Hangar 6 at Dublin Airport: Discussion.
The next item on the agenda is the matter of 300 jobs at Dublin Airport. I thank the delegations for coming to this meeting at short notice. I thank the delegations from Ryanair, Aer Lingus, Dublin Airport Authority and IDA Ireland. Invitations were also issued to the Minister for Transport and the Minister for Enterprise, Trade and Employment and they have indicated they will attend the committee on another day after the facts have been presented here today.
I will call each delegation in the following order: Ryanair will have ten minutes for a presentation and ten minutes for questions and the same will apply for Aer Lingus, DAA and IDA Ireland.
I welcome Mr. Michael O'Leary and Mr. Michael Hickey of Ryanair. Mr. O'Leary has ten minutes.
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It is a great pleasure to be back here again. I have been asked to give a brief presentation of ten minutes with ten minutes for a question and answer session. Since we do not have the time to read through all the correspondence, I have brought two booklets for the committee which summarise the entire sequence of events that took place last year. The first booklet is the correspondence between Ryanair, the Tánaiste and the IDA re Ryanair's February 2009 offer to create 500 jobs in hangar 6. Rather than bore the committee to death with this correspondence — although it is relatively short — I draw the committee's attention to the first letter in that pack which is letter No. 1. The dates are important. This is a letter dated 26 February 2009, almost 12 months ago. This was at a time when SRT had announced it was closing and withdrawing from maintenance at Dublin Airport and planned to make either 900 or 1,100 engineers redundant. The Tánaiste had set up a task force with all the usual panoply of stuff to find jobs, create jobs, rescue jobs and so on. Being the opportunistic business we are, we thought here is an opportunity, we will write to the Tánaiste and we made the following offer. I refer the committee to paragraph three:
The lack of suitable facilities at Dublin together with an airport monopoly that has repeatedly refused to engage in constructive dialogue on alternative facilities has forced Ryanair to locate base maintenance facilities overseas [at places like Prestwick and Stansted.]
I refer the committee to the following page which contains the kernel of our offer:
However, in the light of this recent announcement by SR Technics, Ryanair (the worlds largest international low fare airline) ... is willing to immediately set in and commit its foreseeable future base maintenance requirements to Dublin and guarantee the survival of this industry and the creation of up to 500 well paid aircraft maintenance jobs in North Dublin.
This offer is conditional only upon our ability to operate free from the interference of the DAA monopoly and to facilitate this we are prepared to buy the freehold to the hangar 6 facilities back from the DAA for the same cost that they have paid to SR Technics and on the same terms and conditions that this facility has operated under since its inception. This will provide Ryanair with the necessary facility in which to carry out our maintenance and allow for the creation of 500 [ jobs.] ... Ryanair is the only viable airline alternative with the scale, growth and capacity which can genuinely justify and sustain the continued existence and expansion of this industry ... if this opportunity is missed we will be forced to continue to invest in non-Irish overseas facilities, a situation that will remove any opportunity for Ryanair to create this volume of new jobs at Dublin Airport.
I refer the committee to letter No. 3. Following a number of months of meetings with the IDA and with lots of talk but not a lot of action, the Tánaiste wrote back to me and I refer to the second paragraph:
I am highly supportive of this project and you can take it that all Government agencies are expected to assign the highest priority to job creation in current circumstances. I understand that the hangerage is available at Dublin Airport to accommodate the project but that a number of other parties are in discussion with DAA with a view to securing facilities and that the window of opportunity may not remain open much longer. [This letter is dated 12 August and the dates are important.]
I, and my Department and its agencies will do whatever we can to progress this project. However, I don't think further progress is possible without direct discussion between Ryanair and DAA, however it is arranged. I really don't see how parties can agree on a commercial arrangement, particularly given the complexity of the situation at the Airport, without talking to each other.
We wrote back to the Tánaiste in letter No. 4 to thank her for her letter and remind her that we did not want to talk to the DAA. We said we were happy to buy or to lease the hangar through an honest broker such as IDA Ireland. We reminded her of Ryanair's only condition: "We will not enter into direct discussions with the DAA". As we do not trust the DAA, we do not deal with it. We told the Tánaiste that if that was all she had got, the jobs would go abroad.
In the interests of brevity, I will take the committee forward to the last exchange of correspondence with which I am dealing. I refer to letter No. 13 which was sent to Ryanair by IDA Ireland on 10 September. It is stated in the second paragraph of that letter:
We have continued to work with the DAA to clarify the position as regards Hangar 6 and to explore if any other workable option might be available. As regards Hangar 6, I understand that while there are outstanding issues to be resolved with Aer Lingus, which will determine its availability, the DAA has re-affirmed its willingness to discuss this matter further and to consider any proposals from Ryanair.
As we were not making proposals to the DAA, we did not need IDA Ireland to come back and give us the same offer. We were prepared to create 500 jobs and use the hangar for all the maintenance activity it could take. The only condition was that we would not deal with the DAA. I wrote back to IDA Ireland to say:
Thank you for your letter of today's date. As far as Hangar 6 is concerned, we welcome the confirmation that the DAA has no "other interested party" willing to invest in this facility or create 500 well paid, sustainable jobs there ... We will not however enter into any discussions with the DAA monopoly ... any further discussions between the IDA and Ryanair in relation to our offer of investment in the Hangar 6 facility [and 500 new jobs] must be concluded [by the end of] September.
Mr. Barry O'Leary wrote back to me in letter No. 15. I wrote back to him on 24 September in letter No. 16, the last letter in the file I furnished to members:
I note your confirmation that "Hangar 6 continues to be occupied by Aer Lingus". This is untrue ... If as you claim, the IDA, the Tánaiste, and the Minister for Transport are "fully committed to maximising maintenance employment at the airport" then why is the only offer you have received from one of the world's largest airlines, to create up to 500 high paid maintenance jobs in Dublin Airport dismissed so casually? ... It beggars belief that this government could allow such an insignificant line maintenance requirement [that of Aer Lingus], which will not create one extra job, to prevent a multi-million dollar investment in the facility and in the creation of up to 500 jobs there ... Since Ryanair is already far advanced with much lower cost airports than Dublin, the terms for the construction of new maintenance facilities at European airports ... I am afraid we have no interest in looking at other green field sites [in Dublin] if our offer to acquire ... Hangar 6 ... is not acceptable.
That is where Ryanair's correspondence with the Tánaiste and IDA Ireland finished.
I have also given the committee a copy of a report in The Irish Times of 6 January last, in case some other parties use it to try to confuse the committee with the complexities and difficulties of the Aer Lingus lease of hangar 6. The newspaper reported the good news about the lease:
AER LINGUS is to rent the largest hangar at Dublin airport to centralise its aircraft maintenance operation. [By the way, all the heavy maintenance work has been contracted out to France for the next 10 years] The deal was concluded on Christmas Eve and was the most important industrial letting in Ireland in 2009.
I draw the committee's attention to the report that the Aer Lingus lease of hangar 6 was concluded on 24 December 2009, nine months after we had first written to the Tánaiste to offer to create 500 jobs in an empty hangar and four months after the last of our correspondence with the Tánaiste's office and IDA Ireland, in which we had offered to buy or rent the hangar through IDA Ireland and create 500 jobs. What did the DAA, Aer Lingus and the Department of Transport do? They reached a cosy deal on Christmas Eve, whereby the hangar was rented by the DAA to Aer Lingus.
It is stated in the second last line of the report in The Irish Times, “Aer Lingus currently employs 250 aircraft maintenance staff at Dublin airport but it has no immediate plans to increase that number, according to the company”. One can bet one’s bottom dollar that Aer Lingus has no immediate plans to increase that number — it is cutting jobs.
The hangar was leased on 24 December to an airline which had no heavy maintenance business for it — all such business has been contracted out to France for the next 10 years. Aer Lingus has not created a single job in the facility. It has not yet even moved into it because it has nothing to move in. We went to the hangar last week to take pictures which we published on our website. Unfortunately, the doors of the facility have been locked closed since. When RTE staff went there today, they could not get pictures of what was going on in the empty hangar.
The final document in the file, sadly, is Ryanair's announcement on 10 February of the creation of 200 jobs in Prestwick where we are investing €10 million in building a big hangar which will hold three aircraft side by side. That is the first of 200 jobs.
We have released this correspondence to expose the inaction of the Tánaiste and IDA Ireland. I do not have a suitable word to describe the activities of the DAA and Aer Lingus. They had an offer on the table at a time when all the State agencies were doing whatever they could to create jobs. They did nothing for a period of nine months, other than to create a vacuum in which the DAA agreed a friendly lease with Aer Lingus in respect of hangar 6. Members may have noticed that yesterday evening, after we were all summoned to this committee meeting, Aer Lingus announced that it intended to centralise some of its operations in hangar 6. Of the 450 jobs it plans to move into hangar 6, not one will be new because operations people and cabin crew are being moved out of Aer Lingus's headquarters building. I am not sure what cabin crew will be doing in a maintenance hangar — perhaps they will have céilí dances or something. Not one job will be created there. In the next two or three weeks, sadly, Ryanair will sign one of two offers it has received from two competing European governments — two competing European airports — for another hangar. We have yet to decide whether it will have three or four bays. We will create approximately 250 jobs somewhere other than Ireland.
I remind the committee that after the Tánaiste established a task force last February, the world's largest airline offered her 500 jobs. In such circumstances, why did the Minister with responsibility for jobs, IDA Ireland and the DAA do nothing to take up this offer? I do not suggest anybody has it in for me, but if I was Bill Gates, Michael Dell or a representative of the American pharmaceutical industry and I came in here to offer 500 jobs and the only condition was that I did not want to talk to the DAA, a way would be found to do business without talking to the DAA.
I draw the committee's attention — I am about to make my last point — to the second booklet I have provided. It sets out a sequence of claims and comments made by the Taoiseach and the Tánaiste in the Dáil last week. In the first three pages of the document I have listed a sequence of quotes which I have taken directly from the Official Report. I draw the committee's attention to quote No. 23, a remark made by the Taoiseach in the Dáil. Members can read some other marvellous quotes from the Tánaiste and the Taoiseach on the first three pages of the document. The Taoiseach said, "there was a competition." No, there was not. He continued, "Michael O'Leary and Ryanair for whatever reason, which is their own business, did not compete for the hangar." We did not know there was a competition, but we spent all last year writing to the Government to offer to buy or lease the hangar. The Taoiseach has also said Ryanair did not "seek ownership of the hangar". I have given the members of the committee details of the offers we made in writing to buy the hangar. He has also said we did not "seek a lease for it last September." In fact, the committee will find that we did last February, last March, last April, last June, last July and last September. The Taoiseach has claimed that we "suggested [we] needed the hangar to go ahead with a heavy line maintenance operation." We do not need the hangar. We were offering to create 500 jobs in this country if the Government would sell us or lease us an empty hangar.
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The Taoiseach continued, "However, they never negotiated and they never contacted the DAA about that hangar." That is right. We did not negotiate with the DAA about the hangar. It was the only condition that was attached to our offer to create 500 jobs. We will not talk to a dishonest organisation such as the DAA. To this day, we still do not understand why nothing was done to take up the 500 jobs which have now been lost to another European country.
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Is the essence of the issue that Ryanair would not talk to the DAA? I have two questions. A letter sent by IDA Ireland on 21 July reads:
Following on from your letter on July 2 ... the DAA wants to engage actively and constructively with any company to create viable employment at Dublin Airport ... Michael, clearly the position outlined above does not tie in with your letter of July 2 but I do feel that the best way to progress matters is for direct contact with DAA and we are happy to arrange this if you feel that IDA chairing the meeting would be of benefit.
What was Ryanair's response to that letter from IDA Ireland? Second, where does Ryanair currently do its heavy maintenance work? What other European airlines carry out their own heavy maintenance work, rather than having it done by other companies or agencies?
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Although I do not have it to hand, I am absolutely certain that our response to that letter would have been, "We are not talking to the DAA". The correspondence we have given the committee today shows the complete hollowness and dishonesty of the claim that the DAA is willing to engage constructively with anybody creating jobs.
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I am answering it. We spent nine months last year offering to create 500 jobs in hangar 6.
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I have already answered that question. Our answer was, "We will not deal with the DAA".
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Our response was, "We will not deal with the DAA".
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Can Mr. O'Leary give the committee some evidence of that response? He has produced a great deal of evidence.
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Our response to the letter read:
Dear Barry,
Thanks for your fax of July 21 which I received here this morning.
Given that Ryanair has offered to reimburse the DAA the full amount they recently paid to SRT for Hangar 6, there is nothing to impede the DAA, via the IDA, agreeing to these patently "commercial terms".
Since the "commercial arrangements for the use of Hangar 2" were only hammered out over a 24-hour period on the steps of the High Court, we have no faith or confidence in the DAA's claimed "willingness" to negotiate anything with Ryanair...
The DAA doesn't have any other potential client to fully occupy Hangar 6 or create ... 500 ... jobs...
The DAA's claims about "supporting job creation" or "meeting the needs of users" or "arriving at pragmatic, sensible commercial terms" are simply false.
If these claims were true then the DAA would have accepted our offer (via the IDA) of the same commercial terms for Hangar 6 as it recently paid to SRT.
This would have allowed Ryanair's offer to create 500 jobs to be accepted by the Minister for Enterprise, Trade and Employment and the IDA. It could not be clearer.
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The other question was on the number of other airlines that engage in heavy maintenance. I do not honestly know the answer. We do all our own heavy maintenance on our fleet. This includes the monthly, annual and biannual checks. At present, the facilities are in a five-bay hangar in Stanstead and a two-bay hangar in Prestwick. We are now building a three-bay hangar facility in Prestwick. In the next three or four weeks, another three-bay or four-bay hangar facility will be announced somewhere else. Those last two hangars would not be built in Prestwick and another location if the Government had accepted our offer last year to sell us or lease us hangar 6. We would now be employing the 500 currently unemployed aviation engineers in north County Dublin.
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We do not have aircraft old enough to be subject to such checks. Generally our policy is to sell aircraft by the time they are seven years old.
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The offer by the IDA to chair a meeting and commence negotiations should have at least merited acceptance by Ryanair. It should at least have sat down with the IDA and got on with the job rather than simply rejecting the offer, as it did in the letter.
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We had been sitting down with the IDA for approximately four months of last year. However, there is no point in coming back. If we are making an offer to the Tánaiste to create 500 jobs and the only condition is that we will not deal with a dishonest organisation such as the DAA, there is not much point in either the IDA or the Tánaiste writing back to us stating we must deal with it.
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I welcome Mr. Michael O'Leary. We are in the middle of a very serious global aviation crisis. The number of tourists coming to Ireland is down by 900,000 this year.
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We need Ryanair's 500 jobs. If they are on the table, the political system must respond. The barrier Ryanair has established involves its talking to the DAA but it is prepared to accept the IDA and goodwill from Ministers. Why are talks not happening?
Quotations by Mr. Michael O'Leary seem to indicate a very serious lack of action. Given the rate of unemployment nationally, affecting over 400,000 people, we should stand on our heads to create the jobs in Dublin Airport. Dublin Airport is big enough for Ryanair and Aer Lingus. The problem is that the present administration is not to the liking of Ryanair. The DAA is running the show, as matters stand. Its chief executive is paid approximately €700,000 per year. It does not make sense to me that, if the jobs can be created, we are not pushing the barriers out and that the Minister is not doing enough. What does Ryanair believe needs to be done, but which is not being done currently, to ensure the jobs can be created at Dublin Airport? We cannot afford to have the jobs leave the country. They are essential to our economy.
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Sadly, the first 200 jobs have already left. They were announced in Prestwick last week.
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I welcome Ryanair's chief executive, Mr. Michael O'Leary, and his colleague. Many observers considering this issue say, "A plague on both your houses", the houses being those of the Government and Ryanair. They have been messing around and perhaps 300, 400 or 500 jobs have been lost.
Is Ryanair not behaving like a spoilt child waving its rattle, stating it will not do what is being asked of it, that it will not go into hangars 3 or 4 and that it must be hangar 6? Once again, it is throwing a big tantrum. Today, sadly, we saw SR Technics workers walking around the town again. I refer to the remainder of the 800 workers who lost their jobs this time last year.
I bear no brief whatsoever for the Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan. I had to chase her time and again in the Dáil to produce some reasonable proposals.
Of the 30 expressions of interest, which reduced to two, I do not remember that of Ryanair. I was in touch with it and all the stakeholders at the time in question. Why did Ryanair not raise this row and go to war last September? I looked at the correspondence and acknowledge Ryanair states it was prepared to accept a lease on hangar 6 at the time in question. Why did it wait until February to go to war? Is it the case, as many believe, that Ryanair has already done a deal with Lufthansa Technik and a deal somewhere in eastern Europe? It is investing $140 million in Kaunas and developing its operation there substantially. Is it true that, having done the deal in Prestwick and while doing the deal in eastern Europe, Ryanair is coming to us to start moaning in retrospect? It is meaningless and very unfair to those workers who are on the street.
All of us have been in the hangars. Ryanair could easily do what it wants in hangars 3 or 4. It would have more space there than in Prestwick. I do not understand why Ryanair cannot start hiring the workers there tomorrow. I presume Ryanair will recognise the trade union the workers were marching with today.
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I welcome Mr. Michael O'Leary and Mr. Michael Hickey. How large is the Prestwick plant? When did Ryanair enter negotiations with the Scottish authorities and when will the plant be ready for use? Ryanair says it is in advanced negotiations on two alternative sites in Europe. What are the sizes of those plants, when were negotiations commenced and when will the hangars be ready?
Why is hangar 1, which is 8,400 sq. m, not suitable for Ryanair's needs? The hangar in Prestwick is 6,000 sq. m. Why is hangar 2, which is 5,300 sq. m, not suitable? Why is hangar 3, which is 8,400 sq. m, not suitable? Will Mr. Michael O'Leary confirm today that he has no interest? I understand the DAA and IDA are negotiating with a potential tenant who will create a quite substantial number of jobs for the hangar.
I have many more questions because I represent the area.
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I am a Deputy for the area and believe I should be allowed to continue given the seriousness of this discussion.
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Why is hangar 4 not suitable? Hangar 5 is 13,000 sq. m. Why does it not suit Ryanair's needs? Hangar 6 is 25,000 sq. m., four times the size of the Prestwick hangar. Why is Ryanair insisting on hangar 6 or nothing?
In the voluminous correspondence given to us by Mr. Michael O'Leary, one letter is omitted, namely, a letter dated 2 July that he wrote to Mr. Barry O'Leary, CEO of the IDA. Why is it not in the file given to us? Perhaps it was forgotten about? It states:
We would be prepared to agree to any lease term which gives the DAA the right to ask us to move from this Hangar 6 location to allow for necessary development of the airport, as long as in so doing, we are not disadvantaged. We believe this could be accommodated by some simple language which would require the DAA to provide us with a similar-sized hangar in a similar (ie: not less convenient) location on the same terms and conditions under which we occupy Hangar 6 should it require us to move in the future.
Given that the DAA expressed willingness to provide Ryanair with an alternative to hangar 6, why has it not accepted the offer in this regard by the IDA? Ryanair stated clearly it will not deal with the DAA. Why is hangar 6 so important in this context?
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I appreciate that but as Deputy for the area in question I have the right to ask questions. I will equally ask questions of the other bodies attending the committee.
When and why did Ryanair close off discussions with IDA Ireland? Will Mr. O'Leary confirm that hangar 6 can accommodate two Boeing 747s, aircraft Ryanair does not have. Why does the company need hangar 6 when it does not have wide-bodied aircraft?
Is there an integrated pollution prevention control licence needed for Ryanair aircraft?
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I will have to hold the Deputy on that question. In all fairness, the Deputy is going into detail, time for which the committee does not have.
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Does the Chairman want to hear the facts or not?
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I shall give Mr. O'Leary an opportunity to respond and then I will be calling on Deputies Dooley and McEntee and Senators Ross and Ellis.
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I asked a question some time ago and I am also a Deputy for the area in question.
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Yet the Deputy is not a member of the committee.
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Well, there is no time pressure then, is there?
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Michael O'Leary is more like a president.
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First, 500 jobs cannot be saved; the first 200 have already gone. What needs to be done to save the 300 jobs is exactly the same as it was last week. All that needs to be done some time in the next week or so is to give us, sell to us or lease to us hangar 6.
The committee will hear much spin in the next hour that it cannot be done. It can be done. Two things need to happen. One, somebody in the Government needs to call Declan Collier in the Dublin Airport Authority and tell him to release hangar 6. That can be done because the DAA has a clause in the Aer Lingus lease which both the Taoiseach and the Tánaiste and Minister for Enterprise, Trade and Employment have confirmed. She claims it allows Aer Lingus to vacate the terminal in 12 months but he says 24 months. Since Aer Lingus has nothing there, it should take about 12 minutes to be out.
Alternatively, I will make this offer now in front of the committee. The Government owns 24% of Aer Lingus. I own 29% of it. I will happily give the Government a proxy over my 29% of Aer Lingus. The Tánaiste and Minister for Enterprise, Trade and Employment can then call an EGM and with her 54% voting power she can simply instruct Aer Lingus to get the hell out of hangar 6, although that will not take very long because it has nothing in it. This would free it up and not discommode Aer Lingus. We have no beef with Aer Lingus in this. What it did was commercial. Our beef is with the Government and the DAA.
Contrary to what the Taoiseach told the Dáil last week, there are two other hangars. Hangars 5 and 3 were both built by Aer Lingus for wide-bodied aircraft maintenance such as 747s. They can both hold the Aer Lingus Airbus A330. The claim that Aer Lingus's wide-bodied aircraft can only fit into hangar 6 is nonsense. The committee has photographs on this before it.
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Hangar 5, as I understand it, cannot accommodate 747s.
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Aer Lingus does not have 747s but A330s.
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Yes, I accept that but I am referring to an old-fashioned jumbo jet.
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Hangars 3 and 5 can both accommodate Aer Lingus aircraft.
Deputy Broughan asked if Ryanair will recognise unions in hangar 6. No. Hell will freeze over before we recognise a union in hangar 6 or anywhere else.
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Mr. O'Leary did not say that to Aer Lingus.
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Was Ryanair prepared to recognise them when it took it over?
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That is what Mr. O'Leary said.
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We said Aer Lingus can continue to recognise unions but Ryanair will not.
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What did you tell Aer Lingus?
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What has Mr. O'Leary to say to the SRT workers?
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I have a lot of questions to answer, can you let me answer them?
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Mr. O'Leary will not answer the tricky ones though.
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What do I say to the SRT workers? I say we offered their Minister for jobs the opportunity to get 500 of their jobs back last September but she has done nothing about it. Still, 300 of them could be in gainful engineering employment by September this year but only if the Minister for jobs in this country makes a call to the DAA or, otherwise, creates a vacancy in hangar 6.
Why did we wait until September to make the offer? As the correspondence demonstrates, we were making offers to the Tánaiste and Minister for Enterprise, Trade and Employment and IDA Ireland from February 2009.
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Why did Ryanair not start this row in September?
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We waited until we announced the first of these facilities elsewhere in Europe. If we had done so beforehand, it would be claimed Ryanair was whingeing, has no plans to create jobs and has some hidden agenda. We waited until the first 200 jobs went somewhere else to say these jobs were offered to the Tánaiste and Minister for Enterprise, Trade and Employment and the Government but they did nothing to secure them.
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It is very strange that Mr. O'Leary, who gets so much public attention with 500 jobs on the table, did not plough on and demand the jobs were for Dublin and not for Prestwick or anywhere else.
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For exactly the same reason I set out in the letter to the IDA and the Tánaiste and Minister for Enterprise, Trade and Employment. If they do not want these jobs, we are already in advanced discussions with other European airports and they will go elsewhere.
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Why did Mr. O'Leary come back in February claiming he has had no correspondence since September?
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I have a lot of questions to answer and I am still going through Deputy Broughan's questions.
Why did we wait until September? We were writing to them from February through to September of last year. The answer to that question is why did the DAA and the Department of Transport wait until Christmas Eve to lease hangar 6 to Aer Lingus who created not one job but will actually cut 900 jobs?
Are the deals already done? No. Call my bluff. Somebody in this Government can call my bluff in the next two weeks by telling me, "O'Leary you can have hangar 6; now create 300 jobs". It is very simple.
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What if we give Mr. O'Leary a new hangar and call his bluff that way?
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It was. Barry O'Leary, IDA Ireland, has said he would.
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Deputy Kennedy has missed the point. I am the one creating the jobs. Here are the terms on which I want to create the jobs. Last February, my position was sell me or rent me hangar 6. It was vacant from February to December last year. If they want the last 300 jobs, they have to empty hangar 6.
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Is Mr. O'Leary admitting he has alternative plans for hangar 6 if he will not take a spanking brand new similar sized hangar?
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Yes, I have alternatives. They are elsewhere in two different European countries.
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Mr. O'Leary wants 25,000 sq. m.
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Ryanair is currently leasing hangar 1. We never dealt directly with the DAA on this. Our lawyers dealt with the DAA's lawyers on the steps of the High Court for three weeks last year when the DAA was trying to push us out of the executive jet terminal, the old tiny hangar. We exercised the same clause we say the DAA can exercise with Aer Lingus, as confirmed by the Taoiseach and the Tánaiste and Minister for Enterprise, Trade and Employment. Only one aircraft can be fitted into hangar 1 because it is too small. It is the same for hangar 2. Hangar 3, which can fit an A330, will only allow two 737s side by side because it is too small. Only one aircraft can be fitted into hangar 4 because it is too small. Only two, possibly three, aircraft can be fitted into hangar 5 because it is too small.
It is also leased to Dublin Aerospace. It is interesting the Department of Enterprise, Trade and Employment has invested €6 million in that company, which I wish well, to create 30 jobs this year. On a like-for-like basis, the Department should be giving me €60 million to create 500 jobs in Dublin.
Why hangar 6 then? We can put four or five 737s side by side which is what is needed for an efficient maintenance operation. The planes are parked for a week or a month during the winter. All the bits are taken off, laid out on the floor and the engineers move from side to side.
The square footage argument is somewhat misleading. There are offices on the front of hangar 6. The DAA will give all this nonsense of 26,000 sq. ft. of offices. The actual hangar space is about four or five aircraft wide. Our new hangar in Prestwick will be three aircraft wide because we did not build a whole tonne of offices on the front of it.
What drives our requirement for hangar 6 is that it is the only hangar facility in Dublin in which we can put five 737s side by side. The alternative is the first three have gone to Prestwick and the second three will go to another European country in the next couple of weeks.
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If Mr. O'Leary does not want 6,000 sq. m. of offices in hangar 6, why does he not take the IDA Ireland offer to build a second hangar in the same campus and create the jobs?
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We never made that offer to the Tánaiste and Minister for Enterprise, Trade and Employment or IDA Ireland.
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I am making the offer now. The Tánaiste and the Government will make it. Will Mr. O'Leary accept a new building on the same campus?
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Ultimately, the new building will be on DAA land and we will have to deal with it. We will not deal with the DAA.
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I understand that, but that is why we wanted to buy it directly or lease it directly form the IDA. We are too far advanced. I am in advance negotiations with two other governments, whether German, Italian, Spanish, French just to cover my options.
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Mr. O'Leary should get out the atlas.
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I am much bigger in those European countries, by the way, than I am in Ireland. I will sign one of those two deals in the next two weeks. There is no offer on the table to the Irish Government as regards giving me a site now, not that it was too keen to give me one last February or March when I was writing to it.
We entered negotiations with the other European airports and governments at the same time——
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Ryanair was in Prestwick as well.
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When did it start negotiating with Prestwick?
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At the start of last year, in February, March and April when we were offering the Tánaiste 500 jobs here in Dublin. It was exactly the same time.
Comment on this
Yes. The hangar will be ready in Prestwick in September 2010. I was asked previously when we could start putting business into hangar 6 and we said September 2009. Recruitment of some of the SR Technics engineers could start in September this year because we can switch some of our maintenance around. We started negotiations with those other governments as regards the European hangar, in February-March last year, exactly the same time as these offers were being made to the Tánaiste and Dublin Airport. I have gone through all the hangars and said why they do not work.
We closed the discussion with the IDA in my last letter, there, dated 18 September, in which we concluded: "It beggars belief that this Government could allow such an insignificant Aer Lingus line maintenance operation, which will not create one extra job to prevent a multi-million dollar 500-job investment by Ryanair...".
Comment on this
Why did Mr. O'Leary not include the letter he wrote to the IDA on 2 July in the package he handed out today?
Comment on this
Because we have a package of letters with the IDA which would have taken——
Comment on this
It is relevant because Ryanair had accepted the principle that the DAA and IDA could move it out of hangar 6, and it would take an alternative premises of the same size in the same location.
Comment on this
That is what it said on 2 July 2009. Why does Mr. O'Leary refuse to countenance that now.
Comment on this
What we offered and accepted was that if it sold or leased us hangar 6, at some point in the future if the DAA required it for terminal 3, say, or the new northern runway and needed to move us, we can be moved, in exactly the same way.
Comment on this
Ryanair then takes the authority to the High Court in London, does it not?
Comment on this
Where we won, but we still had to get out.
Comment on this
Exactly, so it is a Ryanair terminal.
Comment on this
No. Let me read to the committee what we gave to the IDA at the time, which is: "We would be prepared to agree to any lease term which gives the DAA the right to ask us to move from this hangar 6 location to allow for necessary development of the airport, as long as in so doing we are not disadvantaged."
Comment on this
Why did Ryanair then change its position between July and September, when it point blank said, "hangar 6 or nothing"?
Comment on this
In the letter of 2 July it acknowledged that it would take an alternative premises.
Comment on this
I am quoting from the letter, dated 2 July: "We will be prepared to agree to any lease term which gives the DAA the right to ask us to move from this hangar 6 location."
Comment on this
——and to move to a new building in the same location, which is the offer the IDA is making to Ryanair today.
Comment on this
Yes, but only if it sells or leases us hangar 6. Nothing happens here without hangar 6.
Comment on this
This is my last question. In September the negotiations with the IDA concluded where Mr. O'Leary said, "hangar 6 or nothing". Ryanair then moved to Prestwick and concluded its deal there. Why, four months later, is he saying to the Government, "Give us hangar 6 again and we will create 300 jobs"? Why is he trying to renegotiate on something he knows was not going to happen because Aer Lingus de facto holds the head lease on it?
Comment on this
The Deputy has missed the point. We have not come trying to renegotiate anything. We have just released the correspondence with the Tánaiste and the IDA last year to expose the fact that we offered them 500 jobs and they did nothing.
Comment on this
Mr. O'Leary is saying Ryanair has no offer of a job right now.
Comment on this
Yes, I was asked on RTE on Monday whether the last 300 jobs could still be won by Ireland. I said they could. I was asked what I needed and said "hangar 6".
Comment on this
Ryanair is leading the SR Technics workers up the garden path by suggesting that there are 300 jobs for them when Mr. O'Leary has already made the decision to go Germany.
Comment on this
I keep telling the Deputy. Call my bluff, get me hangar 6 and Dublin can have the 300 jobs. It is very simple.
Comment on this
I do not want to delay too long, but what I am listening to is worse than Northern Ireland. We have a group of people here who are pretending to be Irish, and the reason this is getting so much media attention is because of the jobs at stake. The first question I have for Mr. O'Leary is whether everything was put out to tender properly from day one.
Comment on this
Is the Deputy asking whether there was a competition?
Comment on this
Yes, that is my first question. I am from County Meath and there are SR Technics workers domiciled there. I spoke for 40 minutes with the wife of a worker who is in Turkey with many other former SR Technics employees who have not been paid for four weeks. Their passports are taken from them every morning they go to work. As we are all Irish here, would Mr. O'Leary agree to an independent mediator sorting this out in the interests of the families of these people, because I believe we are getting nowhere. There is great press coverage, but if everyone is serious about jobs, as Mr. O'Leary has just indicated, there are 300 jobs still available. Irish workers are employed in the worst circumstances——
Comment on this
I welcome Mr. O'Leary and thank him for his presentation. If he is serious about jobs, there is an alternative option for him. We should be delighted if he would base his maintenance facilities at Shannon. We have adequate lands available and we can certainly assist him. Perhaps he could comment on that.
He has indicated that the Government should boot Aer Lingus out of hangar 6. Ryanair owns almost 30% of Aer Lingus, so why does it not boot the company out? He has been talking about his relationship with the workers. They have an ESOT and it is possible that he could come together with them to force Aer Lingus, through that collective share power to make hangar 6 available, if he is serious.
Mr. O'Leary has also indicated that he would be prepared to move workers into hangar 6 within the next two to three weeks if it became available.
Comment on this
We did not issue any press release today.
Comment on this
This press release says that "jobs would be made available to Ireland "if hangar 6 was made available to the airport within the next two weeks".
Comment on this
That is correct, if somebody tells us that we can have hangar 6 within the next two weeks.
Comment on this
Where will those workers be taken from?
Comment on this
I want to go on to the next point. Who will lose out as a result of that? What other country will benefit? What kind of deal will Ryanair break out of here to move the jobs there?
We have seen this happening before in terms of moving flights around between airports. Mr. O'Leary can therefore understand the scepticism as regards where jobs might be moved around.
Comment on this
We have been on the receiving end of Ryanair wrath before.
Comment on this
I do not understand the problem. The solution has been suggested by many people here today, and by Mr. O'Leary, and I should like to ask him a question about this. He owns 29% of Aer Lingus and Deputy Mary Coughlan has 29.4%. Did she ask Aer Lingus to leave, because in the event, there is no doubt that between them, Mr. O'Leary and the Minister can call an EGM and fire the board if it does not act according to their instructions? Would Mr. O'Leary be prepared to get together with the Minister and go down that route? This is about jobs and the idea of Aer Lingus sitting there and obstructing job creation is quite unacceptable if the State and Ryanair want it. Between them they have a majority and it could be sorted out within weeks at this rate. Is that a solution that is acceptable to Mr. O'Leary?
I accept what Mr. O'Leary says about the DAA impeding jobs, and about his not talking to the airport authority. His record with the DAA and its record in obstructing him as regards various matters is enormous. Could he give the committee an estimate over his period of time at Ryanair of the number of jobs that the DAA has lost to Ireland and to the airport area?
Comment on this
Can Mr. O'Leary tell us why he will not deal with the DAA under any circumstances? That is the kernel to the whole problem, the row between him and the DAA. If that was not the case, we would not be here today because this would have been resolved. It is something we need to look at.
I agree with Deputy Broughan. I cannot understand how Mr. O'Leary became Rip Van Winkle and went to sleep from September until January. He did not seem to bother pushing this. In that time, was he using Dublin Airport as a bargaining chip in his discussions with the Prestwick and Scottish authorities? I am told that was the case. If Mr. O'Leary did get hangar 6, how much would he seek per job from the State on top of that? Can he guarantee the jobs will be paid at the same rate as paid by SR Technics or will he negotiate new rates with the workers?
Comment on this
I will allow Deputy James Reilly to put his questions because he is a local representative, but unfortunately we will have to cease questions then.
Comment on this
I will not repeat what everybody else said. I expect Aer Lingus will drive as hard a bargain as it can if it is to be got out of hangar 6. I accept Aer Lingus can be moved by the DAA under the terms of its lease, as has been admitted. People here should not be interested in the reason Mr. O'Leary has chosen now to put his case. We must accept it is his prerogative as to where he puts the jobs and the conditions under which he is prepared to operate. However, I have a few questions. Can Mr. O'Leary confirm that if the DAA hands over the hangar to the IDA, he is prepared to lease the hangar with a covenant that the hangar will only be used for aircraft maintenance and the necessary office space? Also, if it is the case that this can be done only under the condition that further jobs will be created by Mr. O'Leary, is he prepared to enter such a negotiation with people other than the DAA?
Many questions have been asked here, but the bottom line for me is that I do not expect Michael O'Leary to create jobs. I expect the Government to create them, through the Tánaiste and Taoiseach. Mr. O'Leary will go wherever he wants to go; that is his prerogative. We need to act.
Comment on this
I will allow Deputies Frank Feighan and Michael Lowry put a quick question and I will allow Deputy Leo Varadkar contribute because he is a spokesman on enterprise.
Comment on this
We may not like Michael O'Leary, but what he has done ——
Comment on this
Maybe the Opposition does not like him, but the Government certainly likes him.
Comment on this
Michael O'Leary has delivered for the country and he has what we want. Regardless of whether we like it, we are in a recession. Is it not better for us to give Michael O'Leary funding to create employment than to pay people to be on the dole? We need flexibility, but the Government has not been flexible. Jobs are the beginning and end of the way out of the recession. We need to appoint somebody immediately to acquire hangar 6 so we can ensure we get these jobs.
Comment on this
Like most people in this country, I admire Ryanair for the remarkable job it has done at home and internationally. I have just one question. When I was Minister for Transport — a long time ago — I and officials in my Department succeeded in achieving the takeover of Team Aer Lingus by SR Technics. The problem then — this is the reason SR Technics is under discussion today — is that work practices, procedures, the cost base ——
Comment on this
The Deputy's facts are incorrect. The company in question was FLS, which is a totally different company from SR Technics.
Comment on this
Yes, FLS. The work practices, procedures, the cost base and the failure to be competitive lost us that company. The same factors have put us in the position we are in today where the SR Technics jobs have moved abroad. How does Mr. O'Leary envisage he can make a success of re-employing that workforce under the same terms and conditions of employment, when its work practices, procedures, cost base and lack of competitiveness are the factors that contributed to its failure in the past?
Comment on this
If it was up to me, I would call Mr. O'Leary's bluff and offer him hangar 6. If he did not deliver, I would pursue him for the rest of his life. I have two brief questions. To the best of my knowledge, Aer Lingus and the DAA have not published the terms of the lease for hangar 6. Does Mr. O'Leary think they should and what is the reason they have not done so? With regard to whether Mr. O'Leary wants a terminal or a hangar, I have no objection to him having a terminal at Dublin Airport. That would be a good idea and would be good for customers. If Mr. O'Leary cannot produce the jobs or if the Government fails to take him up on the offer to produce jobs in aircraft maintenance, why will he not put in a bid to provide a terminal?
Comment on this
I have one more question. How many of the 300 employees Ryanair will take on will be direct Ryanair employees? Normal practice in Ryanair is to sub-contract some of the work.
Comment on this
I will try to deal with all of the questions as quickly as I can, but perhaps not in the order in which they were put. On the question of whether there was a competition for the hangar, there was no competition. The Taoiseach claimed there was, but there was no competition whatsoever. No other airline was invited to compete. We still do not know the terms of the competition. We suspect that one had to collect ten crisp packets and complete the slogan beginning with "I love the DAA and the Department of Transport because ... " in ten words. Even if there was a competition about which we knew nothing, will somebody explain to me how an airline — which originally sold off 1,100 engineers to FLS and then SR Technics where they were made redundant — won a competition for the hangar when it does not do heavy maintenance in it and has not created any job in it? Last night it was issuing a press release suggesting it would move cabin crew into the hangar, for céilí dancing and God knows what else as I have said.
On the question of whether I would agree to an independent review, the committee can have all the correspondence.
Comment on this
Not a review, but an independent chairperson who would get all the parties to sit down in one room to sort out the issue.
Comment on this
As a proud Westmeath man who got shoved into the Meath West constituency for the most recent election, it is too late for an independent review. We are very close to signing up with another European ——
Comment on this
Mr. O'Leary said there are 300 jobs. If that is the case, there is time.
Comment on this
We are about to sign a deal with two other governments. The Irish Government has approximately two weeks to sort it out. If the Tánaiste wants these jobs, she must get hangar 6 for us within the next two weeks. If not, I understand. I am not trying to query Aer Lingus's pitch. I have no beef with Aer Lingus in all of this. It is perfectly correct to take whatever commercial decisions it wants. I have no issue with Aer Lingus. I have an issue — that is the reason we published the correspondence with the Tánaiste, the Government, the IDA, who sat on their hands and did nothing last year when we were offering 500 jobs——
Comment on this
Will Mr. O'Leary not agree to an independent person coming in on this?
Comment on this
There is always time. Never say there is not the time. One cannot put the gun to anyone's head.
Comment on this
The Deputy is missing the point. I am not trying to put a gun to somebody's head.
Comment on this
I am not missing the point. That is what Mr. O'Leary is doing.
Comment on this
We are at the 11th hour in negotiations with two other European governments. I do not have time now ——
Comment on this
There was time to negotiate in the First and Second World Wars and for negotiation in Northern Ireland.
Comment on this
Surely Mr. O'Leary has until September, because the facility would not be built until then.
Comment on this
Exactly. Mr. O'Leary is not being fair. He should agree to an independent person being brought in. He already said he could stay here all night.
Comment on this
Guys and girls, in the real world of business we do not fart around for two weeks having independent reviews. I have been ——
Comment on this
I have been negotiating with other European governments since February of last year. We are almost there on selecting the second destination and I am not about to embarrass Ryanair with another European government. I cannot ask it to wait while the Irish Government has an independent review. One does not have the time for that. I am pushing on with the business. We run the business——
Comment on this
The builders will probably move in by the end of May.
Comment on this
One of the points made to us is that there is a legally binding lease with Aer Lingus. Therefore, whether I or Mr. O'Leary likes it, that is the situation. Suppose, as a compromise, Aer Lingus, the DAA, the IDA and the Tánaiste were to say they would give Ryanair hangar 6 until such time as they built a similar hangar beside it into which Ryanair could move, would Mr. O'Leary be satisfied with that?
Comment on this
No, because one could not build it beside hangar 6 because the land is not available for it. I would not trust any offer I got from the DAA.
Comment on this
Suppose it is possible and suppose the Tánaiste is prepared to bend over backwards and say Ryanair will not have to deal with the DAA?
Comment on this
Why not amalgamate hangars 3, 4 and 5?
Comment on this
If we got Aer Lingus to let Ryanair into this hangar next week on the basis that a new similar sized hangar will be built somewhere nearby, would you accept that?
Comment on this
Would Ryanair share hangar 6? Our understanding is that the Aer Lingus lease, which is close to being a lien, means that if the company collaborated with Ryanair, they could both share the facility. Would Mr. O’Leary work together with Aer Lingus?
Comment on this
We take a typically Irish insular view of this. Here is O'Leary with 300 jobs and a hidden agenda, so will he do this, that and the other. We are a multinational company. We have been negotiating these jobs and these facilities with three other European governments at airports for the last 12 months, while the Irish Government sat on its hands. The only way the Government can get these jobs back — it needs to be done in the next two weeks — is to free hangar 6.
Comment on this
With all due respects, you are asking for the impossible Mr. O'Leary. I think you are being unreasonable in not being prepared to accept a number of compromises that have been put to you here today.
Comment on this
I wasted six months of my life last year writing to this Government, offering 500 jobs if it would sell or rent me an empty hangar, and now you tell me 12 months later that I am being unreasonable. I do not have time to wait while the Government dithers. We have to push on with our business and continue to grow.
Comment on this
Why does Mr. O'Leary not admit that he wants to set up a terminal there? He would have separate road access, private car parking, 6,000 square metres of office space and enough space for a terminal. Why does he not put his cards on the table and tell us his plan?
Comment on this
I refer the Deputy to my fourth letter to the Tánaiste, dated 13 August:
As you will be aware, Ryanair has offered arm's length commercial terms to lease this facility by reimbursing the DAA what they recently paid, while allowing the DAA to retain ownership and secure watertight guarantees that it will only be used as a maintenance facility, thereby protecting and addressing——
Comment on this
What if Mr. O'Leary changes his mind?
Comment on this
Mr. O'Leary would drive a coach and four through contracts.
Comment on this
This is a contract, not a political promise.
Comment on this
He did a deal with Shannon Airport as well and then he drove a coach and four through that. We know his style.
Comment on this
Does Deputy Dooley want me to answer the other questions? Or does he just want to——
Comment on this
He should just answer that question.
Comment on this
Shannon was never on offer. The 900 unemployed aviation engineers are not in Shannon, but in north County Dublin.
Comment on this
Mr. O'Leary said that he would transfer some of them up to Scotland, but Shannon is much closer.
Comment on this
There is a fund of trained engineers in Prestwick. We have them there already and we are training them.
Comment on this
I was asked if the Tánaiste asked Aer Lingus to leave. I do not think so, but that question should be put to Aer Lingus officials. It would be unfair to ask Aer Lingus to leave, but does the Tánaiste want 300 jobs and is she prepared to do what is necessary to get them? There was no competition in spite of what the Taoiseach said. If there was a competition, how did an organisation like Aer Lingus, which originally got rid of these 1,100 workers, win the contract for the hangar when it has not created any job, has no heavy maintenance and has no use for the hangar facility?
I was asked to estimate how many jobs in Ireland were lost by the DAA. That is impossible to do, but in the last 12 months the DAA's high charges have meant that Dublin Airport has lost over 3 million passengers. There is a direct loss of approximately 1,000 jobs per million passengers, so the DAA managed to lose about 3,000 jobs at the airport in the last 12 months. It will lose about another 3 million passengers this year as it increases charges by 40% in the middle of a recession, when inflation is——
Comment on this
Where did those passengers go? How did they get out of the country if they did not use Dublin Airport?
Comment on this
The bosco on this, as my hairy friend beside me said, is very simple.
Comment on this
Does Mr. O'Leary mean that 3 million extra tourists would have come into this country over the past 12 months?
Comment on this
Yes it is. Senator Ellis asked why I will not deal with the DAA. The committee will not be sitting around long enough, but my view, as stated publicly, is that the DAA is a dishonest and corrupt semi-State monopoly that has been trying to disadvantage Ryanair for many years.
Comment on this
I do not have parliamentary privilege, so if people from the DAA want to sue me, I would happy to see them in court. I was asked if I was Rip Van Winkle, doing nothing since September. I was actively negotiating with the Scottish First Minister, the Scottish Transport Minister, the Scottish Enterprise Agency and Prestwick Airport. Instead of sending me letters full of waffle telling me I had to deal with an organisation with which I do not wish to deal, they asked me what I needed, how could they get me in here, how to clear the roadblocks, and they are also giving me £2 million in grants.
I was asked that if I get hangar 6, how much more would I look for from the State in subsidies. I will not look for one cent. In all my correspondence with the Tánaiste and with the IDA last year, I only asked for one little hangar. I did not ask for a penny. We do not want any subsidies, because we would not take a subsidy from this Government. We do not want employment or job creation subsidies, nor do we want training grants. We just want one empty hangar, yet the Government could not even manage that.
If we get hangar 6, we will receive nothing from the State. I will not pay the SRT rates to the engineers. I will pay the Ryanair rates to the engineers, which is the same rate we pay in Glasgow at the moment. There is not that much of a variance, because the pay for engineers is largely set around the pay for licensed engineers. The difference in working for Ryanair is that we will have the engineers working all the time, whereas in SRT they were largely sitting around drinking tea because their contracts were built into some 30 year old Aer Lingus lack of productivity agreement.
Deputy Reilly asked me would I undertake to use the hangar only for maintenance if the DAA sold it to us or leased it through the IDA. The DAA will burn that hangar to the ground before it sells or leases it to Ryanair, but the answer is "Yes". We would even allow the DAA to draft the clause which states it will only be used for maintenance. I am not trying to employ 300 engineers so that I can convert it into a hangar. The DAA will soon have a shiny new empty hangar. Dublin Airport will be awash with terminals. The DAA will soon be bankrupt because traffic is declining and it cannot pay its fees. I expect to get one of the DAA's two terminals in the next couple of years when it goes bankrupt, which I hope will happen soon.
How many more jobs will be created? Ryanair will directly employ about 150 of the 300 engineers, and about 150 will be hired through a contract employment agency. I will do that so that I do not have the bearded brethren from the unions — the hirsute brethren, with respect to Deputy Reilly — marching to my door and telling me they are going on strike if they do not get their lack of productivity. If they want to go on strike, the contractors will keep working and that is the way we run the business, which is to employ 50% of our workers directly, and 50% indirectly.
We do not want any funding to create jobs. We do not want any subsidies, training grants or even a penny from the Government. We only want one little hangar. We know it is now leased to Aer Lingus, but that lease dates from Christmas Eve 2009, between seven and 11 months after we offered the Tánaiste 500 jobs if she would only sell or rent us an empty hangar.
Deputy Lowry asked about the sale of TEAM Aer Lingus to FLS. Aer Lingus wanted to get TEAM Aer Lingus off its hands because it was bleeding money, it could not tackle the unions and there were many shoddy work practices going on out there. The purpose of TEAM Aer Lingus was to get the engineers and their pensions out of Aer Lingus and into a separate company, then flip it on to FLS and then to SRT, in order to be at two removes from Aer Lingus and its pension fund. Aer Lingus did not have any retained rights over TEAM Aer Lingus. In fact, Aer Lingus could not wait to get rid of it because it did not want the pension liabilities, the engineers or any of the stuff that was going on out there.
I was also asked if Aer Lingus had some superior interest which justified the DAA's decision to grant it a 20 year lease. Aer Lingus had no interest in hangar 6. As far as Aer Lingus was concerned, hangar 6, TEAM Aer Lingus and the 1,100 staff were about as welcome as nuclear waste material. It is only when the 1,100 were eventually made redundant, Aer Lingus came back in and is now renting the hangar from its friends in the DAA.
Do I believe the lease should be published? Absolutely, it should be published. We should see what Aer Lingus is paying for it, which I suspect is very little, although the DAA in December said it was €2.5 million a year. How could an airline that is losing €100 million a year, that is making 900 people redundant and that is awash with office space at Dublin Airport suddenly rent a big hangar when it has no maintenance business, and pay rent of €2.5 million a year and rates of €1 million a year?
Comment on this
Aer Lingus still employs more people in Ireland than Ryanair does.
Comment on this
The DAA paid SRT approximately €20 million-odd for the six hangars. On a like for like basis——
Comment on this
That would be exactly what the DAA paid SRT for it, whatever that arm's length price was — we estimate it was about €15 million or so. That is exactly what we offered last February.
Comment on this
If the position was reversed and Mr. O'Leary held the lease on hangar 6, would he give it over to Aer Lingus in similar circumstances?
Comment on this
In the national interest, in the interest of creating 300 jobs and in the interest of seeing 300 former Aer Lingus engineers re-employed productively at Dublin Airport, I would tell the cabin crew to get out of hangar 6, I would move up to hangar 3 or hangar 5 and I would stand back and allow Ryanair, Ireland's greatest airline, to create 300 jobs here in Dublin.
Comment on this
If the British Government asked Mr. O'Leary to give up Stanstead, would he hand it over to the BAA?
Comment on this
Would Mr. O'Leary not agree with Donald Trump who, in his "The Apprentice" programme recently, sacked——
Comment on this
He sacked a man because that man gave an advantage to a competitor. Is it not a golden rule of entrepreneurship to never give an advantage to a competitor? Why is Mr. O'Leary blaming Aer Lingus and suggesting it would be stupid enough to give Ryanair that cutting edge advantage? Why should it?
Comment on this
I thought I had explained that. I have no beef with Aer Lingus. The correspondence shows that the Tánaiste, the Department of Enterprise, Trade and Employment and the IDA did nothing——
Comment on this
It wants hangar 6 as well. That is the point.
Comment on this
It is welcome. However, why did the Tánaiste, the DAA and the IDA lease hangar 6 to Aer Lingus with not one new job being created when it had an offer from Ryanair to create 300 jobs?
Comment on this
There are 220 jobs. Does it not still have twice as many jobs as Ryanair at the airport?
Comment on this
Ryanair has been in discussion with Boeing and the US Government. What would the US Government do in this situation that is different to what the Irish Government is doing?
Comment on this
If the Deputy came offering 500 jobs to the US Government, it would build him the airport, it would certainly sack the DAA, although I do not believe the DAA would ever exist in the US anyway, and it would leave no stone unturned, as other European Governments have left no stone unturned, to give us what we want to create these jobs. This is the only Government which would not give us what we wanted.
The Deputy can criticise me for being childish, and I am guilty as charged. I am just a spoilt child — that is true — but I am a spoilt child offering 500 jobs. At a time when there are 450,000 people unemployed, one has to ask why in the name of God did the Minister for Enterprise, Trade and Employment and the IDA not bite my hand off, spoilt child that I am, to get these 500 jobs. Why were 300 unemployed aviation engineers marching in the rain today in the Garden of Remembrance? The Tánaiste is clearly concerned only about saving one job — her own — and could not care less about the 300 engineering jobs in Dublin that we are still offering, even at this late stage.
Comment on this
Mr. O'Leary has not been in discussions with the DAA since 2007. Does he not think he has been seriously disadvantaged and that Aer Lingus has wiped his feet by being in direct negotiations and getting hangar 6?
Comment on this
Since we stopped dealing with the DAA in 2006, we have grown from 30 million passengers to 75 million passengers. Profits have increased from €100 million to €450 million a year.
Comment on this
We will this year become the No. 1 airline in Italy and in Spain, where we will overtake Iberia. Ireland is a very small market.
Comment on this
I accept that and I congratulate Mr. O'Leary. I am just making the point that if he had communication with the DAA, he would have had ongoing discussions and would not have lost hangar 6.
Comment on this
If Mr. O'Leary does not talk to people, how can he ever get to a negotiating table?
Comment on this
I have other people to negotiate with, who will build me hangars.
Comment on this
We all talk to our landlords; we have no choice. One has to talk to the landlord.
Comment on this
The Deputy may have to, but it is not my only landlord.
Comment on this
Ryanair and Aer Lingus are not the losers. The losers are 300 families in this country and the Irish economy.
Comment on this
I will bring the discussion to a conclusion. I thank Mr. O'Leary for attending and for his presentation.
Comment on this
I believe Mr. O'Leary's failure to respond to the IDA's urging and his continued failure today to give any acknowledgement to the DAA, which after all is Ryanair's landlord, is a failure on his part. I put it to him that while he has talked much about saving 300 jobs, he has been given some suggestions today by several members and he has rejected them out of hand. I must honestly conclude that he is not really serious about this.
Comment on this
I disagree with the Chairman's analysis. If we are being offered 300 jobs, we should take them. It is as simple as that.
Comment on this
I have sat and listened to Deputy Kennedy long enough and I have listened to the Chairman. I would use the word "refusal" rather than "failure". If there is any failure here, it is a failure of the Government in its responsibility to create jobs. Mr. Michael O'Leary's company or any other company has a right to put down its conditions and terms. Our responsibility is to create jobs.
Comment on this
There are alternatives which would create jobs.
Comment on this
There is the offer of a brand new hangar.
Comment on this
I welcome, from Aer Lingus, Mr. Christoph Mueller, chief executive; Mr. Fergus Wilson, chief operating officer; and Mr. Enda Corneille, corporate affairs director.
Comment on this
I may be less entertaining but more factual. For the personal recollection of the members, Aer Lingus rented hangar 6 in 1991 and has since then occupied the hangar as tenant. There was not a single day in 19 years that there was no Aer Lingus aircraft maintained in that hangar. We recently sourced the portion we had outsourced to SRT, created 97 new jobs in Aer Lingus and took over the line maintenance we previously had in Westlands.
The hangar was built in accordance with Aer Lingus specifications in 1991 and ever since it has been our main maintenance base at our home base in Dublin. We have a total fleet of 44 aircraft, which is entirely maintained in that hangar. Even aircraft flying out of Belfast and Gatwick are rotated through Dublin every night in order to maintain them. We need exactly that hangar in order to maintain up to six narrow body aircraft during the night and, when RTE colleagues are sleeping, our people are working on the aircraft. If the temperature allows, we would even open the doors in order to facilitate better pictures.
Comment on this
Up to six narrow body aircraft are there every night. In the morning, when our long haul fleet arrives from the north Atlantic, we have one long haul aircraft normally in that hangar, and the other one is currently sitting in the hangar at Shannon.
Over and above what we do on a maintenance basis in hangar 6, the hangar has enough space to accommodate much of the operation of Aer Lingus, which is currently scattered all over the place. We occupy buildings in Westlands, the tech building and we have locations in the B terminal. It was a very important element of our restructuring plan to occupy hangar 6 in total because only this would allow us to concentrate the entire staff of Aer Lingus in just two buildings, hangar 6 and our headquarters building onsite. Hangar 6 is very important for us.
I will add some further facts because I believe it is very interesting for the public to take note that while the location on which hangar 6 is built is in the possession and ownership of the DAA, the hangar does not belong to the DAA. The hangar is owned by First Active, a subsidiary of Royal Bank of Scotland, from which we lease it directly, as a lessee, with the option to extend the lease up to 2059, which we intend to do. To clarify, the language that has been used is not correct. There is no heavy maintenance foreseen from the Ryanair party; it is what is called base maintenance. Heavy maintenance starts with a D check but what Ryanair intends to do in the hangar is one level above the line maintenance we provide. I also wish to clarify that our lease with the DAA was not signed on Christmas Eve but on 17 December. I remember that clearly because it was my birthday.
On the question of the market price calculation in regard to the lease, we engaged an external adviser to ensure we secured the market price. The negotiations with the DAA had just started when I arrived on 1 September. I must admit those negotiations were not always very friendly, and we saw the necessity to bring in a third, neutral party. I will be pleased to answer any questions members may have.
Comment on this
Will Mr. Mueller indicate the value of Aer Lingus's lease and the amount of rent being paid? Does he agree with Mr. O'Leary's statement that the hangar is valued at some €15 million? Second, will Mr. Mueller respond to Mr. O'Leary's point that what is being done in hangar 6 is line maintenance, that Aer Lingus's heavy maintenance is being done in France and that jobs were initially lost when Aer Lingus pulled that work out of Dublin? What possibility, if any, exists for Aer Lingus's heavy maintenance work to be brought back to Dublin?
Comment on this
I cannot disclose the value of the lease because it is confidential between the two parties, but I can discuss with the DAA whether we are jointly prepared to do so. The value of the lease is based on an assessment that was done. The building is in very poor shape in terms of insulation, heating and the external facade. All that dilapidation would have to be taken into account to find the true market value.
Comment on this
Is the Chairman referring to the asset value or the lease value?
Comment on this
I cannot answer that. Mr. Wilson may have the answer.
Comment on this
I am not aware of the asset value of the building.
Comment on this
Aer Lingus is not the owner of the building.
Comment on this
Surely it makes sense, before entering any lease, to ascertain the value of the building. The lease is usually approximately 5% of the asset value per year.
Comment on this
As somebody who has rented privately on many occasions, I have never inquired as to the asset value of a house or apartment.
In regard to heavy maintenance, we have outsourced much of our maintenance, including heavy maintenance and also components and engines. We do not have our own shop and are currently in a contract with Sabena Technics. Heavy maintenance of our long-haul fleet is done in Bordeaux and maintenance of the short-haul fleet in Bordeaux and Dinard. Whether this will continue to be the case is subject to ongoing negotiation with our outsourcing partner. Likewise, whether heavy maintenance returns to Ireland is totally uncertain. There is currently no heavy maintenance provider in the State able to facilitate such a high quality of work.
Comment on this
Could the line maintenance that is done on the six or so aircraft that are put into hangar 6 every night be done in any of the other hangars?
Comment on this
The short-haul fleet could be maintained in smaller hangars. However, there is a great benefit for us in integrating our long-haul and short-haul line maintenance overnight because it is the same engineers signing off on the aircraft. We need the height provided by hangar 6 for the tail fin of our A330 aircraft. From an industry point of view, and I have been involved in aircraft maintenance all my life, hangar 6 is not the best of all solutions for a short-haul only fleet because it provides approximately double the necessary height which would add greatly to heating costs particularly in a winter such as this. One would end up paying to heat a huge empty space because the 737 tail fin is less than half the height of that of an A330.
Comment on this
Mr. O'Leary has said that the only way the jobs he is talking about can be created is if Ryanair is allowed to use hangar 6. In support of his campaign he has shown the public photographs of an empty hangar. Mr. Mueller says it is not empty and that aeroplanes are there in the evening in particular. An article in The Irish Times some days ago implied that what is going on at Dublin Airport is a game where all the players are seeking to secure control of developments there. The article suggested that Aer Lingus is moving different parts of its operation from elsewhere into hangar 6 in a move to deflect the argument in favour of it leaving the hangar in order to allow Ryanair in. Are there any conditions under which Aer Lingus would leave hangar 6 and move its operation to one of the other hangars?
Comment on this
It is important to note that Aer Lingus has created aviation jobs on the site. We insourced 100 jobs——
Comment on this
Dublin Aerospace has created 120 jobs this year and expects the number employed to increase to 250, as I understand from the press, and Lufthansa Technik Airmotive recently invested in Dublin. Therefore, it is unacceptable to claim that efforts to create jobs are unilateral, coming from only one source.
The Deputy's second question was under which conditions we would potentially leave hangar 6. The hangar is located in prolongation to the very short, old northern runway. In the event of a development such as the construction of a new runway, for example, the hangar would deflect radar echoes from the instrument landing system, in which case it would most likely have to be demolished. Under those circumstances, which are part of the greater framework for the development of the airport, we would be able, with a lead time of two years, to accept a termination of the lease. It is not the most modern of hangars and we would be pleased if somebody could provide us with something similar but with modern heating, insulation and so on. We are not in the hangar collecting business.
Comment on this
Is there any other option for Aer Lingus given that it is not currently using all the space in hangar 6?
Comment on this
We are using the space. I invite all members on any given night in the foreseeable future to visit our hangar. Members need to see for themselves.
Comment on this
We cannot rely on one photograph taken deliberately when all six aircraft were being towed.
Comment on this
In fairness, as far as I am aware, Aer Lingus has not challenged that depiction until today even though the photographs have been in circulation for more than a week. I am trying to approach this constructively. Mr. O'Leary is saying that if Aer Lingus moves out of the hangar, Ryanair will move in and create 300 jobs. Mr. Mueller is saying there may be developments two years down the road whereby he would be satisfied with a termination of the lease. The point I made to Mr. O'Leary is that Dublin Airport is large enough for both airlines and that we want both to expand, create jobs and maintain existing jobs. Is there any way that Aer Lingus could move within a few months to one of the other hangars? I know it is not the legal position——
Comment on this
No, it is not possible. Hangar 6 is not a deal we did on the side. The lease was passed by our board of directors.
Comment on this
A very complete business case underlines the rationale of the deal. If we had to leave hangar 6 it would be to the disadvantage of all our shareholders because we would lose a lot of money. We simply cannot replace it in the timeframe given by Ryanair. The Ryanair fleet is clearly in urgent need of maintenance given the September deadline it has proposed. I was not aware it was in such bad shape. We cannot possibly erect a hangar of similar quality within such a short timeframe. We will remain in that hangar as long as we need it to maintain our fleet.
Comment on this
Were the DAA, the Government or whoever to build Aer Lingus a hangar of equal size, which is the offer to Ryanair, would Aer Lingus move to it as soon as it was finished?
Comment on this
The lease contract with the condition attached is a large and heavy document and I will not step into the trap of saying "Yes" or "No" to a single-sentence proposal. However, in principle, I referred to the possibility of having access to a similar modern hangar that was able to accommodate our 44 aircraft every night with a similar location. The Westlands hangar we occupied previously forced all our technicians to drive up to four times a day around the airport on the ring road. This cost one working hour per employee or constituted a productivity decrease of 12.5% in an eight-hour working day. We cannot accept being in the middle of nowhere and need a hangar at the core of our operations.
Comment on this
Provided that the conditions are similar to those we have at present in our lease.
Comment on this
I must state all these reservations because one cannot possibly quote me to the effect that I agreed to that.
Comment on this
I understand that. My point is that there is an option which Aer Lingus is prepared to take but which Ryanair is not, were that hangar to be built as proposed by the Government. Consequently, the question is how soon can such a hangar be built.
Comment on this
No, but in fairness, we are the head lessee of this hangar. We have a direct contract with the owner of the hangar and it is for the long term.
Comment on this
It is a hypothetical question. Everyone knows that in a timeframe——
Comment on this
I suspect Mr. Mueller has gone as far as he can.
Comment on this
It is a hypothetical question. Everyone knows that for a hangar of that size, which involves building permission near a runway, the DAA can testify from its experience with terminal 2 that the planning phase alone takes little short of two years——
Comment on this
—— let alone the certification of the site with regard to safety, health and so on. This is the reason I am not prepared to conduct such wargaming, which is completely unrealistic.
Comment on this
I welcome Mr. Mueller and his colleagues before the joint committee. The decision of Aer Lingus to move its base maintenance out of Dublin and from SRT was one obvious major step in the destruction of that company. I understand some dissatisfaction has been expressed with aspects of that contract, which is based in France, because it was necessary to bring back planes to be checked out in Dublin. When is the earliest date on which Aer Lingus can review that contract? The chief executive of Ryanair stated that it was a ten-year contract. Is it true, for example, that this contract, which has been in effect for one and a half years, could be reviewed within five years?
Comment on this
First, I wish to correct Deputy Broughan's comment on aircraft being brought back to Dublin to be checked. That is completely incorrect. As for the contractual question, it is a ten-year contract of which approximately eight years are left to run. There is a break clause at five years, which is slightly more than three years away.
Comment on this
Three years is the earliest time at which Aer Lingus could even consider bringing base maintenance back to Dublin.
Comment on this
Yes, per the terms of the contract and break clause.
Comment on this
Aer Lingus now has based 230 maintenance jobs in hangar 6. How many planes of the 44 were there last night?
Comment on this
Of the 44 planes, I believe there were six in total there last night. They move in and out sequentially through the night. It can be higher than seven aircraft and on the night preceding the famous photograph, seven aircraft were involved. However, the camera angle was aligned strategically to exclude an aircraft that still was within the hangar that morning. It is a function of the work schedule that arises on the aircraft per night. Like all aircraft maintenance activities, line maintenance is critical. It is critical to Aer Lingus to have facilities of sufficient quality and capacity to discharge those responsibilities and hangar 6 is the only facility at Dublin airport that affords such facilities to us for our long-haul and short-haul fleets.
Comment on this
From the perspective of the Labour Party, one of the worst aspects of this affair is that the Minister for Transport knew that SRT was leaving Dublin from early November 2008. The Department of Enterprise, Trade and Employment has stated that it was informed this time last year. While I acknowledge this took place before the chief executive took up his post, when did Aer Lingus as a company become aware that SRT was leaving? For the record, I completely dispute every single word the chief executive of Ryanair said when, as I believe, he defamed a gallant workforce in SR Technics. Having examined business plans, my understanding is that SRT was a highly profitable organisation up to 2007. It appears to me that the bottom line is that the great Sheikh Mohammed Al-Maktoum, who Mr. O'Leary actually knows as a fellow horse breeder, decided to take this business out of Ireland and bring it to the Middle East because he wanted to have a viable business when the oil ran out. This was, by far the most significant reason. The other reason, however, was that Aer Lingus also moved and took away a vital €30 million contract, which meant that SRT was unable to balance its books.
When did Aer Lingus become aware of the forthcoming move? Moreover, although I did not interrupt at the time because I did not wish to delay the joint committee, I believe Mr. O'Leary defamed the workforce he allegedly wishes to employ. I presume, as he suggested, that half of them would be employed through companies in Gibraltar and elsewhere. I understand that the Revenue Commissioners is examining this issue at present in respect of other workers in his company. When exactly did Aer Lingus become aware? When did it submit its first proposal on the basis that SRT was leaving? Was it before Christmas 2008? When did Aer Lingus decide that, because SRT was leaving the beautiful hangar which the airline had built, it should return to it? In common with other Deputies from north County Dublin and Fingal, I acknowledge that its office comprises a wonderful headquarters for an aviation company or for any other future purpose. When did Aer Lingus become aware of this?
Comment on this
Furthermore, I remain unclear with regard to a point also raised by the Cathaoirleach. Were Aer Lingus in a mellow frame of mind and were it to decide to allow Michael O'Leary and his colleagues to use part of hangar 6, would its lease permit this to take place? In summary, when did Aer Lingus become aware and what is its fundamental legal entitlement?
Comment on this
I also welcome Mr. Mueller, Mr. Wilson and Mr. Corneille. In respect of the ownership of the building, Mr. Mueller has stated that First Active is the owner of the building. It has assigned a lease to the DAA going back to its construction in 1991 and the DAA has assigned Aer Lingus a separate lease, which the latter has maintained for the past 19 years. Is that correct?
Comment on this
No. I pointed out that Aer Lingus is leasing, through Shinagh, its 100%-owned subsidiary, directly from First Active, from 1991 to 2017, with a call option to extend to 2059.
Comment on this
Therefore, the DAA has absolutely no involvement in the lease on hangar 6.
Comment on this
No, we sub-leased to the DAA and in a consequent lease, we lease from the DAA with a sub-lease. The DAA stepped into the role of SRT Sheerwalk as a legal entity. It is a little complex but I believe the entire debate was suffering from a lack of precision with respect of who is dealing with whom.
Comment on this
That is what I am trying to clarify.
Comment on this
I seek clarification on this question. Mr. Mueller should outline the exact situation.
Comment on this
The building was funded by First Active, which is the legal owner of the building.
Comment on this
It is a financing construction. One might see it as a finance lease for an aircraft, whereby Aer Lingus is the first user assigned. Then TEAM Aer Lingus, Shinagh, was the first lessor. We leased out to SRT and this assignment was replaced by a sub-lease to the DAA. However, that is absolutely no secret. I wish to emphasise that in that entire added value chain, there is no place for the Irish Government. It has nothing to do with the entire matter and cannot interfere in any way in that legal construction, as required by the prospective tenant.
Comment on this
The owner of the building is a company called First Active, which to my knowledge is a 100% subsidiary of Ulster Bank, which is a subsidiary of the Royal Bank of Scotland. Committee members know the mother company of the Royal Bank of Scotland.
Comment on this
This is very important. Can Mr. Mueller explain the lease? Before 17 December, who was it leased from?
Comment on this
SRT. SRT also had the possibility to extend the lease until 2059 but I must check that date. Only after 17 December was SRT released from a duty to maintain our aircraft. There was not a single day of interruption. SRT maintained our aircraft until 17 December and had the obligation to do so. In conjunction with that it had the lease on the building.
Comment on this
Who paid SRT the money when it was going? Who paid out for that lease when SRT handed the lease back?
Comment on this
That was a bilateral deal in the assignment of Sheerwalk Services Limited's interest in the sub-lease to the DAA. Members should ask that question of the DAA.
Comment on this
Aer Lingus is effectively a sub-tenant.
Comment on this
When First Active built the hanger in 1991——
Comment on this
We built the hangar, First Active provided the finance.
Comment on this
——the lease was held by Aer Lingus, which became FLS, which became SRT.
Comment on this
It was more precisely Team Aer Lingus, not Aer Lingus Ltd.
Comment on this
When Team Aer Lingus was sold to FLS, the lease went to FLS and when FLS sold to SRT the lease went to SRT. Then SRT sold it to the DAA.
Comment on this
I am not sure whether sold is the correct legal term but yes.
Comment on this
I am talking about selling the lease.
Regarding Aer Lingus as we know it today, Mr. Mueller is saying it has maintained an interest since 1991. When Team Aer Lingus became the head lessor, Aer Lingus the airline maintained an interest in the building through some form of lease. Is that correct?
Comment on this
We always maintained the legal entity but there was not a single day in 19 years without an Aer Lingus aircraft in the hangar.
Comment on this
I accept that but I am trying to get my head around the ownership of the lease. Aer Lingus Teo always maintained a legal interest in the lease through Sheerwalk Services Limited funded by First Active. Is that correct?
Comment on this
There is a 24-month notice period in the new lease. If the DAA says it wants to build a new runway and wants to do some infrastructure work, can Mr. Mueller clarify the conditions or reasons by which the DAA could claim it needs hangar 6 back because it is doing infrastructure work? Can Mr. Mueller describe the type of work?
Comment on this
It is related to the development of the airport. The runway is a good example but the DAA having another tenant for the hangar is not a sufficient reason to terminate the lease even with a notice period of two years.
Comment on this
Does Mr. Mueller believe the Ryanair assumption that the company will create 300 jobs in airport development is not a legal reason the leasing contract could be broken with 24 months' notice?
Comment on this
I am not convinced the creation of 300 additional jobs is conditional on the possession of hangar 6, where other hangars are better suited to short-haul aircraft. From a commercial point of view there are lower heating costs.
Comment on this
I have two further questions. Let us ignore the fact that Aer Lingus has held an interest for 19 years. Why does Aer Lingus need hangar 6 in the same way Mr. Michael O'Leary is saying he needs it?
Comment on this
It combines two important aspects. Our maintenance organisation was spread all over the place, with part in the old fire brigade building, which one does not want to send employees into from a health and safety point of view. Other parts were in the Westlands and the SRT building. The productivity of our maintenance staff was inferior to our competition because they spent half the day in a car driving from one end of the airport to the other. We now have spare parts holding integrated in hangar 6 and it also has huge office facilities, which accommodate much of our operational staff. This includes everything but those in the headquarters, such as flight operations, the joint operations centre and ground operations. It includes those running the airline from the operations point of view.
Comment on this
How many people will be there eventually?
Comment on this
We are currently looking into the floor plans but we expect the vast majority of our back-office operations will be accommodated in that building. It is airside so accessibility is limited.
Comment on this
Is it fair to say Mr. Mueller has the same foresight as Mr. O'Leary and is planning ten years down the road? Does he see hangar 6 facilitating all of his office people? One quarter of the building, 6,000 sq. m., is comprised of offices. Like Deputy Broughan, I have been to the offices and they are pretty nice. Mr. Mueller is saying he made a commercial decision that this building would facilitate Aer Lingus office administration as well as the maintenance and other work.
Comment on this
We invested in that building, which is why the business case for hangar 6 was subject to board approval in early December in anticipation that we would come to terms on the commercial agreement. It outlines the maintenance aspect and the strategic value of hangar 6 but also the consolidation of technical operations.
Comment on this
I welcome Mr. Mueller and thank him for answering questions. Was the Tánaiste in touch with Mr. Mueller about this issue?
Comment on this
I have the e-mail correspondence with me and I can read it to the committee.
Comment on this
Was she in touch with Mr. Mueller by telephone or in person?
Comment on this
Both. The Minister for Transport and the Minister for Enterprise, Trade and Employment telephoned me advising me that I would receive an e-mail. I answered in due course, 50 minutes later.
The e-mail I received is as follows:
You will be aware of the proposal by Ryanair to create 300 maintenance jobs at Dublin Airport, which they have made strictly conditional on the sale or lease to them of hangar 6. The DAA has pointed out that hangar 6 is licensed to Aer Lingus for the next 20 years on terms which preclude it being withdrawn from you unless it is required for airport development. Ryanair have claimed the hangar is not in fact required by you given the nature of the work you are doing there and therefore to ask you whether Aer Lingus would be willing to surrender its licence of hangar 6 and relocate its operation there to elsewhere in the airport if this would ensure the creation of 300 jobs which Ryanair has stated it will provide if hangar 6 is made available to it. We would be grateful if you could respond to this inquiry as soon as possible as the matter will be discussed today.
My response was:
I was very surprised to receive your e-mail today asking us to surrender our license of hangar 6 and relocate our operations there to elsewhere in the airport. While we are sympathetic to the moves to generate employment at the airport, Aer Lingus as a PLC must at all times ensure that matters of business are dealt with professionally and transparently. To this end we believe any proposal to us regarding property matters here at the airport is more appropriately a matter for the DAA and ourselves than any third party. We have read with interest the correspondence between the Tánaiste, Mary Coughlan, and Ryanair, in particular the view expressed in her letter to Mr. O'Leary of August 12th last year that while she would do whatever she could to progress the proposal, she did not believe further progress would be possible without direct discussions between Ryanair and the DAA. Aer Lingus would support the Tánaiste's position that this issue is a matter for the DAA and Ryanair to reach agreement on and we, for our part, do not wish to become embroiled in an unseemly row between two of our largest shareholders.
Comment on this
As they are the two largest shareholders, if they were both to ask Aer Lingus to leave what would Mr. Mueller's response be?
Comment on this
If the two largest shareholders were to ask Aer Lingus to leave what would Mr. Mueller's response be?
Comment on this
It is not theoretical at all; they have both asked Aer Lingus to do so.
Comment on this
No. One must consider the laws of a public limited company. The executive management of a public limited company cannot respond directly to any shareholder's proposition without formally considering the matter. That would really give preferential rights to certain shareholders. I am not sure what our other shareholders, of whom I am one, would say to that.
Comment on this
Mr. Mueller would not be cognisant or sensitive to the fact that the majority shareholders would like Aer Lingus to leave that particular hangar?
Comment on this
Why should we do that when it does not serve a purpose? We would have to leave the hangar in two years from now.
Comment on this
That is approximately one and a half years after Ryanair would have opened a heavy maintenance base elsewhere in Europe.
Comment on this
The reason Aer Lingus should do so is because the majority of its shareholders wants it to do so.
Comment on this
That is why Aer Lingus should consider it.
Comment on this
First, I would have to inform the shareholders of the financial disadvantage of leaving the hangar.
Comment on this
That would be proved by a business case and approved by the board. That would require a decision of a shareholders' meeting, such as an AGM——
Comment on this
——overruling the board. It has seldom been seen in a public limited company but I am prepared to do it. However, what is the commercial sense of vacating a hangar when the alternative tenant had taken possession of an alternative site one and a half years earlier?
Comment on this
Mr. Mueller may not like it but he has a 25.4% shareholder whose interest is not always commercial. The reason the Government held onto that shareholding was to have a strategic interest.
Comment on this
Ryanair may have a commercial interest.
Comment on this
——Aer Lingus is a public limited company.
Comment on this
That is correct. However, the interests of one of its largest shareholders are not purely commercial and Mr. Mueller must be aware of that.
Comment on this
It is a perfectly fair comment and we were told at the time——
Comment on this
At the time, we were told again and again by the Government that it was not a commercial interest, but a strategic interest.
Comment on this
We have got to pay the price for that.
Comment on this
On that same point, some Aer Lingus people have suggested to me——
Comment on this
——that Aer Lingus could swap the shares for the hangar.
Comment on this
I have a second question. I read in the newspapers today or yesterday that Aer Lingus suddenly has an interest in basing its headquarters in hangar 6. Is this correct?
Comment on this
It is not sudden, it is documented in board papers dated as early as the end of November.
Comment on this
However, it only entered the public arena in recent days.
Comment on this
We do not publish every board paper in the public arena and I regret that this is in the public arena.
Comment on this
Aer Lingus's interest in hangar 6 becoming its headquarters is very sudden——
Comment on this
No. I described that the use foreseen for hangar 6 expressly excludes the headquarter functions of Aer Lingus. A purely operational entity will be located there. The same people occupying the technical building at present will occupy it and it accommodates a simulator, a crisis centre and operational matters. Our headquarters building is now very recognisable to anyone who visits the airport because of the large Aer Lingus banner. Left of the headquarters building is hangar 6.
Comment on this
Two sets of deeds are involved in this, one for the ownership of the building and another for ownership of the lease. Mr. Mueller has clearly stated that First Active owns the building.
Comment on this
No, the land is owned by the DAA but such construction is very common.
Comment on this
No, with regard to the building there can be only two sets of deeds.
Comment on this
First Active owns the deeds. Who owns the lease deeds? Is it Aer Lingus or the DAA?
Comment on this
Team Aer Lingus is the name of the legal entity. It is a 100% subsidiary of Aer Lingus.
Comment on this
That is fair enough. So where does the DAA come into this? Why is there a row between Michael O'Leary and the DAA? Why is Aer Lingus leasing it back from itself?
Comment on this
Deputy McEntee has asked a question I have asked myself for more than a week.
Comment on this
We are interested in driving this discussion in a fact based way and to carve out all these arguments. I know they are very entertaining as I mentioned in my——
Comment on this
However, our employees suffer badly from the uncertainty created. Suddenly 300 non-existent jobs are valued more than the 3,700 existing jobs in our company. It is a permanent distraction to us and is unsustainable. That is why I can disclose the structure of the deal, which is considerably complicated and for which we had to employ external expertise. There is no reason it should remain in the dark. This is not the case with the commercial agreements we have with the DAA, which are multifold. We have a component lease whereby each check-in desk is incorporated in the deal. I am certain that with joint effort we will bring light into this chaos and address the right questions. None of the hypothetical options outlined tonight are feasible.
Comment on this
Michael O'Leary stated there is no point in anyone sitting around a table and that the politicians should be left out of the matter altogether. Does Mr. Mueller see any point in the DAA, Aer Lingus and Ryanair sitting down with an independent chairperson to sort this out? Is this all pie in the sky?
Comment on this
I did not know that Michael O'Leary stopped speaking to the DAA in 2006. I will not try to fix that.
Comment on this
Would Mr. Mueller agree to Aer Lingus being a party to talks with the DAA and Ryanair?
Comment on this
I am showing my goodwill; I am here and I am available but how could I possibly do so?
Comment on this
The Government is trying to do so and is not being successful.
Comment on this
So is all the talk about the DAA, the IDA or the Minister intervening a load of hot air? This is what Michael O'Leary has been saying in recent weeks.
Comment on this
I would probably use different language. I would say that it lacks substance.
Comment on this
Do Mr. Mueller's sources in Germany tell him he has already signed a deal?
Comment on this
What is going on here is quite simple. Mr. Mueller stated he will shine a light on a very difficult situation. Mr. O'Leary made allegations against Aer Lingus and the DAA. Is it true that First Active owns the building and that it is leased to the DAA?
Comment on this
Does the DAA lease the building from First Active?
Comment on this
I have answered that question three times. Will the Chairman please relieve me of this?
Comment on this
I ask because unless Mr. Mueller can furnish us with the details of the lease, how much it costs and how much the building is valued at, I simply do not believe him.
Comment on this
The only way around this is for the Government, as the major shareholder along with Ryanair, to call an extraordinary general meeting to determine the figures. Otherwise we will go nowhere. Mr. Mueller's responsibility is to protect shareholders and their profits but ours is to protect and create jobs. We can talk until the cows come home but the only way to resolve the issue is through an EGM. Am I right in saying that?
Comment on this
I would say so. Mr. Mueller may offer the advice he is duty-bound to give but the shareholders can reject it.
Comment on this
I am the chief executive of Aer Lingus. This is a question that should be put to the chairman. As a public limited company we have a clear division of responsibilities under law. Executive management does not deal with shareholder issues of any kind.
Comment on this
We are discussing two competitive airlines. It is extraordinary that Senator Ross does not think it inappropriate that one company would own 29% of its competitor. I think it is an outrage which we must address.
Comment on this
Of course it is appropriate in an open market. Has Deputy Broughan ever heard of a takeover?
Comment on this
Senator Ross is in favour of monopolies.
Comment on this
That is what companies do before they take over their competitors.
Comment on this
Senator Ross is a monopolist.
Comment on this
Senator Ross is the guy from Albania. He believes in monopolies. It is not funny. He is just like his newspaper.
Comment on this
That is what happens in the marketplace when companies take over their competitors.
Comment on this
He does not believe in competition.
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He peddles this old rubbish in committees.
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I welcome Mr. Mueller and his colleagues and thank them for taking the time to meet us. All this stuff about the lease and who owns the land is quite complex. However, is it not true that under the terms of the lease with the DAA Aer Lingus can be moved from the hangar for operational or development purposes? A simple "Yes" or "No" will suffice.
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We can have a long discussion but he answered the question.
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Deputy Reilly spoke on the radio the other day——
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He should ask the reason why the lease cannot be broken.
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I believe Deputy Reilly misrepresented us last week following our meeting.
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The provision is made in the context of strategic development of the airport. As Mr. Mueller has already noted, if the northern runway development requires the demolition of the hangar, it is of that nature. It is not intended to allow another tenant to replace us.
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There is a legal provision in the lease which allows the DAA to move Aer Lingus out of the hangar. Aer Lingus has described it as applying in exceptional circumstances. None of us has seen the lease but judging from other leases it makes reference to developing the airport. Mr. Mueller has suggested that one such development might involve a runway. The board of Aer Lingus could equally suggest that the creation of 300 jobs at the airport is another development reason. I did not misrepresent the witnesses. We have established that it is within the DAA's gift legally to move Aer Lingus out of the hangar.
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That is wrong and totally inaccurate. If the Deputy read the document provided by Michael O'Leary, and I am assuming the new contract with Aer Lingus——
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Do not misrepresent the situation.
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That is not at question. I will come to that in a moment.
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Excuse me, I will answer the question in my own time and not at the behest of the Chairman or Deputy Kennedy. I am making the irrefutable point that there is a legal provision in the document to allow——
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It is qualified by specific uses.
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It may be qualified but the provision is there.
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The Deputy's attitude is just to tear it up because it makes no difference.
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I am prepared to stay here all night if I have to but I am going to say what I want to say.
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Excuse me, I will come to that when I am ready. I am entitled to ask my questions and develop my case.
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The Deputy should ask the question and wait for the answer. He should not provide the answer himself. He was interpreting the document.
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I have established the fact that the DAA lease includes a provision to move Aer Lingus out of the hangar with 24 months notice. One can describe the circumstances involved as exceptional but that is open to interpretation. I fully expect Aer Lingus to dig its heels in to get the best deal for its shareholders. It is a public limited company and I commend it on looking after its own interests. However, on the other side of the equation are the Government and Members of the Oireachtas and we have a responsibility to create jobs.
Given the existence of this provision, negotiations would have to take place to compensate the airline for discommoding it and on the period of notice which was not served. I am aware of many instances where periods of notices set out in leases are renegotiated. I do not expect Aer Lingus's representatives to tell me what music will ring in their ears when the terms are right. That will only happen when they sit down with the DAA to negotiate their exit but that does not have to be two years' time.
If the hangar is handed over to the IDA, that organisation can do the deal with Mr. O'Leary. The deal is there to be done and there is no reason why Aer Lingus cannot move. Two other hangars at the airport can accept wide bodied aircraft and I am sure Shannon would also be acceptable. Furthermore, does Aer Lingus believe it could sue the DAA or the Government if the majority of the board does allow it to do so?
When was the valuation of the hangar carried out? That was covered to some extent but we still do not know the exact answer. How many people worked in hangar 6 at full capacity when SR Technics occupied it? Is it not the case that employing 95 people in the hanger is akin to running a corner shop in a hypermarket? Most of the hangar remains unoccupied by workers. I am sure their numbers ran into the hundreds when SR Technics operated out of it.
I wish to ask one more question, which I do not intend pejoratively but because it would make good business sense. Does the plan for the metro and the location of Aer Lingus's present headquarters play any part in its relocation to hangar 6?
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The first part of the Deputy's comments comprised a very long statement with which I absolutely disagree, as he will understand. I ask Mr. Wilson to answer the remaining questions.
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Deputy Reilly asked how many workers were employed in the hangar by SR Technics at the peak of its business. He will have to address his question to that company. The figure of 1,000 workers was mentioned earlier but they were deployed across hangars 1 to 6.
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Only SR Technics could accurately outline how it allocated its manpower according to the demand for the hangars at any given time. In regard to the occupancy or volume of the hangar, we have addressed that issue earlier. We are an approved line maintenance organisation and we need sufficient capacity. That hangar is the only facility at Dublin Airport which affords us the capacity and it is extensively used at night in line with our requirements.
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Aer Lingus plans to shed jobs. Will it be shedding aircraft?
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Will the airline be disposing of aircraft?
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He is wiping the floor with Deputy Reilly in his midfield capacity.
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Really? Mr. Mueller said he had been asking himself for the past week why Aer Lingus was renting it. How long has he been CEO of Aer Lingus and why did he not ask himself this question beforehand?
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I have to say this is a much more boisterous and interesting committee than any of those of which I am a member. I might see if I can defect.
I thank the representatives of Aer Lingus for attending. In many ways this is a dispute between Ryanair, the DAA and the Government. As Aer Lingus has really been dragged into it as a third party, I appreciate that its representatives have come here. I seek clarification on the ownership. I understand Mr. Mueller said the DAA is the freeholder of the land, First Active owns the building, which is then leased to Shinagh which is the former TEAM Aer Lingus entity which is a 100% subsidiary of Aer Lingus which then had a lease to SRT which was taken over by the DAA and it now leases to Aer Lingus plc. It is very odd but that seems to be the case.
While I do not need the numbers, would Aer Lingus be willing to publish the terms of the lease it has with the DAA for hangar 6 so we might see it for ourselves? Obviously it might wish to ask the DAA if it is also willing to do that. However, subject to the agreement of the DAA would Aer Lingus be willing to publish that end lease so we can see the conditions for ourselves? I understand it would not want to release the amount it pays because that would be commercially sensitive.
The Taoiseach stated clearly in the Dáil that when the DAA took over the lease for hangar 6, there was a competition to determine to whom hangar 6 would be sublet. Did Aer Lingus participate in any competition in order for it to secure its current lease from the DAA? Did the competition exist?
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With regard to the disclosure of commercial terms of our lease agreement, I will give the Deputy a very clear answer. There are two things in the airline business which are highly sensitive to competition, one being aircraft prices and the other being airport lease agreements. I do not know of a single airline in the world which has ever disclosed the purchase price of an aircraft. I believe if the Deputy researches that he will find confirmation. Even our shareholder Ryanair does not disclose airport deals. At European Union level there is an inquiry going on in 20 cases, just in the cases of Ryanair, to find out what the terms of the airport deals might be. So I am not prepared to disclose it.
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My second question was whether a competition took place for the current lease.
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I am not aware, but the nature of the discussion I encountered between September and December did not lead me to the conclusion that this deal was precast; the opposite was the case. We were very often very close to walking away from the table and that is——
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Did Aer Lingus participate in a competition?
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The Deputy should let me answer the question. That is only the case if the counterpart one is dealing with has another option, otherwise it goes——
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Mr. Mueller is saying there was not a competition.
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No, it was no tender. I am not aware of an official tender or that there were two, three or four parties.
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The DAA might have been in discussion with those parties, though.
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You misjudge the situation. I wanted to answer one of the questions that was answered before in that context. When were we aware that SRT intended to close the facility in Dublin? In my previous jobs, I was one of the largest customers of SRT. I had 160 APUs from 160 aircraft in Dublin. I was informed at the beginning of the year that that contract would be unilaterally revoked. It was always our intention to keep SRT maintaining our aircraft. We wanted SRT to fulfil its contractual obligations to maintain our aircraft. That was our first intention. The hangar 6 deal was in the wake of our maintenance deal. That is really a total misjudgment of the situation. We are not in the hangar collecting business. We are an airline business. One of the things an airline needs to do is maintain its aircraft and in order to do that it needs a hangar, but it is in that sequence. It was not a question of who will occupy hangar 6. It was a question of who is maintaining the Aer Lingus fleet and only then where would that work be performed.
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I am not interested in the cost of leasing aircraft or airport charges. We need a simple answer to a question, on which Mr. Mueller may not be able to help us. First Active owns the building and is getting a payment from somebody. Is Aer Lingus paying First Active? Who is taking the hit between Aer Lingus and First Active? First Active is effectively a bank and is getting its payment. Is Aer Lingus paying the amount directly to First Active or is it paying considerably less? I need to hear that from First Active, the DAA or Aer Lingus. This is where the problem lies.
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There is a sweetheart deal and jobs are being lost. We want to get answers.
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I would like to get a final summary of Aer Lingus's position. Is it prepared to move voluntarily if a hangar that meets its qualifications and needs is built or earlier if it is built earlier provided it is satisfied it meets its needs?
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I think I answered that question more than a couple of times.
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Does the Chairman intend ending the meeting before 8.30 p.m.? There is other business and Mr. Mueller answered this question twice or three times.
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I understand that but I believe this is really important. Mr. Mueller's bona fides in what he is saying is quite clear. I want to ensure I understand it entirely correctly. There are conditions under which Aer Lingus would move even if it means it is as long as two years provided it is satisfied with what it gets. If it were shorter it would still require Ryanair not to go anywhere else. Is that a summary of it?
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Let me reduce the complexity of my statement and make it a final closing statement. We will not move out of hangar 6.
Comment on this
I thank Mr. Mueller, Mr. Corneille and Mr. Wilson for their contributions.
The next witnesses are from the DAA. We have 30 minutes left and I propose we have 15 minutes with the DAA and 15 minutes with IDA Ireland.
Many of the questions have been answered. I welcome Mr. Declan Collier, Mr. Paul O'Kane, Mr. Jack MacGowan and Mr. Oliver Cussen. As we have many answers to questions, I ask Mr. Collier to give a quick summary of the DAA position.
Comment on this
For the record I totally reject the assertion that the DAA is a corrupt and dishonest organisation.
The Dublin Airport Authority has a mandate to operate and develop the State's three airports at Dublin, Cork and Shannon. A fundamental element of that mandate is that the DAA ultimately owns the property assets at the Irish airports under its control. We do this to protect key elements of national infrastructure on behalf of the taxpayer and to ensure the proper long-term development of our three airports. We do not provide for any commercial company to own key property assets at our Irish airports and this has always been the case. The DAA leases or licenses its key property assets to protect the long-term strategic interests of the taxpayer. In accordance with that mandate, the DAA signed legally binding contracts with SRT to acquire the leasehold interests in hangars 1 to 6 at Dublin Airport in February 2009. The hangars are in a strategic location for the long-term development of Dublin Airport and SRT had decided to withdraw from Ireland and was selling its property assets.
The DAA, and its predecessor Aer Rianta, had always been the ultimate landlord for the SRT hangars, which were held in two separate leases. One lease covered hangars 1 to 5, a maintenance garage, some offices and other related areas. The second lease covered hangar 6.
In the wake of the SRT withdrawal there were a large number of proposals for alternative aircraft maintenance operations at the airport. The Government established a task force and the IDA and Enterprise Ireland were asked to assess the proposals received with regard to the use of the former SRT facilities. As the owner of the hangars, the DAA negotiated directly with any party which came through the State-sponsored competition process and which was interested in renting hangar space. Separately, a number of companies also directly approached the DAA with regard to the hangar space.
By the end of August 2009, the sale of hangars 1 to 5 and related properties was completed and the DAA was in negotiation during the spring and summer of last year with potential new tenants for the hangars. At all times the DAA fully assisted the various State agencies and the Departments in their job creation efforts. By July last year we had negotiated commercial terms with Dublin Aerospace for the use of hangar 5 and part of hangar 1, the maintenance firm M50 for the former SRT garage and maintenance facility and with Ryanair for hangar 2 and part of hangar 1. Ryanair negotiated and signed a commercial licence for both hangars directly with the DAA.
As members may be aware, th position of hangar 6 was much more complicated. Hangar 6 was held within a complex structure of companies, originally established for the benefit of Aer Lingus and related parties in the early 1990s. As a result of this structure, Aer Lingus had to give permission to allow SRT to sell hangar 6 to the DAA. An additional issue that had to be resolved was the fact that SRT had an obligation to continue to provide maintenance services to Aer Lingus at Dublin Airport. The DAA initially understood that SRT and Aer Lingus had come to an agreement on the issue.
Such a scenario could have allowed the DAA to lease the hangar to a range of potential users other than Aer Lingus. If Aer Lingus indicated that it was happy to vacate hangar 6 and cease having its maintenance activities carried out there, then the DAA could have licensed the hangar to another party. This did not happen. During the spring and summer Aer Lingus's ultimate intentions for hangar 6 remained unclear. It also emerged in the summer that there existed a scenario whereby, under certain circumstances, Aer Lingus could have been able to regain full control of hangar 6 at no cost.
The talks between SRT, Aer Lingus, and the DAA on completing the purchase of hangar 6 continued through the summer. Meanwhile, SRT was also seeking to get another firm to take over the Aer Lingus maintenance contract. There was also the prospect that SRT would agree a new maintenance supplier with Aer Lingus and that the new provider could then have licensed hangar 6 from the DAA.
Throughout the period from February until September, the DAA was examining its legal options to force the completion of the contract and take possession of hangar 6. We were on the verge of entering court proceedings against Aer Lingus on at least three occasions during this period to force the completion of the purchase of hangar 6. However, on each occasion the legal advice we received from senior counsel was that the outcome of any such court challenge was at best uncertain.
By the early autumn, Aer Lingus had still failed to agree a position with SRT on its maintenance contract. Despite being offered the use of hangars 3 and 4, Aer Lingus made it clear that it was not going to move out of hangar 6. The DAA again considered its legal options but it was now clear that the best option was to negotiate a commercial licence with Aer Lingus for hangar 6. By concluding a 20-year commercial licence with Aer Lingus in December at a market rent, the DAA successfully created in excess of €24 million in value for the State.
Through its actions, the DAA protected a strategic property asset and also created significant value, as the company effectively doubled its purchase price in less than a year. Ryanair told the IDA it would buy hangar 6 for in excess of €13 million and when the rental agreement concluded last year, the hangar was worth more than double that.
I would now like to set out the position as Ryanair relates to hangar 6. Ryanair approached the Department of Enterprise, Trade and Employment in February 2009 to buy hangar 6. Ryanair refused to negotiate with the DAA directly despite the fact that the airline signed two other hangar licences with the DAA in the same year. The DAA was willing to engage with Ryanair——
Comment on this
Ryanair refused to negotiate with the DAA for the purchase or leasing of hangar 6 but it had already negotiated the lease or license of two other hangars in the configuration 1 to 6 at Dublin Airport.
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Did the company deal with the DAA face to face?
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I will finish the statement and return to that. We were willing to engage with Ryanair on the use of any of the hangars for maintenance. Notwithstanding the legal complexities relating to hangar 6, it was possible that the hangar could subsequently have become available for use by Ryanair or other third parties. If hangar 6 had become available for rent to Ryanair, the DAA would have been more than happy to licence the facility to Ryanair at a commercial rent, subject to the normal terms and conditions that apply to key property assets at our airports. That point was made abundantly clear at all times.
The DAA kept the Departments informed about developments relating to the hangar 6 sale and we also informed Ryanair directly that another party was in advanced negotiations with regard to the hangar. The DAA did not reveal the identity of the other party to Ryanair as this was commercially sensitive. We did not inform Ryanair about the complex structure surrounding hangar 6, as to do so would have breached confidentiality relating to the operations of Aer Lingus.
The DAA is now aware that Ryanair had been informed of the complex structures relating to hangar 6 and the requirement for Aer Lingus's consent to any change of ownership as early as February 2008, a full 12 months before Ryanair contacted the Government with its hangar 6 proposal. In September 2009, when it became clear that Aer Lingus was not going to vacate hangar 6, Ryanair was informed by the IDA that Aer Lingus had legal rights and the hangar would not become available. The DAA offered Ryanair a number of alternatives to hangar 6, including a possible new facility built to its specifications, but Ryanair has refused to engage with the company on this matter.
Under the terms of the 20-year licence Aer Lingus now has, the DAA has no authority to remove Aer Lingus from the hangar to be replaced by any other commercial customer. The only circumstance under which Aer Lingus could be moved is if the DAA required the hangar for the future development of Dublin Airport. In that case, and in that case only, the DAA would be obliged to give Aer Lingus 24 months' notice and either provide an alternative existing facility that met Aer Lingus's approval or build a new hangar to the same specifications elsewhere. A similar clause applies to every other comparable tenant.
We understand that the Attorney General has examined the relevant clause in the Aer Lingus contract and has confirmed that the DAA cannot move Aer Lingus to allow Ryanair or any other commercial tenant take possession of the hangar. The DAA has also received its own legal opinion that Aer Lingus cannot be moved in favour of another commercial tenant. The DAA strongly rejects recent allegations that it has somehow stood in the way of job creation or has negotiated a sweetheart deal with Aer Lingus, as nothing could be further from the truth.
With regard to the deal with Aer Lingus, the DAA has explored every possible avenue to maximise the commercial options available to it for all the hangars acquired, including hangar 6. It was only when it became clear that the long-standing legal interest in and the complexities relating to hangar 6 limited the DAA's options on hangar 6 that the DAA moved to conclude a 20-year licence for hangar 6 with Aer Lingus. This deal was done at a market rent and created significant value for the State in a hugely depressed property market.
The DAA does not have a specific mandate to create jobs. Its primary role is to manage, operate and develop the State's airports. Where it is commercially feasible the DAA is always willing to support employment creation. With regard to the former SRT hangars, the DAA has at all times acted to facilitate any new commercial business that wished to locate there. We have acted with State agencies and directly with any and all interested parties. The DAA has secured tenants for the hangars. These businesses will create and support 365 new jobs. Dublin Aerospace is creating up to 230 new jobs, Aer Lingus is employing in the region of 100 former SRT workers and maintenance firm M50 will employ up to 35 people.
The DAA is also pleased to inform the committee that it is currently in very advanced discussions with another aircraft services firm that will create a further 120 new jobs at Dublin Airport. These jobs are dependent on achieving clarity without further delay that hangar 3, which has been offered to Ryanair as a possible alternative to hangar 6, is still available. A successful outcome in this regard would mean that the DAA has concluded agreements with aircraft maintenance companies that will create close to 500 jobs at the former SRT site.
At all times during this process the DAA has behaved commercially but responsibly and in the best interests of its shareholders and the taxpayer. We also reiterate that the DAA has been and remains available to discuss any reasonable hangar requirements that Ryanair might have. We have shown that hangar 6 is not available. Unfortunately, Ryanair's irrational insistence that only hangar 6 will meet its needs seems to rule out any chance of locating those jobs at Dublin Airport.
Comment on this
Our timescale is very tight, but I will allow just one quick question from each member.
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The last comment from the representatives of Aer Lingus leads me to believe there is no way it will leave unless it is forced out. Thus, from the point of view of creating jobs, how long would it take to build a hangar of equivalent size?
Comment on this
When did the representatives last meet Mr. O'Leary in a business setting? When did the two companies — the landlord and tenant — last engage in discussions?
We were astonished at the complex ownership structure and leasing arrangements of hangar 6. This was in none of the literature that Michael O'Leary gave us this afternoon. Is Mr. Collier saying that the chief executive of Ryanair was aware of this all the way through the controversy?
Comment on this
With regard to the legal advice obtained by Mr. Collier that the DAA could not move Aer Lingus out of the hangar, was that advice obtained from a solicitor or a barrister? How high up the ranks of legal advisers was the person who provided this advice?
Can Mr. Collier specify once again, particularly for the benefit of Deputy Reilly, the conditions under which the DAA could ask Aer Lingus to move? Would it involve building a runway? What infrastructural development would be necessary for the DAA to move Aer Lingus on?
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Could Mr. Collier tell us in some detail——
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I am asking for two lines of detail. What has been the nature of communications between the DAA and the Minister for Enterprise, Trade and Employment since the beginning of this episode a couple of weeks ago?
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I welcome the DAA. I accept the DAA is not corrupt, and I would not agree with any suggestion that it is. I would like to know the nature of the jobs proposed at hangar 3. Are they maintenance jobs? Can we have copies of the legal opinions? With regard to the meaning of the word "development" at the airport, is Mr. Collier saying the creation of 300 jobs does not fall under that definition? Does he have a legal opinion that states that specifically?
Comment on this
Does the DAA own hangar 6? Where does First Active come into the story? Does the DAA have a mortgage with First Active, or a lease, and how much does it pay First Active per year? How much does the DAA receive from Aer Lingus every year?
Comment on this
Mr. Collier has three minutes to answer, and he can provide us with the rest of the answers in written form.
Comment on this
A question was asked about how long it would take to build hangar 3. Including planning, I estimate that it would take between two and three years. Deputy Kennedy asked from whom we had received legal advice. I understand the Attorney General has provided legal advice, and we have received legal advice from a senior counsel, Maurice Collins.
The last time I met Michael O'Leary was less than two weeks ago.
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Thus, it is not a case of "You never talk, you never write". The two parties have actually talked to each other.
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If the Deputies saw the volume of correspondence I have had with Michael O'Leary, they would be surprised. It would fill the Library of Congress.
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Perhaps Mr. Collier might make it available.
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A question was asked about the specific conditions under which we could move Aer Lingus. The type of development involved could be the building of a new terminal, pier or runway. It is related to infrastructural development.
Senator Ross asked about the nature of my communications with the Minister for Enterprise, Trade and Employment. My communications with Departments tend to be directly with officials; however, I did speak to the Minister about the situation with hangar 6, and I clarified the circumstances under which a termination could come about.
A question was asked about the nature of the jobs in hangar 3. I am in a somewhat difficult position as this is a confidential negotiation. I was due to sign the contract last Friday. The company has been put on hold; it has 19 aircraft booked into the hangar from 3 March through to the end of June. This shows the urgency of obtaining an answer from Ryanair. The company is involved in aircraft servicing; it is not related to heavy maintenance.
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Is Mr. Collier happy that Michael O'Leary will give an answer?
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We are talking about jobs, Chairman.
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With regard to the provision of a legal opinion, I would have to take advice on that. I do not think I would be prepared to make that legal opinion available.
With regard to the definition of development at the airport and whether the creation of 300 jobs would fall under this definition, it would depend on the project. If the 300 jobs were to be created by the development of a terminal or a pier, this would come under the definition, but my understanding is that the current proposal would not be considered development under the terms of the existing contract.
I have no idea who pays the mortgage to First Active. This is a complex structure which was originally set up in 1991 for the benefit of Aer Lingus and related parties. I can tell the committee that Aer Lingus is paying a market rent, but I am not prepared to divulge the value as it is confidential commercial information. Those funds flow straight through to the DAA.
Comment on this
Surely Mr. Collier knows how much First Active is getting.
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Given that Mr. O'Leary has said he is not interested in hangar 3, is the DAA now in a position to offer a lease to this new company which is to provide 120 jobs?
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Two senior executives from IDA Ireland have been sitting here for the last three and a half hours.
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I am sorry; I asked Mr. Collier about the nature of the 120 jobs.
Comment on this
As I said, that is confidential information. The jobs are related to aircraft servicing rather than heavy maintenance. We are talking about 120 real jobs which can be created now, but I need to be able to sign the lease. Signing that lease would bring 120 jobs to the SRT facility.
Comment on this
I thank Mr. Collier, Mr. O'Kane, Mr. Cussen and Mr. MacGowan for their contributions. In particular, I thank them for clarifying quite an amount of significant misinformation, including some we have heard today.
I welcome Mr. Barry O'Leary, chief executive of IDA Ireland, and Mr. John O'Brien, company secretary. I ask them to take five minutes to give us a brief outline of the involvement of the IDA in all this.
Comment on this
I will keep it short. When it became clear that SRT was pulling out of Ireland, IDA Ireland and Enterprise Ireland set up a team to target potential takeovers of part or all of the operation, and also to deal with expressions of interest from various companies. In the initial stages, with the help of an aviation consultant from the UK, we identified and targeted more than 50 companies around the globe to determine whether they were interested in taking over part or all of the operation. We dealt with about 30 expressions of interest but, unfortunately, the only one of substance was that of Dublin Aerospace.
The initial inquiry from Ryanair was made in meetings in February 2009. We met on a number of occasions, on one of which we brought the DAA and Ryanair together. However, the committee learned today about the complexity of leases at the airport. On three occasions we reiterated to Ryanair after meetings that hangar 6 was still potentially in play but that it must engage with the DAA. The one thing that has disappointed us the most was that, according to the letter of 2 July which has not been circulated, if hangar 6 was needed for future development after Ryanair had moved into it, it would have been prepared to commit to moving out and finding a satisfactory solution. I do not have anything more to add; I am happy to take questions or comments.
Comment on this
Was Ryanair seriously interested in the creation of the 300 jobs, given the impediments it placed for itself in the discussions, as outlined by Mr. O'Leary today?
Comment on this
It is hard for us to judge whether Ryanair was serious. We treated the inquiry as being very serious. There was business to be won. As a corporation, Ryanair has the volume of work that would require the facility but we had to consider the logic of what was said and whether it was prepared to move. That always poses a question.
Comment on this
I accept IDA Ireland's bona fides and welcome that it got the two sides together which was an amazing feat. It is sad to lose the 300 jobs on the grounds that Aer Lingus will not leave and Ryanair will not wait. A new hangar could not be built before two or three years. It looks like end game. Can anything else be done?
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I welcome Mr. O'Leary and thank him, on behalf of Fingal and north county Dublin and all the other areas in the constituency. I know at first hand the effort that was made to try to pull together a proposal.
Comment on this
Did IDA Ireland have any substantial discussions with Ryanair about a takeover of the ongoing SR Technics operation? Accepting that Michael O'Leary had reservations about that, were there any substantive negotiations about taking the company over as it was and, as he would see it, whipping the workers into shape as a Ryanair operation? Was the IDA aware that we were in competition with Scotland and, as it now appears, Germany?
Comment on this
I welcome the delegation. With regard to the 30 expressions of interest in the SR Technics business, Mr. O'Leary said only one job creation opportunity arose, namely, Dublin Aerospace. Why were the 29 others not viable? Was no financing available?
I refer to the letter Mr. Michael O'Leary wrote to IDA Ireland on 2 July 2009, confirming that hangar 6's availability would not be a problem if an alternative facility of similar size could be built. Given the controversy that has evolved during last year and up to the past two weeks, why did the IDA not put that letter into circulation? Can it be put into circulation now? Michael O'Leary has run rings around everybody. The media have been crawling after him, calling out for the jobs and blaming everybody else. Essentially he said, and confirmed this in the letter whose contents I read earlier, that he would willingly take a hangar of similar size and specifications. Why was that not made public? It would have saved much confusion.
Comment on this
I welcome Mr. Barry O'Leary. There is little doubt that he is an honest broker in this situation. There has been much commercial spin and there certainly is an element of political spin. Does Mr. O' Leary think there was any action the Government or Aer Lingus might have taken to facilitate the request of Mr. Michael O'Leary?
Comment on this
I welcome the delegates. They offer the most independent view in the room today. Do they see a solution to this problem? What is the main obstruction to the creation of these 300 jobs?
Comment on this
I welcome the IDA representatives. The IDA is one of the most effective of our semi-State organisations. Do the delegates see any way in which we might secure these jobs? Did they have any role in the initial management buy out proposal by which the management sought to get €25 million when SRT left?
Comment on this
I would like to hear the organisation's views on the ownership of hangar 6. If Ryanair were prepared to pay the First Active mortgage on that building at the going rate, would it have a case for getting hangar 6? I believe there is a discrepancy in what the DAA is paying First Active and what Aer Lingus is paying the DAA and that is being funded by the Irish taxpayer.
Comment on this
Our interpretation of whether Ryanair was serious about taking over the operation was that it would have waited until SRT was closed down and then it would have begun to re-employ people and start afresh. That was our understanding at the time.
The situation of Scotland was clear. Ryanair made it clear from day one about Prestwick. It already had an operation there and invited us to look at it. I have no doubt that Prestwick was a serious player.
As to the 30 expressions of interest, there are some small projects involved. I would not like that to be taken as a negative comment but the main one of substance was Dublin Aerospace. As to why the others did not make it, a number would have been overseas companies. They came, they looked, they saw and did not like what they saw. Others were very ambitious in that they did not have funding, etc. The call was made that these were not viable businesses from a support point of view.
Comment on this
SR Technics was involved in some of those decisions. In the first place, while that company was still in place it had certain assets and much of the filtering would been done at that stage. It would not have accepted the proposals from some of the interested parties.
Comment on this
It did not accept a management buy out.
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On the basis that there was no funding in place.
Regarding whether the Government and Aer Lingus were serious, I do not know about the comment by Aer Lingus. Members have seen the complexity of this. Certainly, the Government was serious, or at least that was our understanding. As regards solutions, the fundamental problem was that hangar 6 was in play at least, on a number of occasions and Ryanair refused to interact. That was the biggest stumbling block.
Comment on this
Ryanair and the DAA. The fact was that we could not get them to sit down in a meaningful way to try to come to an agreement on hangar 6. The DAA put in writing to both the IDA Ireland and Ryanair on 1 September that: "As previously stated, if Ryanair wishes to make a proposal in relation to the leasing of hangar 6 DAA will give consideration to any such proposals from Ryanair." That was written to Michael O'Leary on 1 September. One can see the DAA was saying it was prepared to enter into dialogue. Ryanair would not. We tried to broker it together and we were not successful in doing that.
In the context of securing the jobs, if the maintenance capacity is needed as quickly as Ryanair says it is, I do not see that happening in Dublin Airport at speed. That is the question — whether the capacity is there or whether there are alternatives where some aircraft could be placed under maintenance while facilities were being built.
Comment on this
Will Mr. Barry O'Leary make the letter of 2 July available?
Comment on this
I am glad the Deputy raised that. The reason we did not put any of these letters into the public domain is that we treat all our relationships with potential clients with the utmost confidentiality because we deal with more than 1,000 companies and one cannot do otherwise. If I remember correctly, last weekend the Sunday Independent published all the letters between the Tánaiste and Ryanair and all those between Ryanair and IDA Ireland. I cannot recall whether the letter of 2 July was included.
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Is there an impediment to releasing it now? We have voluminous correspondence from everybody else.
Comment on this
It would be against our business principles regarding the release of correspondence we regard as private.
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We would not agree to waive it. I would have to check on the technicalities. We have never done this in our history. Think of the damage it would do.
Comment on this
We accept that but everything else is out in the open now. It is hardly a matter of breaking confidence.
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There is the issue of the management buy out and the IDA's involvement in that.
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Does the Deputy mean my personal involvement?
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IDA Ireland and Enterprise Ireland. My understanding at the time was that it was not fundable. The sheer magnitude of funding that would have been required——
Comment on this
To sum up, one of the most significant pieces of information given to us today relates to the speech from Mr. Collier which everyone has received. It emerged in the summer that a scenario existed whereby, under certain circumstances, Aer Lingus could have been able to regain full control of hangar 6 at no cost and that, by concluding a 20-year commercial licence with Aer Lingus in early December at a market rent, the DAA successfully created €24 million in value for the State, something of which we should not lose sight especially in view of the fact that today Mr. O'Leary put a value of €15 million on that hangar.
Comment on this
We do not know what the market rent is so we are buying a pig in a poke.