aer Lingus and therefore knew the angles and methodologies used to arrive at decisions and to make appointments but what is certain is that Mr. Walsh and the rest of the staff have done a magnificent job.

One of the difficulties a State or semi-State body faces is that it is subject to directives from the Minister or, more usually, from this House. Needless to say, I will get in my plug for Cork. We also had a great survival plan and turned a situation around to make it profitable. The figures are magnificent. However, we all have an opinion regarding the routes Aer Lingus should service from our neck of woods. People say they should run this or that bad route no matter what it costs. We ask the company to implement a survival plan, but we tell it not to interfere with our neck of the woods. We may have just lost the direct connection from Cork to Dublin, but I credit Aer Lingus that when the pressure was on after 11 September 2001 the company maintained all the crucial routes it could. Shannon Airport suffered because there was an artificial entity there. Many things were done which were not essential to the national plan. The airport was protected by an artificial entitlement whereby it was argued that Shannon should be kept going. If it had not been able to make the changes, Aer Lingus would have gone belly up.

I argue that nine new European routes are being opened on top of the existing 42. The complaint has been made that all are from Dublin and none is from Shannon Airport. I subscribe to that because none of them is going from Cork either. Although none of the American flights was from Cork, no one in Shannon, the mid-west or any place else was troubled in the least about the survival of the State's third international airport. My argument has been consistent.

Deputy Glennon said he lives nine or ten miles from the airport. I am practically living at the airport, being located half a mile from it, but my point to the workers in Cork is that we will survive. We have a good product. We exist because people want the service. They are coming to Cork, they are not being diverted to Cork. If they are travelling from another continent they are not told that they must fly into Cork. There is nothing artificial about the arrangement. Cork will survive, given a level playing pitch and that an advantage is not given to any of the other two airports with which Cork will compete. I welcome the competition and the changes made by the Minister. I welcome also the opportunity for Cork to show what it can do and to compete.

Arguments about marketing subsidies have been made for the past 20 years. I could never unveil the full extent of the marketing budget available to Shannon, despite putting questions in the Committee of Public Accounts and other fora where people came to make known their information. It might have been Mr. O'Leary of Ryanair who said at the time when Cork appeared to be losing out that we could not be offered the same stimulation or the same cosy deal, so to speak. That should not be the case when the taxpayer is paying for everything. There should be a level playing field. We must take up this opportunity. People are working hard in Dublin, Cork and Shannon airports and that has to be recognised. Administration must be the same for all and they must get an equal opportunity. Let there be competition. If people want to drive from Thurles to Dublin to fly out from that airport rather than drive from Thurles to Cork, which is almost an equal distance – Urlingford to Cork would be an equal distance – let that be their decision based on the ability to get there, the service they get and the cost to fly out of that airport. Let there be nothing artificial about it.

Despite all the difficulties, Aer Lingus staff have done a magnificent job and they are to be complimented for it. I would like that to continue. An important part of the recovery was the change in work practice etc. As a trade unionist for more years than I care to enunciate, I would not dream of calling the rights and wrongs of any dispute, particularly the current one in Aer Lingus, but speaking from personal experience I can say that nobody wins in a strike or a work to rule, which is the next step. The person involved usually suffers some kind of deprivation, financial or otherwise. I appeal to all sides involved in the Aer Lingus dispute to try to resolve it quickly before further damage is done to our national carrier. The staff have come through a traumatic time and they have done a magnificent job. I appeal to them to resolve this difficulty. Everything appears to be going well for the company but there are internal dynamics at work in any company, particularly one with such a large staff doing a wide variety of work. The dispute has to be resolved, however, and having seen what the staff have gone through I hope they will resolve it.

On the changes being made on the operational side and otherwise, we want to have our cake and eat it in that regard. I want to spell out to Mr. Walsh, or his man on the ground in Cork, the number of flights we should operate out of Cork. I want him to make the company viable but there can be conflict between those two aspects.

I welcome the confidence shown by the Minister in fully supporting the company at this early stage. I discussed with the marketing manager last week the change to the 17 Airbus, the A320 type aircraft they are buying, which I welcome. I questioned the need for that and he mentioned the repair service, how long it takes to train people in and so on. He put forward a logical argument in favour of this type of aircraft but that decision required the support of the Minister. I welcome the fact that the Minister had the confidence in the company to accept the replacement of the Boeing aircraft and the BAe 146. That shows confidence in the staff and the work they do, and that is reflected in their approach. Workers will say the equipment was needed for the job and it was for the Minister to make the decision, which was welcome.

I appreciate the Minister will not solve all the problems regarding pensions but I ask him to examine the overall situation regarding pensioners and others who have been affected in Aer Rianta and elsewhere and come back to us on that. There is a good atmosphere in this business, despite the difficulties. There is a feeling among all the staff involved in Cork Airport – I cannot speak for Shannon but I presume it is the same there – that business is booming. Recently the Minister turned the sod – he nearly threw it on top of me – on another €120 million development which is a vote of confidence in the company. I have no doubt we will be back to the Minister before his term of office concludes in three years—

Mr. Naughten

Two years.

Mr. Dennehy

—looking for an extension of the apron to allow us fly directly to the United States. With the confidence the Minister has shown in the company and the fact that he sanctioned the earlier funding, I have no doubt he will do the same in that regard.

I was interested in the point made by Deputy Killeen about access to the airport. We have a difficulty in Cork also with the flyover at the Kinsale roundabout, which is programmed to commence work in January at a cost of €120 million. A major amount of money is required but we must be able to access it. I have not read the details of the offer at Shannon, which became known over the past few days, but it is critically important. Dublin was a bit of a shambles. I do not know how the new bypass will affect it. I have driven past it twice in the past three or four weeks heading north but access is crucially important. Airport people forget about access at the airport gate, and it is probably up to us to facilitate them but good access is important because time is of the essence. People want to travel speedily and safely. With the new security restrictions people have to be at the airport much earlier and we do not need to add to that.

On the question of private investors, all of us would have an open mind on the issue. It is easy to take a stance and say that we should not sell off the national carrier for strategic reasons. For 25 years I made an argument for selling Irish Steel until I realised the difficulties in which we found ourselves. We needed outside expertise and a niche market. We were selling to 27 countries but we needed more. It took me a long time to come round to the view that there may be a reason for selling. We need to go down that route rather than have a knee jerk reaction.

What is significant is that Aer Lingus came to the Minister on this issue and said it is time for outside capital. It made €49 million this year but there must be cognisance of the fact that Aer Lingus told the Government that the time is right for private sector investment. They are the people who fly the planes and provide the service and I am aware that the Minister is very positive in his approach to them.

Six years ago we started on the route of an initial public offering of the airline but so much has happened since then that we are talking about a totally different situation. The concept of these deals, whatever we call them or however we frame them, is to give the employee a share ownership plan. Where employees have a stake in a company, it is good for morale, for financial standing, for collateral and for work practices. It is a win, win situation. It is a route which should be followed and encouraged. I appreciate there is a cap of 12.5% or 14.5% which is, as the Minister was at pains to point out, unique. I presume it is unique because we might be thinking of selling off, but the concept should be followed. It is an excellent one.

People have worked for 40 years in some companies. It has been said that those who worked in the State or semi-State sectors had security of tenure and great pensions, but that is not so. The situation in the State and semi-State sectors has not been as good as it has been painted. There is a need for further input and this is the route which should be taken. It will make people think differently about their jobs in that they will no longer be just another number. It will benefit everybody. I would like the issue of pensions hammered out satisfactorily.

I wish to use this opportunity to tell the Minister about the situation in Cork. My dealings with Aer Lingus since the difficulties have arisen have been positive. When we needed it most, Aer Lingus maintained the service. Changes were needed. Air fares from Cork to Dublin were crazy – they were more expensive than to anywhere in Europe. All of the changes have not been made by Ryanair. Aer Lingus has made changes. There is a positive atmosphere at the moment and I would like to see it continue. It is good for this country, for the national airline and for the customer who is most important of all.

Ms Burton

With the rest of the Labour Parliamentary Party, I was very taken aback by the detailed contents of this Bill. The Bill has two halves. One is to provide for an ESOP and for enhanced participation by workers, management and staff in Aer Lingus in a greater share in the ownership of the company through an ESOP. The Labour Party in Government strongly supported that development in relation to a number of State companies but with some critical differences to the model Fianna Fáil and the Progressive Democrats subsequently went on to develop. A critical issue in relation to the Labour Party's views on that was that the workers' interest in the company should be long-term and permanent and should be effectively recycled into the company, as was done very successfully in a number of other European countries. That first half of the Bill is not hugely contentious. It has been discussed. The Minister, after much difficulty, finally concluded negotiations with the staff of the company. The staff and their representatives in the various unions seem to largely accept it.

As regards the other half of the Bill, particularly the elements contained in sections 4, 5 and 6, the Labour Party has really serious concerns about it. Under the guise of the provision for an ESOP, it seems as if the Minister is basically providing for another Fianna Fáil-Progressive Democrats sale of the century of State assets to God knows who in this case. The indication from the Minister's speech is that it may be a trade sale rather than a privatisation as in the case of Eircom. Obviously, the Minister is reluctant to submit himself to the same kind of publicity in which his predecessor, the Leader of the Seanad, Senator O'Rourke, indulged and enjoyed enormously until it went—

Mr. Naughten

The Minister enjoys publicity too.

Ms Burton

We know the Minister enjoys publicity but perhaps he is more cute and cannier. I do not think we will hear him on radio or see him on television with a hammer advertising the knockdown sale of Aer Lingus and its assets to the public in the same way Senator O'Rourke did with Eircom over a prolonged period.

The Minister said he asked the chairman of Aer Lingus to examine and report back to him on future options for the company. He said the chairman has given him the report and that the company's view is that a private sector investment process should be initiated without delay. The Minister is currently considering that and will report his views to Cabinet in the coming weeks. The critical aspect of this Bill is that under the guise of providing for an ESOP, with which everybody broadly agrees, it is designed on the quiet and by the backdoor to provide for the sale of some, or all, of the State's shareholding, for the company to issue new shares and, I suspect from the Minister's speech, for a trade sale of all, or the bulk, of Aer Lingus to as yet unidentified partners.

This Government is ideologically very right wing and has, in terms of the Progressive Democrats members of Cabinet and half the Fianna Fáil members, a very right wing bias. We know from statements by people like Deputy Ned O'Keeffe that this is one of the most right wing Governments this State has ever seen. We heard this at length from the former Fianna Fáil councillor from Wexford on radio the other morning. One has to ask why. Is this just to satisfy the ideological needs of people like the Minister for Justice, Equality and Law Reform, Deputy McDowell, and the Minister, Deputy Brennan, so that they can say they have privatised so much in terms of State assets or has it been, in any way, thought out in terms of our strategic national interest and our need to have a profitable and functioning airline serving the connections between this country and the United States and Europe?

I have no problem with a detailed debate but for the Minister to come in and try to sneak in the trade sale of Aer Lingus by the backdoor without any detailed discussion of why he proposes to do that, other than to say the chairman has examined the situation, has reported to his satisfaction and he is going to come up with a deal, is not the way to deal with the strategic future of air transport in this country by the main provider of European services and pretty much the principal provider of North Atlantic services. The air connections to Europe, the United States and the United Kingdom from this country are critical.

We all know the role they have played in opening up the market, just as increased competition levels in the communications market have been enormously important. However, we have strategic interests as an island country and we have no indication what this proposed trade sale will do to strategic air links.

The Minister for Transport is proposing this Bill without giving the Dáil an opportunity to discuss it. He is bringing it in through the backdoor. I say this against the background of the Government's performance. It has been in power now for more than six years. In that time we have had debacle after debacle. We had the former Minister for Public Enterprise, Senator O'Rourke, with her non-stop advertising campaign for Eircom privatisation, when small and big investors were fleeced. What is Eircom's position today? It is owned by a group of venture capitalists who have made no secret of their desire to sell off Eircom as soon as they have got it to a critical state. Because of the debacle of Fianna Fáil's and the Progressive Democrats Party's handling of the Eircom privatisation, this country is now seriously lagging behind in all types of communications technology, such as broadband, particularly affecting the west coast of Ireland. It is costing us dear in terms of our competitive position on the European and world markets.

As a representative of the Dublin West constituency, close to the airport, I note there has been an enormous amount of foreign direct investment over the last decade. When I was a Minister of State in the 1992-1997 Administration, I was happy to see companies like IBM coming to the constituency and providing thousands of jobs. All I hear now from those compan ies is that Ireland is no longer competitive with regard to communications technology, broadband and pricing.

The reason for the fall in our competitive position is not simply wage inflation arising from the Celtic tiger. It is also to do with the Eircom privatisation debacle, led by Fianna Fáil and the Progressive Democrats. That privatisation was partly a response to changes in market forces, but also arose out of a deep ideological conviction of the benefits of getting the State out of any type of investment.

The Minister for Transport is proposing in this legislation that carte blanche be given to him for a trade sale of Aer Lingus without debate in the Dáil about the strategic considerations involved in such a move. That is an act of national vandalism on his part.

The new building for the Cork School of Music was to cost €12.9 million. However, the so-called PPS is now going to cost the taxpayer up to €200 million, while Cork city will still not have a school of music. We have the debacle of the road and transport infrastructure around Dublin and throughout the country. Spending by this Government on the health services has gone up, for a lesser service. The Government's record in management is pathetic. Why should anyone trust the Minister for Transport to have a serious formula for the needs of Aer Lingus as it goes forward into the future?

There is no indication as to how Aer Lingus is effectively to be valued. No doubt, the private trade sale partners will perform a due diligence examination of Aer Lingus. From the strategic viewpoint, one of the most important assets Aer Lingus has is its landing rights in certain US cities. There is no indication as to how these rights will be valued. I can see a number of middle-sized airlines in Europe, and even in the US, being interested in Aer Lingus because of the availability of these rights within Europe and America.

What is to prevent the recurrence of the Eircom scenario? Having acquired these rights, it will be far easier and more logical for a company to follow the route of current retail sector servicing in Ireland. That is to make the whole of the Republic of Ireland a hub for north-west England, particularly around Manchester. I am not suggesting this will happen today or tomorrow. However, what would be wrong with people in the future, instead of going to Dublin or Shannon for their transatlantic flights, simply using the hub services of either Manchester, a city in Scotland or a hub on the European mainland? Once we allow Aer Lingus to go entirely out of national hands, as is clearly the intention, we will lose critical power over our capacity to decide how our national airline policy should operate. To do that without discussion in the Dáil is a dereliction of duty.

The EU has advanced the notion of TENs with regard to strategic transport routes linking Europe. Ireland has not been in a position seriously to avail of this. In the current discussions in the EU, the competitive policy has been driven by a particular ideological model for the last five to ten years. In the context of a more balanced discussion of Europe's economic future, island states like Ireland would merit serious consideration of their transport linkages whether by sea or by air to other destinations within the EU and the US, the major trading partner of the Union. I know it is not directly within the Minister for Transport's power, but to let go of our strategic control of the national airline at this point, together with Aer Rianta when he turns to privatise that, will historically be the wrong move. I remind the Minister that the privatisation of Eircom lost us critical strategic investment in third and fourth generation communications technology because it went so badly wrong.

If one makes a bad decision now for short-term ideological reasons, in order to keep the Minister, Deputy McDowell, and the Progressive Democrats Party happy, then in ten or 15 years' time when the discussion in Europe will more comprehensively address the island nature of Ireland, we will have sold the path. We will have nothing left if we end up becoming a subsidiary hub to airports in the UK or Europe. We will have only the Minister for Transport, Deputy Brennan, to blame.

There is enormous potential to develop both Shannon and Cork airports. In the case of Shannon, if faster access to the airport was provided by better rail and road infrastructure, a considerable part of the island of Ireland, using it for linkages and as a hub for the US, would find it more attractive. To some extent the same would apply to Cork, particularly in regard to Europe and perhaps in future in regard to the United States as well. This scenario is worth examining in detail and developing. By going in his chosen direction, the Minister is pre-empting decisions. He is going for a trade sale without a detailed discussion or teasing out of the important issues involved.

For the past ten years my constituency has had a high level of success in terms of foreign direct investment. For those mobile international executives from companies like IBM and 3Com, which unfortunately is now leaving, direct access to the country in which they wish to invest is of critical importance. It is not something to be lightly thrown away. If we wish to maintain a high level of foreign direct investment and remain competitive, it should be central to our discussions.

I accept the Minister's congratulations to the staff of Aer Lingus but it would be extremely short-sighted of the staff, on foot of the sacrifices they have made, to accept the privatisation of the airline by the back door. The staff may decide to go with that but for the rest of us, particularly those who want to see sustainable employment and foreign investment continue, the decision to let go of Aer Lingus without a proper discussion will turn out to be a historic mistake.

Mr. Carey

I wish to share time with Deputy Peter Power.

An Ceann Comhairle

Is that agreed? Agreed.

Mr. Carey

I listened with some bemusement to Deputy Burton's economic analysis of the ethos of State companies and the development of companies in State ownership. I came to the conclusion that it resembled the analysis of Michael Foot in the British Labour Party versus the enlightened approach of the present chancellor, Gordon Brown. It was in stark contrast to the positive contribution of my colleague, Deputy Shortall, who, although she has some difficulty with the Bill, at least gave an objective and positive analysis.

Ms Burton

I was basing my analysis on the wonderful job the Government did with Eircom.

An Ceann Comhairle

Allow Deputy Carey without interruption, please.

Ms Burton

It is a wonderful example.

An Ceann Comhairle

Deputy Burton, allow Deputy Carey.

Mr. Carey

I thank Deputy Burton for the opportunity to mention that the trade unions in Eircom at that time skilfully negotiated what is regarded as the best employee share option plan in existence. They are now reaping the rewards of it. I share some of the Deputy's concern in regard to venture capitalists.

Ms Burton

Where is the country's broadband technology?

Mr. Carey

Will Deputy Burton give me half a chance of getting a word in edgeways? Unless we are prepared to encourage the evolution of our semi-State companies Aer Lingus will become the aviation equivalent of Aeroflot. I certainly do not want that to happen. Our national economic life is dependent on a vibrant aviation sector, which can be achieved by Ryanair and also by Aer Lingus as the national carrier.

Deputy Burton is more skilful in the area of economics than I, but when the economic history of the country is written, the contribution of the semi-State and State companies to our industrial and commercial development will be seen as extraordinarily significant, as will the contribution of the chairmen and chief executive officers of those companies. Aer Lingus needs to be allowed to evolve. The same is true for Aer Rianta. The sugar company was allowed to evolve, as were CIE and Bord na Móna. Who would have believed Eddie O'Connor would have been able to turn around Bord na Móna in the manner in which he did. I accept that he was sacrificed for his efforts but the rewards are there and the company is thriving.

We should be allowed to encourage the further development of Aer Lingus as a thriving company with private sector investment. I would be very careful about that. What the Minister is proposing is probably about right for a modern company. We are coming from a situation where—

Ms Shortall

What is he proposing?

Mr. Carey

—the aviation industry in Ireland has been a bit like Icarus – there have been peaks and troughs. We must remember the GPA saga and how that company developed into Ryanair, the events of 11 September and the SARS issue. I do not wish to return to the challenge I think I heard Deputy Shortall throw down. What about the misleading—

Ms Shortall

I asked what the Minister is proposing to do.

Mr. Carey

—commitments that were made to workers in Aer Lingus? I was not in the hangars at the time, but I think Deputy Shortall was, where they were promised the sun, moon and stars. The workforce was taken to the top of the mountain and abandoned. It was left to later Governments to come to the rescue of Aer Lingus.

Ms Shortall

They were given the investment that was required, as the Deputy well knows.

An Ceann Comhairle

Allow Deputy Carey to continue without interruption, please.

Ms Shortall

A total of £175 million was invested.

An Ceann Comhairle

Deputy Shortall, please.

Mr. Carey

That is where the Government—

An Ceann Comhairle

Deputy Shortall, you had an opportunity to make your contribution without interruption. Deputy Carey is entitled to exactly the same courtesy in the House.

Ms Shortall

He is re-writing history.

Mr. Naughten

That is nothing new.

Mr. Carey

I listened to Deputy Shortall's analysis, which was a valid one. Perhaps I will be allowed to indicate where we are coming from.

I repeat, we need to allow semi-State companies to evolve in response to events such as 11 September, the SARS crisis and the international downturn in the economy. The aviation sector has been affected by all these events. Aer Lingus has responded magnificently, in contrast to companies on the mainland of Europe which have been sold off and liquidated by various states. We have seen the transformation of Aer Lingus into a high quality, low fares airline. While it has a fair distance to go, the contribution of management and workers to the company's transformation needs to be recognised.

The measures that have been talked about here are required to allow for further flexibility to take place. While I am not an aviation expert it clearly makes a great deal of sense from a maintenance point of view as well as in terms of cost control and the training of staff to have a standardised fleet. It is equally desirable that the purchase of new aircraft, for example, be funded from existing company resources.

Who would have thought even a year ago that Aer Lingus would now be a thriving company and looking at new opportunities. I listened to the chief executive of the company who was in the House in recent weeks speak about the vision he has for Aer Lingus playing its part in an enlarged Europe. As Deputy Burton said, the opportunities are immense. A community of 500 million people is a vast customer base which presents great opportunities in the emerging new countries in eastern Europe and our new member states.

Ms Shortall

So why does the Deputy want to sell it off?

An Ceann Comhairle

Sorry, Deputy Shortall, allow Deputy Carey, please, without interruption.

Mr. Carey

The Minister is more than capable of answering for himself. I suggest that until such time as there is an injection of further investment into the company, it will not be able to respond to the challenges that are being presented to it, including the change in the Shannon stopover policy. I come originally from that part of the country and I can understand that there are good emotional and other reasons for it but it has always bamboozled me why we have insisted on the arrangement at Shannon which hinders any real development in the North American market. The opportunities for tourism and investment are clearly there and they need to be maximised.

The need for further streamlining of Aer Lingus goes without saying. I urge those involved in the current phase of development to continue on that courageous path. Aer Lingus has been a very loyal employer on the north side of Dublin. It has made a significant contribution to the economic life of the area—

Mr. F. McGrath

Especially to Dublin North-Central.

Mr. Carey

I suggest in other areas as well. I ask the Minister to listen carefully to cross-party urgings for further investment in infrastructure in the vicinity of Dublin Airport. The rail network is entirely absent. There needs to be a commitment to provide a rail network and to further develop the road network around the airport. I believe that is possible if there is investment in Aer Lingus and further development of Aer Rianta.

Contrary to what the Labour Party wishes to see in this Bill, I believe the Government should press ahead. The Minister is to be lauded for the options he is making available to Aer Lingus and to its workforce. I commend the Bill to the House.

Mr. P. Power

I thank Deputy Carey for sharing his time with me. There is an air of unreality about some of the contributions to this debate. Deputies Shortall and Eamon Ryan and, to a certain extent, Deputies Naughten and Burton have called for an ideological debate on the strategic national interests. I believe they are missing the point of this Bill. Either it shows a fundamental misunderstanding of the legislation or it shows a deliberate—

Ms Shortall

Did the Deputy read the Bill?

Mr. P. Power

—attempt to ignore the purpose of the legislation. It shows a lack of appreciation of the commercial realities in which airline companies operate and a lack of understanding of the capital requirements of large companies such as Aer Lingus.

Ms Shortall

The House should discuss them. Why not have a debate?

An Ceann Comhairle

The Deputy had her opportunity.

Mr. P. Power

The Deputy had her opportunity this morning and the House listened to her. The Deputy asked the Government side to respond to her views on the ideological debate, the debate on our strategic national interests, and that is what I will do.

I want to explain the context in which modern national airlines operate. We must realise that Aer Lingus is now operating in an ultra-competitive environment. Ryanair is now one of the foremost aviation companies in the world and one with which Aer Lingus competes on a daily basis. The aviation business is cyclical and aviation companies require major capital investment, as evidenced by the amount of money which Ryanair borrowed in the last few years to fund capital investment of €7 billion. We are now in an environment where we cannot lend money for development of a capital base to aviation companies such as Aer Lingus because it would be in breach of EU rules of competition.

Deputy Shortall has asked for a debate on privatisation and a debate on investment, but that is missing the point of this legislation. It is to give Aer Lingus the ability to invest in its own future, which in my view cannot be achieved by simply asking the existing shareholder to borrow to expand. In the modern aviation environment it is generally recognised that airline businesses must expand and grow in order to survive. The airline cannot ask the existing shareholder for €2 billion or €3 billion to expand because it would be in breach of the Stability and Growth Pact and in breach of EU legislation.

The Government is the primary shareholder in Aer Lingus. What should it say to the company? Should it say it is not interested in giving money, that the company will have to fly its own plane and sail its own ship and that the Government wants nothing more to do with it? Should it put in place a concrete legislative framework to allow the company access to the sort of massive capital required by aviation businesses? This Bill seeks to take the latter course of action. To argue the case on the ideological grounds that this represents a sell-off of the national silver or that it will be used to prop up the budget deficit, is fundamentally to miss the point.

Mr. Durkan

It could be another Eircom.

Ms Shortall

That is exactly what it is about.

An Ceann Comhairle

Please allow Deputy Power without interruption.

Mr. P. Power

These airlines need money.

Mr. Durkan

It is Eircom Two.

Mr. P. Power

If the Labour Party and Deputy Eamon Ryan and the Green Party had their way the airlines would not have that money. In fairness to Deputy Naughten and the Fine Gael Party, they appreciated the commercial realities and the capital requirement realities within which these companies operate.

Mr. Durkan

We are suspicious at the same time.

Ms Shortall

The money will not go into the company.

An Ceann Comhairle

Deputy Shortall, allow Deputy Power without interruption.

Ms Shortall

The State privatises it. The money does not go into the company.

Mr. P. Power

The Deputy said that nobody in this House was prepared to engage with her in a debate about the real reasons behind the legislation.

Ms Shortall

The money goes to the Exchequer.

An Ceann Comhairle

Please, Deputy Shortall.

Mr. P. Power

I am now seeking to do so but the Deputy will not allow me to speak, which is typical. Nevertheless section 4 of the Bill makes provision for Aer Lingus Group plc to issue new shares and to create shares of different classes with different rights, subject to the Companies Act. If the Deputies really understand company law – and I doubt if some people do – that provision is clearly designed to allow sophisticated financial arrangements and share arrangements with other entities, be it by way of strategic partnerships or by way of limited ownership or the retention of a golden share, as was mentioned by Deputy Shortall. To suggest enacting this legislation and selling off Aer Lingus tomorrow morning is a very blunt method which does not take account of the nuances of the international aviation business. That may be the Deputy's view but I do not think she appreciates the realities with which aviation companies are now working.

To bring Deputy Shortall's argument to its logical conclusion, on the one hand she is saying that she is in favour of the ESOP and all for giving 15% of this company to the workers. That in itself is a very real and concrete form of privatisation.

Ms Shortall

It was part of the deal which must be honoured.

Mr. P. Power

It means the privatisation of 15% of the company. On the other hand the Deputy is saying that she is not willing to tolerate any form of privatisation whatsoever. She is either on one side of the fence or the other. The Labour Party is trying to have it both ways. Why should 15% of a company be given to the employees? It is done for genuine commercial and capital reasons. The reason the company made such an offer and such an arrangement is that it received a return for it in the same way that any company would seek strategic partners and sell off its shares to introduce fresh capital. In this case the company did not bring in fresh capital. It got genuine and substantial concessions from the unions to allow it to operate in a new competitive environment, which the Labour Party is ignoring.

Some 15% of the company has already been sold off. That is privatisation, but the company has got something in return. If power and authority are given to the Minister to allow Aer Lingus to enter into strategic arrangements with other companies to provide the new airplanes for its new routes, that would be a genuine commercial business decision. It should be allowed to do that. Deputy Shortall is saying, if I interpret her correctly, that she would not allow the Government to do that or to pass this legislation, thereby completely tying the hands of the Government and the Minister so they would not be able to enter into commercial arrangements with other companies.

Ms Shortall

We are saying that we want to hear the terms of the deal first.

An Ceann Comhairle

Deputy Shortall, please.

Mr. P. Power

Everything is fine for Aer Lingus now due to the great endeavours of Willie Walsh and others who have made the company profitable. However, aviation is cyclical by nature. When the downturn comes and Aer Lingus needs a massive injection of capital from banks or partners and there is no legislative framework to underpin such activity, it will look to the Labour Party which denied it that opportunity. Deputy Shortall asked for a fundamental debate on the reasons for the legislation. I have given her the reasons. Her comments and those made by others highlight a fundamental misunderstanding of the huge capital requirements of such companies in a modern environment.

Ms Shortall

We fully understand what the Minister is doing.

Mr. P. Power

A number of other issues were raised which I do not have time to deal with now. Deputy Shortall asked if the Minister will make the decision in the interests of the State. It was also asked if he will decide to enter into arrangements on the basis of the company as a corporate entity or if he will make a decision based on the requirements of the fee paying passengers of this country. Those are the criteria we should bear in mind when framing this legislation.

Ms Shortall

I thank the Deputy for agreeing with me.

Mr. P. Power

I concede the Deputy made that point. The best way to subscribe to the interests of the consumer is to give the provider of those services the flexibility in a modern environment to expand and to raise fresh capital to provide passengers with the new airplanes, routes and services to which Deputy Shortall referred. However, that cannot be done under the model proposed by the Deputy.

Ms Shortall

What happened in Eircom was hardly in the best interest of the consumers.

Mr. F. McGrath

I wish to share my time with Deputies Ó Caoláin and Boyle.

An Ceann Comhairle

Is that agreed? Agreed.

Mr. F. McGrath

I thank you, a Cheann Comhairle, for the opportunity to speak on this legislation. The purpose of the Bill is to give effect to the employee share ownership plan agreed by the Government and the Aer Lingus unions. This Bill includes an enabling provision for the establishment of new pension schemes by Aer Lingus. While I strongly respect and support the democratic wishes of the trade unions on this issue – I will always give them my total support – I am concerned about the Bill in terms of providing a legal framework to facilitate any private sector investment process in the event that the Government embarks on such a process. Having listened to the debate on privatisation, I am concerned that this will not be the road ahead. I hope we do not see the destruction of a great company.

Let us remind ourselves of the economic arguments. We are an island economy and we will always need a national airline. We have seen recently how well it is able to compete with the so-called low cost airlines. When we are discussing this Bill, we should also remember the staff at Aer Rianta. I am totally opposed to the break-up of Aer Rianta. It is our jewel and it is the taxpayers' national asset. The proposed break-up is economic and social vandalism. Aer Rianta made €36 million in profits and returned €8 million in dividends to the Exchequer. Its charges are €5.36, which the regulator said are too low. It is time to challenge the people on the economic side of this issue and the Michael O'Learys and mainland Europe Deputy Careys of this world and tell them to look at the real issues in the debate. We all agree with and support modernisation, change and efficiency. However, privatisation is not always the solution – we could look across the water for many examples of that. I have heard no good economic or social arguments, therefore, I am not convinced by the Minister's proposals.

The staff have genuine concerns about their terms and conditions of employment and the Minister must listen to their constructive ideas. There are 1,400 workers at the airport and I stand with them on this issue. I want to ask the Minister a number of straightforward questions. Is it right during a time of so-called partnership that the Minister refuses to provide reasons for the break-up? Does a 15 minute discussion with union leaders in eight months, particularly during the summer, constitute respectful recognition of airport workers' concerns? Is it understood that as a consequence of the Minister's proposals hundreds of millions of euro, which were returned to the Government through the efforts of Aer Rianta workers and which could help in the housing, health and education crises, will be lost forever? We should discuss those issues in this debate on Aer Lingus.

Section 7 provides for employee shareholding schemes and the acquisition of shares in the company. Parts of the Bill are valuable and progressive and have the potential to give staff a sense of ownership of the company. That could lead to more productivity, efficiency and modernisation. The staff of Aer Lingus are in favour of that. I also welcome section 12 which includes the Ethics in Public Office Act 1995 and 2001, the Prompt Payment of Accounts Act 1997 and section 521 of the Taxes Consolidation Act 1997. Good legislation will always be required to ensure openness and transparency in business. We owe it to the people, to the taxpayers and the staff of Aer Lingus.

This is an opportunity to put on record our appreciation of all the staff at Aer Lingus and our thanks for their great contribution to Irish society. I put them on the same level as our international football team. They deserve our support and they have earned our respect. Aer Lingus has one of the best safety records in the world. I encourage the management of Aer Lingus to pay the outstanding 4% increase under the Programme for Prosperity and Fairness and allow the IMPACT members to get on with their jobs. Until now they were paid only for 35 hours even when extra hours were worked. They have been flexible for years. I urge senior management to pay the staff and allow them to get on with their jobs. I urge both sides to meet as a matter of urgency and to break the impasse.

I support Deputy Shortall's amendment because the primary purpose of the legislation seems to be to facilitate the privatisation of Aer Lingus. I am not convinced by any sound economic, political or social justice arguments. I urge all trade Unionists and taxpayers to row in behind this position. We cannot sit back and watch our national airline being taken over or damaged by the privatisation wing of the Government. When one looks at the detail in the legislation, one has no option but to support the Labour Party amendment, particularly if one cares about our national airline. I urge all Members of the House to do that. This issue is too serious to play politics with it. It is above politics. Hence my support for the amendment.

I note the drift to the right by some sections of Irish society and our national media. Semi-State workers and public servants seem to be under pressure. It is time to draw a line in the sand on issues, such as Aer Lingus. The fat cats in our society are trying to bully their way to the top of the political and economic agenda. That level of arrogance must be tackled. It seems to be getting more difficult to defend the interests of working people, particularly the weaker sections of society. We have undergone rapid social, economic and political change in the past decade which has had a profound impact on our value system. Difficult decisions about the distribution of resources raise awkward questions for society.

There is a tension between the rights of individuals and the overall good of society. How will this be resolved? Our people are looking for guidance. The political elite and big business interests seem to get away with anything they want. We need real debate and real leadership and vision. This debate on Aer Lingus is part of the analysis of the ethics and values of our society. We need a society that is able to create wealth and distribute it equitably. Aer Lingus is a great company, providing jobs and services for our people. It should never be threatened with privatisation. Hence my concern about this legislation.

Caoimhghín Ó Caoláin

This Government and the last one have been responsible for many fiascos over the past six long and tortuous years, and I hope the electorate will not allow it to forget that. I cannot address this Bill without touching on one of the biggest disasters of those six years, the privatisation of Eircom, a semi-State company like Aer Lingus. In July of this year we learned that a €446 million dividend was awarded to itself by Valentia, the current owner of Eircom. The dividend, of course, was distributed by a British shelf company. This exposed how the public has been robbed not once, not twice, but three times by the marriage of interests between this Government and the privateers who are ever waiting for opportunity. The Government provides them with opportunity aplenty.

First, a valuable State asset was broken up and up to half a million people, the vast majority of whom had never had share investments, were encouraged – persuaded, indeed – by the Government to purchase Eircom shares at inflated prices. Many ordinary citizens borrowed to buy these shares out of a sense of duty and patriotism.

Mr. Naughten

It was greed.

Caoimhghín Ó Caoláin

All who retained their shares lost out. Second, in November 2001 people who had bought the Eircom shares were faced with a dilemma as the so-called offer to sell to Valentia was launched. It was a case of take it or leave it – either they took the offer or they lost out. Finally, during the past summer we saw a €446 million dividend being paid to the owners of Valentia, including a €20 million dividend paid to Tony O'Reilly personally. These were moneys that could have been invested in developing an effective telecommunications, broadband and Internet system in this country, something the Government has failed to do. It clearly allowed this rip-off of the people of this State and the destruction of their hopes and aspirations for the future. This debacle has clearly exposed the privatisation agenda of the Government.

The most recent manifestation of this policy is the Aer Lingus Bill. This is a deceitful and duplicitous Bill. The sugar coating of employee share ownership hides a very bitter pill for the people as a whole. Aer Lingus belongs to each and every one of us. What is the reward for the loyalty of so many people who, through the years, would never opt for a cheaper airline offer or another airline in the competitive market, staying solidly, rigidly and loyally with Aer Lingus through all its difficulties? Does that merit nothing? The Aer Lingus unions naturally negotiated in the interests of their memberships and nobody can fault them for that, but our concerns must be wider. They must be for the Irish people as a whole, not the current workforce at Aer Lingus. What about the future workforce? What about the strategic interests of the people of this island nation?

Speaking to the media at the Labour Relations Commission on 21 July last, the Taoiseach, in his much-reported commentary, stated that he was not a supporter of privatisation, "even if that is not the view of my colleagues". This is a most extraordinary view from the leader of a Government, a person who obviously sits at the Cabinet table. Is it possible that the Taoiseach refuses to express himself at the Cabinet table? Does he refuse to engage with his colleagues and impress his views on them? I cannot for a moment believe that he keeps his views to himself, yet that is the inference in his commentary.

We have seen Aer Lingus recover in recent years from a very difficult period, especially the period following the events of 11 September 2001. We have seen the workforce accept job losses and the company increase its efficiency and enhance its place as a world-class player and competitor in the airline market. In other words, the airline has repaid very well the trust, investment and support of the people.

We in Sinn Féin will strongly oppose the privatisation of Aer Lingus. We will strongly oppose this Bill because we do not see it as the cloaked presentation that the Government wants us to see. We see it for what it is. It is not just the thin edge, but a clear, signalled intent on the part of the Minister and his colleagues at Cabinet to move towards the privatisation and the sell-off of one of the most important assets we have. We will rigidly oppose this at every opportunity.

Mr. Boyle

There are several areas in which Aer Lingus has abdicated its responsibility as a national, flag-carrying airline. I represent the constituency of Cork South-Central and Aer Lingus, while it has made a remarkable recovery in balance sheet terms, has made decisions that call into question its role as a national airline – I speak of the decision of Aer Lingus to absent itself from the Cork-Dublin route. How any national company can seek not to provide a service between the two largest urban areas in its country beggars belief. The response from the Government has been lacking, as has the response from the company.

Last week I tabled a parliamentary question in which I asked the Minister to what extent his office had communicated with Aer Lingus about its decision not to continue services on this route. The answer the Minister gave me, while honest, says something about the willingness of the Minister to employ Government policy in this area. He has not put one word down on paper, nor has he uttered one syllable to the company about whether this decision was the correct one for the Cork region or for the country in general. Deputy Brennan might claim to be a hands-off Minister, but at the same time he is prepared to tell Iarnród Éireann how it should conduct its construction works, at a possible cost of €900,000.

As Deputy for the area, I am unhappy with the Minister's reply and with the response of the company. I, with others in the constituency, have written to the chief executive and have not received one word in response. The Minister will argue that the service will continue to be provided by Aer Arann and, to a small extent, Air Wales. However, Aer Arann has no service facilities in Cork Airport. If anything goes wrong with an aircraft, maintenance must be done in Dublin and spare parts and alternative aircraft must be flown to Cork. I have experienced the quality of service offered by Aer Arann and I do not think it is suitable. There have been several dozen cancellations of flights from the Cork area.

An Ceann Comhairle

I ask the Deputy to move the adjournment. He has four minutes remaining.

Mr. Boyle

Surely I have one minute left. It is 3.29 p.m. by the clock.

An Ceann Comhairle

On my clock the time is 3.30 p.m. It is a matter of choice. If the Deputy wants a minute he can take it but he will then have three minutes remaining when the debate resumes.

Mr. Boyle

Fair enough. Aer Lingus now operates on the smallest possible margins, providing the least possible service. The additional services that Aer Lingus has chosen to provide from Cork to mainland European locations are not new – the company is piggy-backing on routes that have been opened by a private enterprise company. If this is the business practice of the new, streamlined Aer Lingus, we in the House need to ask serious questions about where the company is going.

Debate adjourned.