Aer Lingus investment and pensions
Ó Caoláin challenges the Taoiseach’s account of whether the State can invest in Aer Lingus and raises the threat of redundancies and employees’ pension entitlements. The Taoiseach says investment is possible only in a restricted way and could face objections, and that discussions with staff and management are ongoing; procedural interruptions concern speaking-time limits.
On behalf of the Sinn Féin Members, and I expect I am reflecting the views of the Technical Group Members, I support Deputy Kenny's proposal for the House to press for the immediate release of the Irish international aid worker, Margaret Hassan, in Iraq.
Over 1,300 Aer Lingus workers now face redundancy. The future of the company as a State asset in the service of the people is now in jeopardy. Workers' representatives have expressed their concern for the future of the company and how the situation has been misrepresented in the House, particularly in the Taoiseach's replies on the matter to myself and Deputy Joe Higgins. On 5 October on Leaders' Questions, the Taoiseach stated in a reply to me that in the early 1990s the Government had put substantial resources of £360 million into Aer Lingus. Does the Taoiseach accept that this figure is incorrect and that the correct amount was £175 million paid in three stages: £75 million at the end of 1993, £50 million at the end of 1994 and £50 million at the end of 1995? This comes to a sum less than half that indicated by the Taoiseach in his reply. In a reply to Deputy Joe Higgins, the Taoiseach stated, "While Aer Lingus has difficulties and aviation is having enormous difficulties there are now restrictions on investing capital". Does the Taoiseach accept that Aer Lingus is not having financial difficulties and, therefore, there are no restrictions on the State, as the major shareholder, investing capital in the company? The Taoiseach also stated, "While in 1993 the State could give significant [State] aid, we cannot do that anymore". Is it not the case that an investment at present would not constitute state aid, but would be a commercial investment by a shareholder as the company is profitable and that any such investment would not be regarded as a subsidy? There is no barrier to the State intervention necessary to ensure the continued viability of the company.
Comment on this
I cannot recall what figures were referred to but I will not dispute them. My point was that in 1993 when the company was in severe difficulties and I was Minister for Finance, the State gave subsidies when there was no State aid issue. The difficulty with State aid now is that other companies object to it. One then enters into the long process of EU competition policy which can take up to 18 months. This has happened in the case of other airlines.
A total of 1,620 expressions in interest in the voluntary severance and early retirement package were received by the closing date of Friday, 15 October. These are now in the process of assessment by the company. Talks between Aer Lingus management and staff, with the assistance of an independent facilitator, on staff related issues arising from the implementation of the business plan also concluded last Friday. However, follow-on discussions are continuing between Aer Lingus management and the workers' representatives SIPTU on a number of issues, mainly relating to catering, cleaning and reservation area. IMPACT has advised Aer Lingus that it is in dispute with the company concerning major work practice changes being sought with cabin crews from 26 October. The company has implemented its new fares strategy to allow it to remain competitive and expects fares to decrease over the next few years. The Goldman Sachs report on Aer Lingus is now being considered by the Minister for Transport and his officials, as I informed Deputy Rabbitte yesterday. This report will form an input by the Minister's deliberation to the Cabinet sub-committee on any decision the Government will make on the future of Aer Lingus.
As I told the House a fortnight ago, I appreciate the work of management, the unions and workers' representatives in dealing with the company's situation. Aer Lingus is one of the few airline companies in profit which is a credit to the work done by all sides. Mr. Willie Walsh, the unions and staff representatives all deserve credit for the effort they have put in for the last three years in turning around the company from a loss-making position. Some of the workers have suffered considerable hardship because of this and more will go in the latest round. However, they have made their expressions of interest in the latest available package. The Government will continue to assist the company, based on the recommendations of the Goldman Sachs report.
Comment on this
The phrase used by the Taoiseach, "all I was trying to say" will hold in this case. What the Taoiseach actually said at the time was that there was not a facility or a means by which the Government could invest in Aer Lingus. I am demonstrating quite categorically that is not the case, and that the replies the Taoiseach previously offered here during Leader's Questions do not stand up to careful scrutiny. As the major shareholder in a profitable company it is open to the State to invest in Aer Lingus without objection and it is a very reasonable business proposition for the State to consider.
The Taoiseach referred to comparisons with other airlines in Europe. He has trundled them out time and again. However, the Italian Government had no difficulty in ensuring a €400 million investment through raising an emergency loan to aid Alitalia. Who is acting differently from whom here? The Taoiseach likes to quote instances from jurisdictions to support his inaction but his inaction does not hold up either in terms of domestic or international scrutiny and there is a particular failure here.
In the past the Taoiseach stated a management buy-out is not compatible with the mandate of Aer Lingus. Will he definitively rule that out and will he further, as he failed to do on the last occasion——
Comment on this
——I spoke to him, guarantee the pension entitlements of current and former employees of Aer Lingus? Will he give them a categoric assurance that their pension entitlements will not——
Comment on this
The bell beats me but I hope the Taoiseach will be frank and straightforward in his reply.
Comment on this
Time limits are laid down for Question Time and if the Deputy goes beyond the time allotted and asks three more questions, it is unfair to expect the Taoiseach to respond in one minute.
Comment on this
I assure the Ceann Comhairle I am watching the clock too. Of the three leader's questions asked that was the shortest. I was the only one the Ceann Comhairle was happy to interrupt.
Comment on this
It is not a question that the Government cannot put in capital, but it can only be done in a very restricted way. It is also open to objections from other countries. That is the point I made previously, it is not straightforward. Capital can only be invested in a very restrictive way. It is not a simple process.
Regarding conditions and other matters, the Minister has already met the unions and management on these issues. In regard to pensionability and other issues, discussions are ongoing between the Department and the staff and management. As discussions are ongoing, it is not for me to take a final position.