Dáil Éireann - Volume 541 - 04 October, 2001

Private Members' Business. - Airline Industry: Motion.

Mr. Noonan: I wish to share time with Deputies Richard Bruton, Owen and Deenihan. I move:

That Dáil Éireann conscious of the vital importance of the airline industry and of Aer Lingus in particular to the commercial life of the nation and deeply concerned about the future of the industry and noting the decision of the US Federal Government to support US airlines, calls on the Ministers for Public Enterprise and Finance to move motions at meetings of EU Ministers to enable EU national governments to give financial assistance to their airline industries in order to assist [727] them survive the current temporary downturn in aviation business and further calls for the deferment of any decision on the future ownership of the national airline for at least three years to enable the airline to be strengthened and restructured.

I have already given notice, and I do so again now, that one of the major themes on which Fine Gael will fight the next general election is the failure by Fianna Fáil and the Progressive Democrats to manage the most successful years the Irish economy has ever had.

Everywhere we look, we see this failure of management. We see it in the health service, in the education sector, in the gridlock on our roads countrywide, in the failure of the Government to organise driving tests in an efficient and effective manner, in the appalling failure to manage asylum seekers, in the mess that is Dublin Airport, in the rip-off of almost half a million people in the Eircom flotation, in the failure to deliver affordable housing, in the failure to deal with homelessness, in the failure to bring about much needed infrastructural change in the telecommunications sector and so on.

The litany of Government failure would be inexcusable in any circumstances but it is particularly so in circumstances where we have had the most successful economic growth in the western world. Our rate of economic achievement was envied all over the world. The performance of the economy was first rate. The performance of the Government in managing it can only be described as dismal.

While the Government produced discussion paper after consultative paper, created photo opportunity after photo opportunity, it avoided most issues where decisiveness and leadership were required. Meanwhile, the ordinary people got on with the job and developed some of the most successful enterprises this country has ever known.

This was done despite the failure of Government. We need look no further than the high-tech sector where an OECD survey shows that this country is now the ninth most expensive for peak time Internet access and where broadband penetration is just 0.01% of the total population. That Irish software companies have succeeded at all is remarkable given that they typically pay ten times more than their British counterparts for the relevant services and for that money, they get the service at one-tenth of the speed.

There is a thread common to many of the difficulties I have highlighted – in transport, in telecommunications, in airports and in aviation. That thread is the Minister for Public Enterprise, Deputy O'Rourke. Her failure and that of the Government is most obvious, most alarming and most regrettable in the case of Aer Lingus. She has been the shareholder representative of that company for more than four years and has managed in that short space of time to bring a once proud national symbol to its very knees. She has [728] done so at a time when Ryanair has gone from strength to strength. She cannot blame market conditions. She cannot blame the ups and downs of the Irish economy because it was all up. She cannot blame the decline in the Irish economy because, as I said, it was all up. She cannot blame a decline in the Irish or in the world business sector because that was all up also. She cannot blame passenger numbers because they were all up. She cannot blame anybody but herself, although I would suggest that the Taoiseach's failure of leadership has also been a decisive factor in the near collapse of Aer Lingus. He should have recognised a long time ago that his Minister was quite simply not up to the job. He should have overcome his normal desire to be seen as the nice guy and removed her from office.

Let us reflect briefly on the situation which the Minister inherited. In the two and a half years of the rainbow Coalition, passenger numbers in and out of Ireland were never higher, Aer Lingus was massively profitable and the then Minister for Transport, Energy and Communications, Deputy Dukes, mandated the board of Aer Lingus to explore the possibilities of the airline entering a strategic alliance with or without the transfer of equity and to submit proposals to the Minister as shareholders. The Minister, Deputy O'Rourke, came into office in June 1997. What did she do? As with so many other things, she dithered, ducked and weaved. It was December 1999 before she announced the intention to sell the entire 95% Government shareholding – a move which was estimated at the time to raise up to £600 million for the Exchequer.

The market place looked good, aviation stocks were doing well but because of the public's experience with the Eircom flotation, they were deeply suspicious of anything which the Minister was offering. She did not help her own case when she emphasised that the flotation would “follow the Eircom model”.

The Minister also made it clear that she wished to complete the sale before the end of the year 2000. The Aer Lingus Bill, 2000, was to provide the legislative framework for the IPO. The Minister appointed the necessary advisers and committed to the usual high fees as she had done in the case of Eircom. Meanwhile, encouraged by the Minister, Aer Lingus planned its strategy on the basis of the availability of private sector capital. At no stage did the Minister do anything to disabuse Aer Lingus of the correctness of its approach in allowing for the provision of private sector capital.

Somehow or other, from the summer of 2000 onwards, the Minister lost control of this situation. She had lost control well before the outbreak of foot and mouth disease and the softening of economic conditions in the US market. She was certainly floundering at the end of last year when she began to talk about looking for an alternative sale option for the airline. She asked advisers to take soundings of interest from potential investors or buyers and she created such an [729] atmosphere of uncertainty and indecisiveness that no one in the aviation sector could any longer regard her as a serious player. One day it was a public offering of Aer Lingus stock, the next day it was a sale to anyone who might buy it. In the circumstances, it was hardly surprising that the airline went from crisis to crisis and that it has now reached the lowest point in a very distinguished history.

At this late stage, what is needed above all else is clarity. Without clarity, there can be no industry or consumer confidence in Aer Lingus. Without confidence, the decline in forward bookings will not be arrested. Unless this decline is arrested, Aer Lingus will go the way of Swissair and Sabena.

It is, therefore, vital that the Minister answer straight questions with straight answers. First, what are her objectives in relation to Aer Lingus and how does she propose to achieve them? Second, is it the Government's intention to further back the airline financially and if so, on what conditions will it do so? Third, is there a reasonable expectation that EU permission can be secured for any further state assistance which the Government might have in mind? Fourth, if it is the Government's intention not to give additional financial support to the airline, either because it believes this is inappropriate or because of EU prohibitions, how does the Government intend that Aer Lingus will be led out of its current difficulties?

The employees of Aer Lingus, the tourism interests, particularly away from the east coast and the people need answers to these questions and they need the answers now. Last year, 1.2 million tourists came here from North America. With the reduced capacity now announced, we will be lucky to have a million this year and it looks particularly black for next year when forward bookings would indicate an almost wipe-out of the North American market. Without a national carrier, particularly serving the North Atlantic, we have no possibility of maintaining and developing a vibrant tourism industry, particularly away from the east coast. Shannon without Aer Lingus is simply not viable. Not only is it the key transatlantic airport for tourism from Kerry to Donegal but it is a key cargo airport for the industries radiating out from Shannon which are so dependent on the North American markets.

I will address a question to the Minister for Tourism, Sport and Recreation, Deputy McDaid. As part of the Good Friday Agreement arrangements, Bord Fáilte and the Northern Ireland Tourist Board amalgamated key promotional functions into Tourism Ireland, a company which has a board, a chief executive and a budget but no employees to administer it. Just when tourism needs the maximum support, the Minister has managed to preside over the creation of another fiasco, another fine mess – an agency without employees to either spend its budget or implement its policies. The situation is critical and requires immediate action. It is for this reason [730] that I must press the Minister for immediate answers. What are her plans for Aer Lingus? How does she propose to implement them and what is the timetable?

I have a proposal to make which I hope the Minister will find helpful. It relates to the possibility of State support for Aer Lingus, particularly against the background of the support the US Administration has made available to US airline companies. At present, there are three airlines connecting the United States and Ireland. These are Continental, Delta and Aer Lingus. Continental and Delta are beneficiaries of US Government support. It seems quite extraordinary that a Commission in Brussels would, in those circumstances, refuse to allow the Irish Government to give some support to Aer Lingus. In particular, given our island status and the fact that we are so heavily dependent on the US for investment, trade and tourism, it seems entirely unreasonable that the Commission would continue to refuse the provision of support in these difficult times.

I can understand that the Commission's refusal to allow Aer Lingus as a whole to be subsidised may be a tenable position. My proposal, therefore, is that the Government should revert to a position which previously existed and split Aer Lingus into two airlines, one serving the United States and the other serving European cities. The application to the Commission in Brussels for approval to give subsidies might be confined to the transatlantic alliance and the case might be based exclusively on the precedent created by the US Administration. Brussels can hardly object to the creation of a level playing field. If the case was properly presented, I believe Ireland's special status as an island and its special economic links and dependency on the United States might sway Brussels and allow at least some short-term support for Aer Lingus if the company was restructured on the basis outlined.

I put it to the Minister that Aer Lingus is in a dire situation. The company had been losing money for a long period before the events of 11 September. Since that date, traffic on the north Atlantic route – in both directions – has fallen by 30%, October to December bookings are down by more than 30% and the downturn will cost £40 million, leading probably to a loss this year for Aer Lingus of £70 million compared to a loss of £58 last year. It is estimated that 600 temporary staff and 25% of permanent staff will be laid off and that the resulting redundancy package will cost approximately £150 million. In addition, it will cost a further £50 million to restructure the company. Without fudging the issue in any way and without taking any half measures, it is, therefore, apparent that £200 million will be the minimum amount of money needed to ensure that Aer Lingus does not go the way of Sabena and Swissair. It is for the Minister to decide whether that £200 million is provided by way of borrowings or equity. Part of the total may be provided through borrowings, but some of it must be provided through equity.

[731] I reiterate that if there is a principled objection in Brussels, the Minister should restructure the airline by dividing it into a north Atlantic airline and a European airline. A total of 40% of Aer Lingus' business and 60% of its profits come from the North American routes and it will not be viable unless those routes are viable.

The latest announcements indicate that 68 flights due to leave Shannon each week are being cancelled. Most of our linkages from the mid-west to Dublin Airport have been cancelled out. Not only is this affecting the tourism industry, it is completely detaching the mid-west and the west from the economy of the remainder of the country. This will shatter the economies of these two areas and I would like the Minister to comment on these adverse effects.

Mr. R. Bruton: I wish to begin where Deputy Noonan left off. The crisis with which Aer Lingus is faced cannot be traded out of in normal commercial terms. The Minister was slow to accept that point of view but she has slowly come around to it. Everyone has seen the shock waves going through the industry with 100,000 jobs lost in the US and 25,000 lost in Europe. Passenger numbers are collapsing and normal, orderly restructuring is not possible against such a background. The Minister must recognise that the impetus towards restructuring is being swamped by the need for survival. The normal avenues companies would consider in such situations are no longer viable. For example, it is estimated that it will cost £50 million for a redundancy package at Aer Lingus. We know the airline's money is running out, that it will be gone by February and that it cannot afford to pay for such a package. If redundancies form part of the package to save Aer Lingus, the Minister will have to find a way to provide the company with the funding it requires.

The payback times for other options such as contracting out are not quick enough and would not alleviate the sort of cash crisis the company is facing. It is the responsibility of the Government to define the strategic priorities and set about achieving them with a purpose. I do not see that sense of purpose or clarity emerging from the Minister or her advisers. Ireland is a small island economy and it has placed all its eggs in the basket containing foreign trade, foreign investment and foreign tourism. Almost 150% of our GNP comes from external trade of one form or another. We cannot get away from the fact that we depend on access transport.

This is the last occasion on which the Minister will address the Dáil before travelling to Brussels and she must articulate what is the strategic role which is, in essence, built around Aer Lingus and which must be protected. She must also indicate the sort of restructuring she envisages will be consistent with that objective. The latter has not been forthcoming from the Department. The Minister must also make a clear statement on the nature [732] and extent of the State aid necessary to secure that combination.

The Government has failed to provide clarity on this issue. The Minister was ambivalent at the outset with regard to whether the company could trade its way out of this crisis and it took a long period before it was realised that State aid was required. We heard from her unnamed spokesman that she attended a meeting with the chairman of the Transport Council and that the issue of State aid was not discussed. Perhaps that was a false report, but it is incredible that the issue of State aid would not be discussed at such a meeting. There have been continuing mixed signals about the issue of ownership and the position must be clarified.

I am disturbed by the amendment to the motion tabled by the Minister. For example, it states that the Minister will examine all available options. That is like looking at the problem through a pair of binoculars. Aer Lingus is faced with a crisis because its cash is running out. The amendment also states that the Minister is seeking details of the US subvention. There is no urgency in that statement. The details are available because the package has already been approved by Congress. There is no need to look for the details; they are available on the Internet. The Minister has raised the red herring of no return to State aid for non-viable airlines. That is not the issue and no one is seeking a return to a situation where the State props up companies. It must be recognised that this crisis is not of Aer Lingus' creation.

The amendment also states that “Aer Lingus has taken the first vital steps”, but it is clearly implied that the Minister envisages the company must do many other things. She has, however, failed to articulate these and we need to know what they are. The need for the Minister to articulate her view on the issue of State aid is crucial because we have an opportunity to shape the direction the EU Commission and EU Ministers take rather than just sitting back and reacting while other bigger players jockey for position to protect their strategic interests. One can be sure that this is what they are doing at present. The idea of not discussing key issues is difficult to understand.

It is clear that EU state aid rules permit aid. They permit aid to undo damage caused by exceptional circumstances – which is clearly the position in this case – and to restructure an airline in a way that is once-off and removes capacity in order not to be unfair to competitors – that is clearly an issue here. The rules also allow emergency rescue aid. It is clear that there are avenues under EU state aid rules which we can pursue.

Deputy Noonan has already referred to the USA which has given $5 billion in state subsidies in the form of direct cash on the basis of flight miles and provided $10 billion in loan guarantees. In addition, there is a Bill before Congress for $4 billion in assistance to displaced workers and the [733] American authorities are envisaging shouldering the extra costs incurred on foot of the new security requirements involving the screening of luggage. Ireland has a strategic interest equal to that of the US which it must protect. We need that interest to be articulated here today. The prosperity of thousands of families living in the north side of Dublin who helped to create the economic miracle built on access to the country depends on the decisions that will be taken. There must be a much clearer statement of strategy. The Opposition will not be found wanting if the Minister articulates a clear, concise strategy. We will be behind it. However, that has not happened. There has been evasion and a lack of clarity which is damaging to the future of 7,000 workers and the tourism and commercial interests associated with them.

Mrs. Owen: On Monday, Aer Lingus staff were told drinking water would no longer be provided in their offices. Within the past 48 hours Delta Airlines has withdrawn its services from Ireland to New York. What a tragic state of affairs has been allowed to develop under the stewardship of the Minister and the Government. I do not deny the events of 11 September have had a disastrous effect on the aviation industry world wide but little more than a year ago the Minister stated in a major contribution in the House on another motion: “I am confident that the company will long continue to provide this service for its customers”. Unless the Minister and the Government take action and adopt progressive steps they will preside over the demise of this great airline.

When Seán Lemass witnessed the departure of the first Aer Lingus aeroplane, An tIolar or the Eagle, from Baldonnel to Bristol he inaugurated not only a national airline but a symbol of the very essence of our Irishness. Our republic was only 14 years old in 1936 and Aer Lingus grew and developed side by side with the new republic. The staff of 12, including one pilot, on the first flight could not have foreseen how important the company would become in terms of opening up Ireland to visitors, allowing people to travel abroad for both business and pleasure and facilitating emigration in the dark years and immigration over the past ten years. The company was the greatest creator of jobs in the 1980s, greater even than the IDA.

During the Second World War a confined service continued and preparations were made to capitalise on the boom in commercial aviation at the end of the war, yet now the Minister and the Government are doing nothing to save the company. Aer Lingus has acted as the true marketeer of Ireland and many tourists would not have visited the country but for the branding and sales effort of the company. Aer Lingus hostesses and pilots were our ambassadors for many years at the St. Patrick's Day festival in New York. They were instantly recognised as Irish but 65 years later there is little or no will on the part of the Government or the Minister to fight like hell to [734] ensure the future of our national airline. Staff morale is at rock bottom because they do not feel any sense of urgency on the part of the chief shareholder of the company about the need for action.

Undoubtedly, the events of 11 September had a disastrous effect but Aer Lingus had a future before that date and the Government should not stand by helplessly and allow the company to die. The more than 6,000 staff at the company displayed true patriotism during the implementation of the Cahill plan. They accepted cuts, job losses, the setting aside of wage increases and changes in working conditions so that their company would survive and recover from the economic downturn in the 1980s and the early 1990s. The reason morale is so low is that when the company achieved profitability there was no recognition of these sacrifices and staff were forced to highlight their meagre wages by going on strike in 2000 and 2001, which was the first strike since 1978 when, interestingly, Fianna Fáil was also in Government. The staff are not blind to the serious crisis facing the business but they are deeply discouraged from taking the inevitable actions required to consolidate the company because of the weakness of the Government and the disinterest being displayed by it.

One only has to examine the evidence of lethargy. Why is there no chief executive? What is the Government doing about it? As Deputy Bruton said, no case has seriously been made in Brussels despite the existence of Article 87.2.B which allows for assistance in times of national emergency or exceptional circumstances. These are exceptional circumstances and the moneys provided by the US Government to assist its airlines reflect this and a similar case could be made in Brussels. The legislation dealing with Aer Lingus should not have been withdrawn from the legislative programme for this session as that has led to confusion. How can the Minister table an amendment to our motion stating the legislation is off the agenda? She should at least announce later that the legislation will be processed.

A number of contradictory statements have been made by different Ministers. The Minister for Tourism, Sport and Recreation, Deputy McDaid's attitude is “Never fear, McDaid is here. Everything will be grand”, while the Tánaiste's attitude is “No money will be invested, get lost”. The Minister for Public Enterprise said “Do not ask me. I am still annoyed about Mick O'Leary's advertisements and nobody helped me when he was writing those advertisements”, while the Taoiseach is saying he has to open a poodle parlour or a barbers shop somewhere. No Minister has taken charge of this crisis and that has caused confusion. They are all making different statements. One minute the Government cannot make a case to Brussels and the next it hopes to do so. One minute Deputy McDaid is saying everything will be all right and the next another Minister is contradicting him.

Where is the plan needed to pull Aer Lingus [735] through this crisis? How many routes and staff will be axed? Will the trans-Atlantic service continue? Delta Airlines has withdrawn its services to New York and concerns exist about Continental Airlines, despite the money being provided to the company by the US Government? Will the staff be paid their PPF wage increase which was negotiated for all workers? The Irish Times has reported the increase will not be paid. If they do not receive the increase will they be given an assurance that when conditions improve they will be paid?

Will airline insurance continue to be provided? This issue was raised in an article in The Irish Times last Friday, 28 September. Nobody could get an answer as to which Department was responsible for insurance. The article stated:

With just hours to go before the planes were being grounded we were being passed “from Billy to Jack” for information. The Department of Public Enterprise suggested the Departments of the Taoiseach, Finance and even the Attorney General's office.

The Department of Finance said responsibility lay with the Department of Public Enterprise – maybe because Aer Lingus was involved, even though five other airlines were affected. The Taoiseach's Department said the issue was still being discussed while all other Departments suggested the issue had to be decided at European level.

If that is a sign of what is going on, I am not surprised there is confusion. Which Department will be responsible for dealing with insurance? What will happen to the 1,700 who have already been flagged to lose their jobs? Many of them live in the suburbs of north Dublin, which are already faced with the loss of 2,000 jobs at Gateway and Motorola.

Can an adequate service be provided if no money is available for overtime? What will happen to the pension scheme? The Minister met a group of Fianna Fáil Members to announce with great fanfare that everything would be all right with regard to the pension scheme yet nothing has happened for retired employees. There have been no changes to the current pension scheme for employees because they are linked to the legislation which will now not be taken. These are some of the questions I am being asked by the staff of Aer Lingus and people who live near me whose family members work for the company. They are frightened by the lack of action and answers.

Seán Lemass would not be proud of the lethargy being shown by the Minister and his party. The decisions necessary to safeguard our national airline are not being tackled. Aer Lingus services 30 destinations with 38 aircraft and carried more than 7 million passengers in 2000. I referred to the first aeroplane, the Eagle, earlier. We demand that the eagle does not land, which is what the Government wants to happen. We want it to be [736] available to fly for future generations under a more competent Government.

I refer to a statement by former Aer Lingus chief executive, Michael Dargan, in 1979. He stated: “We have honoured the trust of our small country by demonstrating we could match the world in one of its most sophisticated industries and, thus, we have contributed to the confidence of our young generation in Ireland”. If 6,000 jobs were under threat in Athlone or somewhere else in the Minister's constituency, she would be doing a hell of a lot more to make sure something was done to secure as many of those jobs as possible. The Minister must act now. She should tell us what she can do in Brussels, what answers she has received and what the Government plans to do to save this airline.

Mr. Deenihan: I wish to refer to the future of Shannon Airport and I am sure my colleague from the region, Deputy Daly, will support me. Shannon Airport is recognised as the most powerful instrument in terms of the economic prosperity of the mid-west region and the entire western seaboard. Any downgrading of the airport will have a devastating consequence for the region.

When the status of Shannon Airport was changed some years ago, people in Kerry did not realise the consequences the decision would have for the region and they have suffered the effects of that decision ever since. If there is a further downgrading of the services to Shannon Airport, it will have a major adverse effect on the tourism industry in Kerry and the region. It will also have a major effect on the economic vibrancy of the region. Aer Lingus has announced that it intends to discontinue 68 flights from Shannon. This will make the airport redundant. Flights to Baltimore/Washington and Newark will be discontinued but more alarmingly for business people who commute between the greater Shannon region and Dublin and onto Europe, certain flights will be totally abandoned.

Early morning flights from Shannon will be discontinued. The flights from Shannon to Dublin will be, in the main, pick-up services on the transatlantic routes. There will be a reduction in dedicated scheduled flights solely covering Shannon to Dublin. If a businessman goes to Dublin in the morning, there will be no flight if he wishes to return in the afternoon. In addition, the popular Shannon to Paris service will be discontinued. This was Aer Lingus's only flight that linked Shannon Airport directly to Europe. Its discontinuation will have a major effect on the significant number of French and other nationals who work in companies in Shannon and the region. They found the route useful because it meant they could commute by rapid rail services to Holland, Belgium and other countries over a weekend. The absence of the service will have a major effect on engineers and others with a high level of expertise who work in the electronics industry and live in the Shannon region. The service [737] between Dublin and Belfast has been discontinued. This connection was very popular and it improved contact between North and South and the business regions of Shannon and Belfast. The discontinuation of the service will have a knock-on effect.

I understand that next summer only three direct flights will operate from Shannon to the USA. It has been reliably claimed – perhaps the Minister could clarify the position – that Shannon Airport will lose about 700,000 passengers next year. This means that one quarter of the business of the airport will be taken away. At present, 850 people work in Aer Lingus in Shannon and I understand that one quarter of them will lose their jobs immediately. The area has a vibrant economy but it has experienced job losses recently and it cannot sustain that level of job losses for long. The jobs involved are good and have existed for some time. People have worked hard but they are facing the prospect of losing their jobs. The loss of 700,000 passengers will have a major effect on the hotel, bed and breakfast and guesthouse industry in addition to the general business community.

The US Government has in various ways given approximately £15 billion in aid to the airline business in America. This will make it more competitive and sustainable. I listened to the debate about the problem the European Commission has with the funding of state airlines. However, in this instance, the Government is the 95% shareholder in the company; the employees have 5%. It is an anti-competitive measure that Aer Lingus cannot ask its main shareholder for funding. If a company is in trouble, it can go back to its shareholders and seek further funding. The current position is a reverse anti-competitive measure against a State company. The decision by the American Government to support its airline industry means a good case can be made to the European Union to allow the Government to support our airline from State funds and ensure its survival. Swissair and Sabena are currently in serious difficulty and British Airways is also in trouble. The airline industry in the European Union was buoyant and thriving, but there will be a major collapse of the industry if intervention is not allowed. The incidents on 11 September are one reason for the difficulties, but another is the decline in general business over the past year because of the slow down of the economy.

I appeal to the Minister to ensure, in terms of the management strategy Aer Lingus will announce in the near future, that Shannon Airport is not ignored or abandoned. Cork Airport is also important to the region but no changes have been made to the Cork schedule and only limited changes have been made to the Dublin schedule. Why is Shannon Airport always singled out for special attention? The Minister's constituency will be affected by difficulties at Shannon Airport and she must ensure that the airport is protected in any future management plans that Aer Lingus draws up.

[738] Minister for Public Enterprise (Mrs. O'Rourke): I move amendment No. 1:

To delete all words after “Dáil Éireann” and substitute the following:

“– notes the strategic importance of the aviation sector in general to the economic well being of the country;

– notes the devastating impact of the US terrorist attacks on the aviation sector worldwide with the result that the finances of many airlines are now in a perilous state;

– notes the financial situation in Aer Lingus gravely exacerbated by the recent events;

– notes that Aer Lingus has taken the first vital steps to address the situation and that the Company is finalising proposals which will endeavour to provide a basis for a viable business going forward;

– notes that, on receipt of those proposals, the Minister will examine all available and appropriate options, and consult staff representatives, in the effort to secure a viable future for Aer Lingus;

– recognises that a change in the ownership of Aer Lingus is not now an issue in the current circumstances;

– notes the decision by the US Federal Government to support US airlines in relation to the immediate aftermath of losses as a direct result of the attacks, full details of which have been sought;

– notes the policy of the European Commission, recently endorsed by Ministers for Finance at an ECOFIN Council that there can be no return to a situation of State aid for non-viable airlines;

– recognises the need for a level playing field in the responses of States to the present crisis, to ensure there is no distortion of markets;

– notes that the Minister for Public Enterprise will be addressing the next Transport Council on the 16th October in relation to the Aer Lingus situation and that the general airline crisis will also be discussed at the next ECOFIN Council meeting on the 16th October 2001; and

– welcomes the discussions initiated by the Minister for Public Enterprise with the EU Transport Commissioner and the EU Belgian Presidency in advance of the Transport Council on the 16th October.”

I thank the Opposition for the opportunity to discuss this matter. I had already decided to request the Chief Whip for time to discuss Aer Lingus and I am glad that opportunity has been found. However, before I deal with the detail of the issue [739] and answer the many legitimate questions raised by Opposition Members, I wish to point out that I did not want this debate to become personal but I must answer the points made by Deputy Noonan.

I think of the man who spoke earlier and I think of the way he left the health system in Ireland when he was the Minister for Health. I think of Mrs. Brigid McCole and the many thousands of women whom, through her, he disenfranchised because of his inability to grasp the issue and the inane way he dealt with it. I think of the way he left the medical services in Ireland. I am replying in a personal way because he dwelt on me considerably in a personal fashion. Deputy Noonan was part of a Cabinet that sponsored Deputy Lowry as the acclaimed Minister for Transport, Energy and Communications.

Mr. R. Bruton: On a point of order, is it in order on a motion that relates to the future of the air industry—

Mrs. O'Rourke: Exactly.

Mr. R. Bruton: —for the Minister to take the opportunity to hurl personal insults, which I believe she will regret in the fullness of time?

Mrs. O'Rourke: Yes, indeed.

Mr. R. Bruton: Perhaps the Chair should indicate the subject matter we are discussing, which is extremely grave.

Mrs. O'Rourke: I am answering personal remarks.

Mrs. Owen: Deputy Noonan was talking about the Minister's job.

Mrs. O'Rourke: We listened to Deputy Noonan – the Deputy was not present.

Mr. R. Bruton: I was present.

Mrs. O'Rourke: I cannot leave it unsaid when the shrill voices of people who have no, and never had any, policies are raised. These people never took proper leadership decisions which we must take now. When I hear those they must be replied to.

Mrs. Owen: The problem is the Minister is not doing that.

Mrs. O'Rourke: I have every intention of leaving it.

Mr. R. Bruton: On a point of order, will the acting chairman give a ruling on whether the Minister is out of order for hurling personal insults against the leader of the Fine Gael Party when we are discussing the Aer Lingus crisis?

[740] Mrs. Owen: The Minister should deal with the issue.

Acting Chairman (Cecilia Keaveney): Members should confine themselves to the debate.

Mr. R. Bruton: You are confirming it was inappropriate for the Minister to launch that type of personal attack. Perhaps the Minister will withdraw the statement in light of that.

Acting Chairman: Given that three minutes of the time available have elapsed, I ask Members to continue with the debate.

Mrs. O'Rourke: The Deputy can dish it out, but he cannot take it.

Mr. R. Bruton: I can take it.

Mrs. Owen: We have not spoken about anything except aviation and Aer Lingus.

Acting Chairman: The Minister, without interruption.

Mrs. O'Rourke: I extend a message of sympathy to Mrs. Kathleen Cahill and her family. Bernie Cahill served this country, Aer Lingus and all the workers and he did a magnificent job during his tenure as chairman. This is the first public occasion I have had to speak about him. I was at his removal and I feel for his widow and family. He gave much of his time and expertise to serve Aer Lingus and he helped it through difficult times. I am sure other Members will join in that expression of sympathy.

I also welcome the new chairman who has taken over the company at a serious time. He has attended to his job with great gusto and verve. I know he will continue to give it the close attention it demands.

We are all still trying to come to terms with the results of the horrendous events of 11 September 2001. First, and most importantly, is the significant loss of life and the personal tragedies for numerous families from many nations around the world, including Ireland and, second, is the evolving economic consequences which are becoming more and more apparent daily, particularly for the aviation and travel sector. While Irish aviation as a whole has received a set back as a result of the events of 11 September, the critical issue facing us now is the future of Aer Lingus in the light of the grave financial situation facing the company. I will return to this vital issue in a few moments.

I will trace the sequence of events and the reaction of my Department to recent events immediately following the US terrorist attacks when the Federal Aviation Authority closed US airspace to all aircraft. In addition to grounding US domestic traffic, this halted all international traffic on the [741] transatlantic routes, including aircraft operating on routes to and from Ireland by Delta, Continental and Aer Lingus. For Aer Lingus, this resulted in its services on that Tuesday either being re-routed to Canada, recalled to Ireland or cancelled. US airspace reopened on Friday, 14 September 2001. Following the introduction of increased security measures, Aer Lingus operated a limited service on the following Saturday, all but one of the regular services on the Sunday with a full resumption of all transatlantic services the following Monday. Many people had their plans disrupted but all airlines worked as quickly and efficiently as possible to get people to their destinations given the dreadful and unexpected circumstances.

The first issue of concern to my Department following the attacks was aviation security. We worked quickly to issue a special advisory notice to all Irish airports, airlines and private aviation security companies on the evening of the attacks requesting increased vigilance and care in all aspects of aviation security activities. As a result, security at airports was stepped up and additional gardaí were deployed. A special meeting of the National Civil Aviation Security Committee was convened on 12 September to review aviation security arrangements. This committee, chaired by my Department, comprises all relevant aviation and security interests. Its role is to advise the Government and the civil aviation industry of security policy for civil aviation, to recommend and review the effectiveness of security measures and to provide for co-ordination of the various interests involved. The committee has had meetings on several occasions since the attacks, one of which I attended on 17 September. It will continue to closely monitor developments.

We also dealt with a critical aviation insurance problem that arose as a result of the aviation insurance underwriters capping third party war risks insurance at US$50 million. This, in effect, meant that airlines from 12 o'clock on that Monday night could not continue operations. The Government acted quickly to underwrite the gap in the missing cover and this scheme now covers Irish airlines, airports, air traffic service providers, essential aircraft maintenance companies, ground handlers and other airport related services. The indemnity will be for a period of one month within which it is hoped the insurance market will return to providing adequate cover. This issue will be kept under review. Emergency legislation to take effect from midnight on 24 September, which will be retrospective, will be introduced by the Government as soon as possible to give Oireachtas approval for the indemnification pledged.

The security and insurance issues were the immediate consequences of the terrorist attacks, but it is now clear that the economic impact on the aviation sector, particularly for those involved in the transatlantic market, could be severe and long lasting and will change the structure of the [742] industry. The Taoiseach, the Minister for Foreign Affairs, the Minister for Finance and I were at the leaders meeting on the Friday, Saturday, Sunday and Monday in the Attorney General's Office and our office. We worked throughout the weekend to ensure that the aeroplanes could fly after 12 o'clock on Monday evening. We did the same for the airports to ensure they could remain open. I thank the officials who worked continuously for four days and the Attorney General and my colleagues who worked closely with me to ensure the matter would be resolved, otherwise aeroplanes would not have been able to fly.

The strategic importance of the aviation sector to the economic well being of the country has been well documented, particularly having regard to our island status and our position on the periphery of Europe. The aviation sector through the provision of good, reliable, competitive services to and from our main markets has made a major contribution to the growth in the economy. Since liberalisation in the early 1990s there has been a phenomenal growth in air travel with passenger throughput increasing from 7.8 million in 1990 to 17.9 million in 2000, an increase of 129%, at the three State airports over the past decade. This trend which everyone expected to continue in the future must now be carefully reviewed.

I acknowledge that the growth experienced in Ireland over the past years was derived from a number of factors, including general economic development, increased and more focused marketing by tourism and other agencies, improved and more competitive tourism product, advent of low cost carriers, more services by non-Irish carriers but also significantly by the contribution of Aer Lingus. Aer Lingus, with its seven million passenger total in 2000, still delivers the biggest proportion of the traffic at our State airports. Its share of passengers on direct transatlantic services is in the region of 70% and this year the airline will carry in excess of one million passengers on Ireland-US routes. This illustrates the critical importance of Aer Lingus in supporting the tourism industry and the important and growing trade links with the US.

Tourism sources now estimate that less that half the expected 300,000 US visitors who would holiday here in the last four months of this year are expected to travel. I welcome the initiative announced last Tuesday by Aer Lingus of a new $198 fare on offer between yesterday and 16 December for US originating passengers flying from JFK and Boston to Dublin and Shannon. It is difficult to predict the traffic situation on US routes in 2002 given the uncertainty which everyone faces about the US military response and the decision by Aer Lingus to cut services, but there is likely to be a dramatic reduction in US visitors to Ireland next year. Delta has also withdrawn from the Ireland-JFK route, at least for the winter season.

I am advised that European markets have not been affected as badly as transatlantic ones. Nevertheless, I commend the action taken by low[743] cost operators to boost traffic on UK-European routes. I welcome and encourage every effort to develop and grow services to and from Ireland, and I will continue to do so. At my request, Aer Rianta has today announced that it is to extend its extensive discount scheme for airlines flying into State airports.

Up to the present, Shannon and Cork operate zero airport charges for all new routes for a period of three years from commencement. Aer Rianta has now extended this scheme to Dublin Airport. In effect, there will be no airport charges for any new routes operating into Dublin, and the current three year scheme operating at Cork and Shannon airports is being extended to four years. I hope this will provide an incentive to carriers, and I believe it will.

We have a very liberal policy in the aviation sector. In Europe, the aviation market is fully open as regards access to routes and fare setting. In the US, from the Irish side, the only major regulatory issue is the requirement to match

Dublin services with services to Shannon and, from the US side, the restriction of services to certain key cities such as New York, Boston, Chicago and Los Angeles.

The difficulties being experienced in Ireland and by Aer Lingus are not unique. All airlines with a significant transatlantic presence are experiencing a dramatic reduction in traffic and in forward bookings. Many are now in a perilous state, with a number facing bankruptcy.

Daily we hear about major world airlines announcing increased losses and responding immediately by drastically cutting capacity and jobs. In the US, American and United have cut jobs by 20,000 each, and Continental by 12,000. In Europe, British Airways, Virgin, SAS and Alitalia are laying off staff. We have also witnessed the collapse of Swissair, Sabena and, this morning, the stark news from KLM. Unfortunately, the list does not end there.

It would be incorrect, however, to blame all the current ills solely on the terrorist attacks. It is clear that the global economic downturn had already begun to impact on the aviation industry worldwide before the events of 11 September. However, while the industry had problems, the situation became a crisis following the terrorist attacks. Of course, it is not only airlines that are being affected – aircraft manufacturers, leasing companies, airports and air traffic management providers, among others, are also affected by the fallout.

Turning to Aer Lingus, the situation is very grave. The dramatic impact on the company of the events of 11 September can be gauged from the fact that transatlantic routes account for 40% of the airline's revenue and 60% of its profits. Aer Lingus has advised me – and reaffirmed it this morning – that booking activity has collapsed on transatlantic routes since 11 September. Current bookings are down 80% on last year and forward bookings to end December are expected [744] to be down 45% on last year. Similarly, on UK and European routes, booking activity is currently down 30% on last year with forward bookings to end December expected to be down by 10% on last year. Given the experts' view about no recovery before the third quarter of 2002, this makes for very gloomy prospects on the transatlantic routes.

This development is all the more discouraging for all concerned when the trading performance of Aer Lingus had been positive over the last number of years, boosted by the strong economic conditions. In 2000, the company recorded operating profits of £63 million. I wish to put that on the record because it is quite clear that Aer Lingus was in an extraordinarily healthy and positive trading environment less than six months ago. The company had passenger numbers of 7 million, an increase of almost 6% over 1999.

While the events of 11 September had the most catastrophic effect on Aer Lingus, a number of internal and external factors had already begun to impact. These included industrial relations disputes, the impact of the foot and mouth outbreak in the UK and the deepening global economic downturn.

Mr. S. Ryan: And the involvement of the Minister.

Mrs. O'Rourke: Last June, Aer Lingus indicated it was heading for a loss in 2001. I had my last meeting with the then chairman, the late Mr. Bernie Cahill, in early June. On that occasion, he envisaged the losses for the year 2001 would be of the nature of £25 million to £30 million, but he was confident that in 2002 the company would be able to trade out of it. He said Aer Lingus would be reviewing its anticipated losses in 2001.

In July, due to the continuing economic downturn, which further reduced business travel and cargo traffic, the company advised an expected loss for the year 2001 in the region of £30 million to £35 million. The company advised that the review of operations started in June involved its entire operation and would be finalised in September in order to allow them to put in place a revised winter 2001 and summer 2002 schedule.

On 6 September, Aer Lingus reported to my departmental officials on the outcome of the review. The company outlined an integrated package of measures designed to yield savings of £25 million to £30 million in 2002 from fleet reductions, operational efficiencies and reduced overheads. The capacity cutbacks included in that package were to be confined to European and domestic routes. The company indicated that it would continue to closely monitor the situation and if the downturn intensified more severe measures would have to be implemented.

As a consequence of the catastrophic events of 11 September, Aer Lingus advised on 17 September that, on the basis of information received on forward bookings, it expected losses to rise to £70 million for 2001 and exceed £100 million next [745] year. The company immediately indicated that it was facing into a grave cash situation and, in fact, was likely to run out of cash early in 2002.

The company immediately advised of additional cutbacks to address the serious situation. The main additional measures include the elimination of transatlantic services to Newark, which were formerly operating at six per week, and Baltimore which previously operated daily. Overall, the scale of the company's operations will be reduced by 25%. This means that the cost

base must also be reduced by a minimum of 25%.

On 18 September, the company announced a series of ten vital initiatives, all of which were relayed to the trades unions and made public. The cash situation is very serious. Aer Lingus management estimates that, even with an early implementation of the capacity and cost cuts announced last week and prudent management, the remaining cash reserves will last until January-February 2002 at best. The company's management is continuously assessing a rapidly evolving situation and this cash crisis could be advanced from the January-February timeframe I have just mentioned.

There has been some public comment about significant cash reserves held by Aer Lingus but this is not the case. At end December 2000, Aer Lingus had cash, deposits and liquid resources totalling £650 million. Of this amount, £350 million are restricted deposits which are not available to fund Aer Lingus's trading operations. These are specific amounts placed on deposit, legally secured, and can only be used to repay specific aircraft loans and to finance lease obligations on their due dates. Along with my officials, I have discussed with Aer Lingus the possibility of freeing up some of those restricted deposits. The company has advised that it is examining the matter but, at best, this will release in the region of £30 million which could offer only limited relief in terms of cash flow.

The remaining cash balances totalling £300 million, which were freely available to the business, were reduced by £115 million down to £185 million in the eight months to end August due to committed expenditure on fleet allied to a depressed trading performance. This amount is expected to be fully depleted by early 2002. There is no doubt that we are facing a crisis in Aer Lingus. In the coming days the board will present me with proposals which outline the full extent of the difficulties and its recommended solutions. I expect to receive focused proposals which will have at their core a basis for a viable business going forward.

We face a difficult challenge in the weeks and months ahead. I believe that Aer Lingus has a future, but securing that future will require a major change in the structure and focus of the airline and significant changes for management and staff. It will mean a complete overhaul and redesign of the airline to give a more cost efficient and flexible operation capable of adapting to the volatile and changing aviation world. The com[746] pany has already sadly indicated that almost 700 temporary staff will be let go over the coming weeks and is now examining the implications for permanent staff of the 25% cut in scale. One of my key aims is to protect the maximum number of sustainable jobs. That means looking at the big picture and taking action to ensure that we will have an airline, however altered, which will have a basis from which to grow in the future when markets improve.

The question of State aid has properly been raised by Deputies. There is a clear position on such aid. Neither the European Commission nor the Government would support any return to a regime of State aid for unviable airlines.

Mr. S. Ryan: The Minister is the only one who mentioned such a proposal. She is muddying the water.

Mrs. Owen: The Minister is talking nonsense.

Mrs. O'Rourke: However, it is essential that there is no distortion of competition either in the internal European market or in any market, including the transatlantic market, where EU airlines operate. In light of the US Government's announcement of a package of measures involving £5 billion in direct grants to airlines and £10 billion in loan guarantees, it is necessary for the European Commission to assess the impact of such aid on European airlines.

I held discussions on the difficulties in the aviation sector with the President of the EU Transport Council and the European Commission last Monday in Brussels. We had a detailed meeting with Commission officials and with Mme. Isobel Durant who is Chairman of the Transport Council of Ministers. She was engaged at that time with the forthcoming situation regarding Sabena. However, we had a long meeting at which we discussed what the Commission will put forward to the Transport Council next Tuesday week. I told her that we were in a unique situation as the only island country in the Union, that we wished to continue to operate our State airline as a viable entity in a restructured manner and that I would make these points in a clear and focused manner at the Transport Council meeting.

I relayed the same message to the Commission officials who I met before my meeting with the President of the Transport Council. The next Transport Council meeting will take place on Tuesday week and the first item on the agenda will be the financial crisis within the European aviation sector. The matter will also be discussed at the next ECOFIN Council scheduled for the same day. If a limited form of compensation is proposed, I expect and hope it will be supported on the basis that each state would make it available on a non-discriminatory basis to viable airlines under guidelines agreed at European level and in respect of specific categories of loss directly associated with the events of 11 September and after.

[747] Mr. R. Bruton: What does that mean? Will it cover redundancy costs?

Acting Chairman (Mr. O'Malley): The Minister should be allowed to make her speech.

Mr. R. Bruton: This is a key sentence in the Minister's speech.

Mrs. Owen: It is the only sentence we can find which gives some hope.

Mrs. O'Rourke: Our objective of securing a viable future for Aer Lingus will not be an easy task. However, let there be no doubt that the Government and I want a strong and vibrant Aer Lingus going forward. I acknowledge the role played by Aer Lingus over the years in the development of Ireland's trade and tourism sectors. I also acknowledge the contribution and sacrifices of its employees over those years in enabling the airline to fulfil that role. These are difficult times but let me assure the House that I will work with all parties to save this airline.

I attended a meeting with 24 members of the central representatives committee of Aer Lingus unions on 24 September 2001. Each day since I have been in contact with at least one of the unions or with the CRC. I gave them details of what I would argue when in Brussels and reported to them when I returned. In turn Aer Lingus management has engaged directly and almost daily with the trade union executive. Nothing is being kept from anyone. An open case is being made. It is clear to everyone that there is a crisis.

Mr. S. Ryan: What about the crisis in the Government?

Mrs. O'Rourke: I did not shout when other Deputies were speaking. I hope we will have the co-operation of the Opposition parties. Nine or ten years ago Deputy Cowen did his best, with the support of the Labour Party, to pull the company through difficult circumstances.

Mr. Stagg: I hope the Minister is not stealing my time.

Mrs. O'Rourke: There will be full consultation with the unions in resolving Aer Lingus's problems. We must all work together in the difficult months ahead to secure a viable future for Aer Lingus.

Reference was made to that part of my amendment which states, “recognises that a change in the ownership of Aer Lingus is not now an issue in the current circumstances”. The Chief Whip asked me to outline that list D of proposed legislation is for factual information. The Bill has been passed by the Seanad and, therefore, it is included on list D. I will ask the Clerk of the Dáil to send [748] the necessary message to the Seanad to withdraw that Bill.

Mrs. Owen: That is some help.

Mr. Stagg: I wish to share time with Deputies O'Sullivan, Seán Ryan, McDowell and Broughan.

Acting Chairman: Is that agreed? Agreed.

Mr. Stagg: I thank Fine Gael for raising this important matter and giving the House an opportunity to address it. The Minister's speech was full of waffle with no details as to how this crisis is to be dealt with. It is amazing that she would come into the House and give a list of the meetings which might happen or have happened. That is all we got from the Minister.

I move the amendment to amendment No. 1:

To delete all words after “well being of the country;” and substitute the following:

“– calls on the Government and European Union to recognise the unique strategic importance of Aer Lingus to this country as an island heavily dependent on tourism and as the only member state of the European Union with no land link to the European mainland;

– calls on the Government to work with management and unions to ensure the survival of Aer Lingus and the retention of the maximum number of jobs; and

– noting the damage that has been done to the morale of Aer Lingus workers by the uncertainty regarding the future of the company, calls on the Government to state unequivocally that there will be no change in the ownership structure of the company.”

No Minister with responsibility for Public Enterprise has inflicted so much damage on the State sector as the Minister, Deputy O'Rourke. Of all our State companies, she seems to have singled out Aer Lingus for particularly appalling treatment. This fact was laid bare in the House last June during the last substantial debate on the future of Aer Lingus. The Minister huffed and puffed from the Government benches, but she had no real reply to the charge. Her performance during that debate was an admission of incompetence and failure.

The challenges facing Aer Lingus in the wake of the murderous attack on the people of New York and Washington are immense. Given the Government's record and the record of the Minister for Public Enterprise in particular, I have grave doubts if they can rise to the challenges.

The Labour Party has proposed an amendment to the Government motion which outlines solid principles for future action. It is intended to remove the waffle and prevarication that forms a vast part of the Government amendment. If our amendment were accepted, it would show that however late in the day the Government is willing [749] to take seriously, its responsibilities to the staff and customers of Aer Lingus. Rejection of the Labour Party amendment by the Government will signal there is no change in policy and that a petty and vindictive attitude will still dominate policy.

The Government amendment is little more than a rehash of the appointments diaries of the Ministers for Public Enterprise and Finance. It tells this House and the workers and customers of Aer Lingus nothing of the Government's policy towards the national carrier after 11 September. There is a belated and grudging recognition that the Government's desire to sell off Aer Lingus as soon as possible regardless of the price is not possible. There is, however, no recognition of the damage this policy has inflicted on the company over many months. Neither is the policy jettisoned. It is not now an issue in the current circumstances. Those are weasel words from a Government without direction. Neither did the Government inform the House of its approach to negotiations with the EU Commission at this critical time for the airline industry here and world wide.

Luckily not all politicians or political parties have demonstrated the same degree of lethargy and obfuscation that this Government confuses with policy. My colleague in the European Parliament, Deputy De Rossa, this week asked a question that goes to the heart of the current debate about State aid to airlines in the EU. The reply to the question is revealing and presents an opportunity to bring some stability and security to Aer Lingus during these turbulent times. The reply quotes Article 87.2(f2>b) of the EC Treaty, which states that member states may be authorised by the Commission to grant aids to make good the damage caused by exceptional occurrences. The reply goes on to state that on 24 September the Commission wrote to member states highlighting their duty to notify in advance the type of State aid or other financial measures envisaged by them. Will the Minister inform the House today if the Government has given a comprehensive reply to that letter and, if so, indicate its contents? It seems that the only obstacle to assisting Aer Lingus out of its problems is the Minister and her inability to make a decision or, having made one, her failure to carry it through.

We deserve to know more than the appointment schedules of the Minister. We need to know what Government policy is, what sum of money in grant aid to Aer Lingus is proposed and what is the Government's attitude to other airline operators in the State. Answers must be given to these questions.

The grounding of the Swissair fleet and the resulting chaos into which Sabena has been thrown is proof positive of the perilous state in which European airlines find themselves. Foot dragging and confusion which seem to permeate Government policy have potentially disastrous consequences for Aer Lingus at this time. A clear [750] strategy that has the support of the management and the unions in Aer Lingus is urgently needed.

One of the main causes for the confusion that exists within the Government is the ideological opposition of the Progressive Democrats and my constituency colleague, Deputy McCreevy, to the prospect of State aid and their opposition to the very existence of State enterprise. It is a corrosive influence in Cabinet at present. I seriously doubt if the Minister, Deputy O'Rourke, given her record, or the Taoiseach, given his cowardice on such matters, will present a coherent argument against the standard bearers of Thatcherism and Thatcherite privatisation.

The Labour Party believes it is right and proper that the Government, which is the shareholder in Aer Lingus, should provide emergency capital to ensure the survival of the airline in these unprecedented times. The EU Commission in its reply to Deputy De Rossa made it clear that it expects such to happen. The Minister now needs to make a decision and to make an application to the Commission so that it can assess that application. Until that is done nothing will happen.

In 1993 Labour fought tooth and nail to ensure that Aer Lingus would receive the capital injection it needed to overcome and transcend the very grave crisis facing it then. Labour's determination provided the capital and the dedication of the work force over the following years succeeded in turning around Aer Lingus so that it became one of the finest airlines in Europe and a member of the One World Alliance.

We are living in exceptional times. I have every confidence that the management, unions and workers in Aer Lingus can ride out the current uncertainty and ensure that our national carrier continues to play an essential role in the economic and social life of this country.

Let us be clear about the challenges before us. Take a minute to imagine what would become of this nation if the worse possible scenario, a fate such as that which befell Sabena last week, were to happen to Aer Lingus. What then of our tourist trade? What then of the families who use Aer Lingus to keep in touch with their sons, daughters and grandchildren across the globe? What would be the effect on our economy nationally, let alone the economy of north county Dublin, Shannon and Cork? It would be a catastrophe. It is worthwhile to consider that scenario to put in context the vital role Aer Lingus has played in the life of this nation. It is a role that the State should and must protect in these unprecedented times.

The Labour Party has set out a clear set of principles which, if followed, would ensure the survival of Aer Lingus over the coming months. Nothing less is acceptable. Anything less could have dramatic consequences for the national carrier and for Ireland.

Ms O'Sullivan: Our primary concern is the very survival of the airline. There is a real danger that it will not survive. Those are the words of Mr. Tom McInerney, corporate manager of Aer [751] Lingus in Shannon, when he addressed the Mid-West Regional Authority last Monday. That is how critical the situation is. Supportive intervention by the Government is now a matter of acute urgency. I did not detect that urgency in the Minister's speech.

The US Government, the home of competition and free enterprise, is willing to put millions of dollars into saving its commercial airlines. It would be a travesty if our Government and the EU did not take the same supportive approach to our national carrier.

EU policy on competition cannot be allowed to supersede EU policy on solidarity, cohesion and regional development, policies which are much closer to the core of what the EU was set up to achieve and which precedes by many years the recently seeming all powerful god of competition.

I very much welcome, as did my colleague Deputy Stagg, indications given to my colleague Deputy De Rossa and John Cushnahan that the Transport Commissioner is sympathetic to the argument that the attacks in the US constitute special circumstances for State airlines. The Minister must act on this now.

The strategic importance of the survival of Aer Lingus is crucial to our national interest because air access is a vital link to us as an island nation, east to our European neighbours and west to the US and beyond.

The thousands of jobs currently under threat by the announcement of a 25% reduction in service will be followed by many more unless remedial action is taken immediately. However, tens of thousands of other jobs are also at risk in tourism, manufacturing and service industries directly dependent on regular air transport.

There is grave concern in the Shannon region, a region whose prosperity has been built around airline access. Shannon International Airport was a brave, although some thought foolhardy, concept half a century ago. It has been used since as the catalyst for development, particularly of a strong multinational technology sector as well as other manufacturing and tourism. Some years ago an independent study indicated that 33,000 jobs were dependent on the continued success of Shannon Airport. That number has undoubtedly risen since then.

The effect of the tragedy on 11 September has been disastrous for Shannon in particular. Some 35% of Shannon passengers are transatlantic passengers compared to 7% in Dublin and none in Cork. Already we have been told that Aer Lingus is shedding one third of its transatlantic aircraft and routes. Shannon-Newark and Shannon-Baltimore are already gone. To the east, Shannon-Paris and Shannon-Belfast have been axed. The early morning and late evening connecting flights to Dublin are to go too, making an overnight in Dublin an extra cost on passengers going from Shannon to European destinations. Deputy Noonan and Deputy Deenihan today listed further imminent route cuts.

[752] I cannot over emphasise how devastating these decisions are for the mid-west and the western seaboard. The terrorist attacks in the US have been a crucial factor in the route cancellations by Aer Lingus, certainly in relation to Shannon. The Shannon corporate manager said:

Between September 11 and 25, we received more cancellations than bookings. That tells its own story. On Monday, 24 September compared to the same day last year, our London bookings were down 45% for October, 44% for November and 30% for December. Transatlantic bookings were down 63% for October, November bookings fell by 52% and there was a shortfall of 65% in bookings for December.

These facts and the strategic importance of airline access to Ireland are more than enough ammunition for the Minister, Deputy O'Rourke, to win her case with her EU colleagues if she argues it with conviction. The Minister must consider no other outcome except State support for Aer Lingus at this crucial time. Aer Lingus management, unions and workers also have serious work to do to adapt to the changed environment but the Minister must engage with them immediately in a real way, now that positive signals have been received from the EU.

My colleagues will spell out the potential job losses in the Dublin area if effective action is not taken. For the mid-west and the west the ripples extend far wider than the environs of the airport. I urge Deputies, particularly those in Government parties, and Ministers who represent constituencies in these regions to speak out and to ensure that vital access to Shannon Airport is maintained.

Mr. S. Ryan: At the Labour Party conference in Cork at the weekend an emergency motion was unanimously passed. It directed that the Taoiseach and the Government take the lead among European governments in demanding that State aid be authorised to deal with the current crisis in the aviation industry.

This motion was the result of a number of factors. First is the lack of leadership and commitment at Government level in dealing with the crisis that has developed. The prospect of massive job losses and the implications of such massive redundancies for the regions, particularly north County Dublin, will be devastating for the economy. Not a town or village in my constituency will be unaffected. Another factor is the possibility that Aer Lingus would go under. Such an event would have implications for the tourism industry, on which we are heavily dependent. When the aviation industry improves, as it will, it is imperative that we have a strong Aer Lingus in operation which will be ready to provide the service on which this island nation depends.

The Minister today showed the lack of commitment to Aer Lingus which has been evident to [753] the staff in recent years. Her determination over the years to sell the company, notwithstanding her praise for the company today, has undermined morale and the efforts of management and staff. Much of the work done in restructuring and rebuilding the company in the early and mid-1990s has been undermined by this Government. The problem is made infinitely worse by the fact that we do not have a united Government. Various Ministers have come forward in recent months and stated that they were not in favour of State aid for Aer Lingus even though a protocol of the EU treaty provides for that.

There appears to be an ongoing problem within the Government in taking the leadership role that is required. If the Minister cannot do it, she should step aside and let the Taoiseach take over. He has taken over everything else in relation to it.

Mrs. Owen: He would not have time; he is busy opening things.

Mr. McDowell: Busy closing things, you mean.

Mr. S. Ryan: We must save this company but the Minister's commitment to it was less than satisfactory today.

Mrs. Owen: The Taoiseach is in north Tipperary today when he should be here to listen to this debate.

Ms Coughlan: He is here.

Mr. S. Ryan: A clear message should emerge from this debate. The Government must come to the aid of Aer Lingus. The Minister said a pruned down company is required. When the staff become involved in that and in working once again for the future of this company there must be a specific guarantee that the company is not for sale. That message must be conveyed. It is inherent in the Labour Party amendment to the motion this afternoon. Nothing less is acceptable. My colleagues will expand on that point.

The Government has not delivered to date and has been unconvincing. It must deliver on this issue.

Mr. McDowell: My colleague, Deputy Ryan, spoke in graphic detail about the consequences of the failure of Aer Lingus for the northside of Dublin. There are probably about 1,000 Aer Lingus workers living in my constituency and I do not need to have explained what the effect on the local community would be of the loss of that number of jobs in either the immediate or the medium term future.

While I obviously wear my constituency hat like other Members, we must also be aware of what the national consequences would be of the failure of our national airline. It simply cannot be reasonably contended that other airlines could in the short-term pick up the slack and perform the services currently provided by Aer Lingus. It cer[754] tainly cannot be suggested that any domestic airline would be interested in taking up that slack and putting those services in place. Furthermore, nobody has persuasively suggested that other international airlines could do so in the short-term or beyond.

There would, therefore, be a significant loss to this country in having access to it simply terminated for many people. The damage for business and tourism would be considerable. That cannot be allowed to happen, particularly if we are told that the primary reason we cannot prevent it is EU State aid rules or competition legislation.

We must get back to basics. I accept in principle that the State aid rules are in place to encourage fair and free competition and that that is a good thing. However, the case can and must be persuasively made that this basic part of our infrastructure must be treated in a more sensible fashion. The airline industry is extremely cyclical, as anybody who has watched the industry over the past ten years knows. It goes up and down and the troughs can be quite low. There simply must be the capacity, within the State aid rules and competition legislation, to allow assistance to be provided in a trough or disaster of this magnitude. This is even more true at this time because, in a sense, the problem is not of the airline industry's doing but is a reflection of the crisis in the international order.

The reaction of the Government has been utterly unacceptable. The Minister for Finance, Deputy McCreevy, and the Tánaiste and Minister for Enterprise, Trade and Employment immediately offered the gut reaction we expect from them. They said State aid was not possible and that they could not interfere with free competition. It is possible. What was particularly strange was that when the Minister for Finance went to the ECOFIN meeting in Brussels he found, I suspect to his surprise, that most of his colleagues in the European Union took a different view. They were more than willing to contemplate the possibility of state aid. They know the consequences of not doing so are potentially disastrous, not just for Ireland but for the European Union. How remarkable, too, that the President and the authorities of the United States, where competition law is at least as stringent as it is here, had no difficulty in saying that a total of $15 billion would be provided in terms of underwriting loans or in direct state aid.

We cannot allow the indecision within the Government and the competition rules to be used in a fashion that could, directly or indirectly, lead to the failure of national airlines. Is it not remarkable that Swissair, which was grounded for 24 hours, got an immediate promise of assistance from the Swiss government, notwithstanding that the government is merely a minority shareholder in that airline?

The ownership of Aer Lingus is a bigger issue. I concur with others who have said we should not have contemplated selling off such an important part of our infrastructure and an industry which [755] regularly goes through cyclical difficulties. This was not a good idea and I am happy to see the Minister appears to have turned her back on it. Unfortunately, much damage has been done in the intervening two years since the Minister put a “for sale” sign up on the airline although she did not have a clear idea of how she would move it forward.

We need clear leadership from the Government. With that, it will be possible to make a case in Brussels. As Deputy Stagg has already made clear, the Commission is open to the idea of allowing for exceptional aid, whether for security, insurance cover or otherwise. We must push that open door.

Mr. Broughan: On his radio programme this morning, Pat Kenny posed the question of how one airline can make substantial profits and have a huge capitalisation while another – he clearly intended Aer Lingus – is making major losses and has debts stacking up. The question was posed on a false premise. Reports of Aer Lingus's performance in recent years show that the pain borne in the 1990s by the airline's work force on the north side of Dublin and in Cork and Limerick has produced a very efficient airline. Pat Kenny also ignored the effect of the dastardly events of 11 September in New York and Washington which changed the nature of aviation forever.

One of the key tasks of Aer Lingus, which it has discharged faithfully and well particularly in the past decade, has been to keep strong the connections between the north and west side of Dublin, Limerick and Cork with regard to IT and high technology industries. Our capital city is twinned with San José near San Francisco and there has been a constant interchange of technology and personnel which has had a major impact on the creation of the Celtic tiger economy. This part of Aer Lingus's operation has experienced a catastrophic collapse of bookings. This morning, even British Airways admitted that its bookings are down 30%.

Aer Lingus is the only major Irish airline for which the needs of this island and this economy are paramount and the only airline to support the key industrial and economic aims of the national economy. I wish Ryanair well in its operations, but comparisons with that airline must take into account the special deals it has done with regional European airports and the large amount of out-sourcing and subcontracting done by the company. It must also take into account the determination of large investors to smash national airlines throughout Europe.

In the days after 11 September, the United States government moved quickly to help the great American airlines to bear the costs of extra security on board aircraft and at airports. The famous security procedures of companies such as El Al do not come cheap. The EU Commission must be prepared to do the same in this extra[756] ordinary situation, particularly with the extra cost of the connection between Europe and the United States.

For the past four years the Taoiseach and the Minister for Public Enterprise have prevaricated about the future ownership and operation of Aer Lingus. I have a high personal regard for Deputy O'Rourke but as a Minister she has been remiss in a large area of her duties. One of the saddest elements of the Minister's record is her failure to deliver on the new deal for pensioners, which was an absolute commitment in the election campaign of 1997. Deputy Wright and his colleagues have let those pensioners down and that will be remembered in a few months time when we canvass for votes on the north side of Dublin.

This morning I tried to raise the issue of the north side of Dublin where an economic melt down is going on as we enter the recession into which Fianna Fáil and the Progressive Democrats are leading us. We have seen the disasters of Gateway 2000 where 2,000 jobs have been lost, and not 900 as the Minister for Enterprise, Trade and Employment claimed while the House was on holidays. We have seen the failure of Seronix. Young men and women who took advantage of the economic boom to gain high technology training are now walking the streets of my constituency following the downsizing of that company. I am sure the same situation prevails in areas of Limerick and Cork where the aviation industry is so important.

To prevent this economic melt down from getting worse, I ask the Taoiseach to take a number of steps which are vitally important for the regions most affected in the east and south of the country. I particularly ask him to set up a jobs task force with the county managers concerned to try to bring forward a plan to sustain the jobs which exist and replace those which have been lost. I ask him, instead of adopting the obsolete 1980s position of the Minister for Finance, to go to Europe and demand the resources needed by the aviation industry in the north side of Dublin and in Cork and Limerick. In these changed circumstances which the chairman of the United States Federal Reserve has described as extraordinary, the Taoiseach must bring forward supports to enable the vital interests of the national airlines of Europe, and in our own case Aer Lingus, to continue.

I strongly support the motion.

Mr. Haughey: I wish to share my time with Deputies Wright and Daly.

The developing situation in Aer Lingus is potentially disastrous and could have widespread implications for employment throughout north Dublin. This is seen against the background of more than 1,000 job losses already announced in Gateway 2000 last August. I call on the Government, as a matter of urgency, to take all possible measures, including the provision of emergency funding to ensure the future of the airline and its thousands of employees.

[757] Mrs. Owen: Will Deputy Haughey support the motion?

Mr. Haughey: It was wonderful to hear the grand-niece of Michael Collins praising the record of Seán Lemass.

Mrs. Owen: I will praise a man if he is worth praising.

Mr. Haughey: If nothing else, Seán Lemass was a realist and a pragmatist who would have no time for the futile political rhetoric we have heard from Deputy Owen.

Mr. Broughan: He would have had no time for Deputy McCreevy.

Mr. Haughey: Aer Lingus is a vital semi-State organisation. It is the State airline and the Government is the main shareholder in it. Its strategic importance for an island nation from a trade and tourism view point cannot be over estimated. It provides a crucial transatlantic service. It employs approximately 6,500 people, making it a focal point for the economy of the north side of the capital city.

Even prior to 11 September, Aer Lingus faced serious difficulties. Industrial disputes, the foot and mouth crisis, the down turn in the US economy and increasing fuel costs meant that the airline was already facing a major crisis. Losses of £70 million for this year and a deficit of £100 million in 2002 had been predicted. Yet, the terrorist attacks on the United States changed everything again. A dramatic slump in air passengers and future bookings mean that many airlines, including Sabena, Swissair and KLM as well as Aer Lingus, now face a major battle to survive.

We are now talking about the very survival of Aer Lingus and we must do everything possible to ensure this. We will not be forgiven by the employees of Aer Lingus or by the citizens of this State if we do not put measures in place to ensure the future of our airline. A rescue package must be prepared by Aer Lingus management in consultation with the unions as soon as possible. I understand this will be done shortly. Operations have been cut back by 25% already. I understand pay rises of 5.5%, due under the PPF, may not be paid. There are rumours that 700 seasonal jobs may be lost and that a further 1,200 permanent jobs are at risk. It is a disaster. Redundancies must be kept to an absolute minimum and the Government must intervene to ensure that a satisfactory package of voluntary redundancies and early retirement is put in place.

The case for State aid is compelling. The federal Government in the United States has announced a £15 million package for domestic airlines there, which puts EU airlines at serious disadvantage. The EU must respond to exceptional circumstances by allowing State aid to be given to national airlines. I understand that EU Transport Ministers are to meet on 16 October. I [758] welcome the fact that the Minister, Deputy O'Rourke, has opened discussions with the EU Transport Commissioner and the Belgian Presidency to pave the way for an injection of funds. I welcome the Government amendment which states that a change in the ownership of Aer Lingus is not an issue in the current circumstances. Present difficulties will have to be dealt with before a change can be considered.

A strong management team needs to be put in place at Aer Lingus. Poor management leads to industrial relations difficulties, as we have seen. Aer Lingus can survive if this change is brought about in this area. I have no doubt that the Government will not be found wanting on this issue. Aer Lingus was saved by a £175 million package on a previous occasion and it can be made viable again. I appeal to all in the House not to make Aer Lingus a political football, as to do so will not help.

As Deputy Broughan said earlier, sniping from Ryanair on the sidelines will not help. Aer Lingus and Ryanair are very different airlines. Aer Lingus is the State airline, with all that involves. It provides a vital transatlantic service for the country and has a social dimension. The no frills, low cost and low fares model simply does not apply in this case.

The case for State aid for Aer Lingus is compelling. I welcome the moves taken by the Minister, Deputy O'Rourke, in this regard, including her commitment to remove the Bill currently before the Seanad in relation to Aer Lingus from the Order Paper. It clearly demonstrates that she is taking a proactive role. I have no doubt that for all our sakes and for the sake of the nation, Aer Lingus will be saved. It has a future and will go from strength to strength once it overcomes its current difficulties.

Mrs. Owen: Well done, Deputy Haughey.

Mr. Wright: I welcome the Government's statement of commitment to the restructuring of the national airline this morning. I represent the Dublin North constituency, where economic and social growth has been based on the aviation industry, particularly the proximity of Dublin Airport. The towns of Portmarnock, Malahide and Swords, often regarded as the seventh hangar, have developed to their present economic status as a result of the support of the aviation industry, especially Aer Lingus.

I wish to respond to the Government's amendment. The strategic importance of the aviation sector has been well explained here today and has been supported by all speakers. It was interesting to read economists in today's newspapers wondering if, as an island nation on the periphery of Europe, we need a national airline to support economic growth and to facilitate the record exports we currently enjoy. I strongly believe there is such a need for a national airline.

I recognise the sacrifices that have been made by Aer Lingus workers in recent years in order [759] to restore the profitability of the company. Only two years ago, the annual report of Aer Lingus showed profit growth of over 11% and total profits of 79 million, much of which was due to the sacrifices made by the workforce in the 1990s. Unfortunately, Aer Lingus was hit by events entirely outside its control. Foot and mouth disease had a devastating effect on the company and the downturn in the global economy led to increased fuel costs. I have to say that I think some of the industrial action that was taken, particularly the Friday strikes, was detrimental to the company. I took a large number of telephone calls from people who were very disappointed because their holidays or business activity were disrupted. The Friday strikes had a devastating marketing effect on Aer Lingus.

Part of the amendment before us relates to the restructuring currently taking place within Aer Lingus. I attended the recent SIPTU conference with colleagues who are in the House at the moment. The debate centred on the future ownership of the company. I argued, and was supported by David Begg and Des Geraghty, that the question of ownership is not the most important one. The most important issue for Aer Lingus at the moment is survival. I am pleased that the Minister has responded to the request that I made to her and to the Taoiseach to remove ownership from the agenda. I welcome the fact that a Bill that was before the Seanad has been taken from the Order Paper and the legislative programme.

As Deputy Haughey said, speakers at the SIPTU conference called for political parties, unions and management to work together in coalition. I welcome the fact that between ten and 12 working groups are putting together a restructure package, to be brought to a board meeting next Thursday, which hopefully will lead to the survival of the company. I hope decisions will be taken soon. Without the restructuring of Aer Lingus, we may be debating its viability and survival in its present form in the not too distant future.

I support Members who have made the case for funding. It was interesting, following the 11 September disaster, that President Bush immediately announced federal aid for national airlines. I do not dispute his right to do so, but in recent years the United States Government has strongly argued with the European Commission that, under competition rules, state funding for national airlines should not be allowed. I am worried by statistics that show that 40% of Aer Lingus' revenue and 60% of its profits come from transatlantic routes. I have strongly argued with my Cabinet colleagues that we have a strong case for providing State funding on the basis of competition. The only competition faced by Aer Lingus on transatlantic routes comes from US carriers. It is vital that the Ministers for Public Enterprise and Finance make the strongest case possible on the grounds of competition, fair play [760] and a level playing pitch. I strongly believe that will happen.

The issues raised by President Bush's announcement yesterday about redundancies, funding of health contributions and the retraining of workers will soon be part of our debate on Aer Lingus workers. Two of my Cabinet colleagues will be making a strong case for emergency funding at EU meetings in the next fortnight. I have no doubt that the funding will be forthcoming. It is hard to keep up, on Teletext or otherwise, with the fallout at the moment in relation to jobs. This morning KLM announced that 2,500 workers are to be let go and that 12,000 are to be put on short-term work and wage reductions. The daily impact of recent events on the aviation sector is most worrying for everyone.

I wish to raise other issues which worry those of us who support the aviation sector. The fallout regarding Aer Lingus involves the company next door to it in Dublin Airport, FLS, formerly TEAM Aer Lingus. That company is worried by the downturn and the fact that 25% of Aer Lingus aircraft are grounded and more may be grounded soon. The cancellations of Virgin contracts will also cause great difficulties for that company. It is vitally important that we are seen to support the national airline, which is the main contract FLS has.

Aviation pensioners were mentioned this morning and that battle is neither won nor lost – it is ongoing. Announcements to be made in the not too distant future may very well make the position of such pensioners a subject of debate at the highest level. All of us on the Fianna Fáil side are raising this issue and support the need for a just and equitable pension to be given to aviation pensioners.

I welcome the commitment made by the Minister on behalf of the Government, that the Government is four square behind a restructured Aer Lingus and will support the national airline in the interests of the economy and its workers. Those of us who represent the Dublin north area must work to ensure job losses are minimal and to offer support in bringing the company back to profit. Its management and workforce brought in 79 million for the year 2000. With the support of Government and a restructured management Aer Lingus can get back to profit and assure the long-term future viability of the company.

Mr. Daly: It was inevitable that, in the aftermath of the horrific atrocities in the United States of 11 September, there would be immediate repercussions for international aviation. American Airlines, United Airlines, Continental, Swissair, Virgin and every other airline in the world is faced with enormous losses in terms of passengers, traffic and business and we in Ireland could not escape that.

The aftermath of the Gulf War brought something similar, though not with the same immediate, devastating effect. It took some considerable time before the aviation business recovered its [761] confidence and before people had the confidence to travel. In the long-term, when these matters of international terrorism are dealt with – and the sooner the better – we will see a return of confidence among the travelling public. People will probably go back slowly to the international routes and international travel will resume. However, the immediate short-term problems are ones we must face speedily, although we need to plan for the long-term. I am not sure it is wise for the management of Aer Lingus to almost abandon the north Atlantic routes. As the Minister said, that is where Aer Lingus makes 60% of its profits and does 40% of its business. The drive to restore confidence will be international and we should be part of that; we should endeavour to salvage what we can from the transatlantic business which is so important to Aer Lingus and other airlines.

We saw the implications of events in British Airways, where 7,000 to 10,000 jobs are being lost and where passenger numbers declined by 60% in the first few days after the tragic events in the United States. The feeling in a situation like this would be that in the long-term business will gradually creep up and that we will be in a position to restore that traffic. It is critical not to have a vacuum between now and that recovery and it is essential that we provide the necessary support and finance for companies like Aer Lingus to get them through this difficult period.

I highlight the impact Aer Lingus has on Shannon, where it spends approximately £40 million, not to mention all the spin-offs, for example, 15,000 meals are provided annually on Aer Lingus flights, so there will be an effect on flight kitchens and those involved in Aer Rianta, as well as the car hire and traffic business. It will be devastating for the region and it is impossible to calculate the impact it will have. That was why, some days after these events occurred, I appealed to the Government and the Minister in particular to immediately establish a task force at Shannon to examine the impact this would have across a range of activities and endeavour to put a committee in place which would respond to the crisis and which would set down a formula to minimise the effect of these devastating losses as well as steering the region through this difficult and precarious time.

There is also a necessity to invoke the public service obligations regarding Shannon and to provide the funding that can be given under existing regulations. As far as I am aware there are no European Commission difficulties with that so I appeal to the Minister to apply the service obligations for the Shannon area and to provide the funding necessary to meet those obligations. Also, it is possible under EU regulations to support peripheral regional airports and Shannon should benefit from whatever funding is available to other regional airports.

These are my proposals: to get a task force to look at the implications and to minimise the effects; to take action on the public service obli[762] gations the Minister has; to look at Shannon's peripheral status and the impact the slowdown would have on the region and to make sure that in the immediate aftermath we have financial support to continue business at Shannon. Not only should we continue business at Shannon but funding should be organised from other Ministers to enable those in the marketing area to get out into the marketplace and make good the losses that have already been predicted for next year.

Everybody knows that at this time of year there is a traditional fall-off in business. Most of our tourism business is of a seasonal nature, not all of it but a lot of it, although we have been trying to minimise that seasonality over the last few years with various initiatives. There is now a necessity for a major initiative to make up whatever losses we will suffer next year. This has always been a slack period, particularly in the regions, and it is a time when planning can be undertaken. There is now urgency in providing additional funding to the Department of Tourism, Sport and Recreation and Bord Fáilte so they can embark on fairly dramatic advertising campaigns and we will be in a position, when the impact of this begins to wear off, where we are capable of bringing the dynamic approach of the regions to tourism back into play.

The impact will be dramatic in the next few months. Thousands of people are losing their jobs already in Aer Lingus and that will put severe pressures on the company and not just its financial capabilities. It is also necessary for Aer Lingus to streamline its management. We all regret the tragic demise of its chairman but at this time it is necessary to have a chief executive and a chairman working actively in Aer Lingus to plan its future strategy.

It is important that a chief executive be appointed immediately. I have tremendous respect for Larry Stanley and the highest regard for Tom McInerney whom I compliment on the work he is doing in Shannon. Dynamic management is required at this time if we are to restore confidence to a shattered business. The Minister has a responsibility to ensure that happens. It is possible to make up the ground we lose in other areas in order that the anticipated devastating effect on hotels, guest houses, car hire companies, coach tours and charter business can be made up from other markets.

The issue of pension funds which has been the cause of so much anxiety to so many people who gave years of dedicated service to Aer Lingus should be rectified. Some people in my constituency have provided lifelong dedicated service to Aer Lingus and the State. It is a scandalous disgrace that at this stage of their lives, they must resort to visiting Ministers and politicians on deputations to get their just desserts.

Mrs. Owen: The Minister promised action two years ago.

Mr. Daly: The Minister is well aware of my [763] views on this issue; I outlined them as recently as a few days ago in Ennis. This matter must be resolved as it is not fair to the people in question and their families. As Deputy Owen said, we owe these people a debt of gratitude. Although I have considerable respect for Deputy Owen, that was the only constructive aspect of her entire contribution to which I listened carefully. I am not surprised she has been consigned to the back benches as she did not advance a single constructive proposal as to how this matter could be dealt with.

Mrs. Owen: Deputy Wright made the same point I did; Deputy Daly should admonish him too.

Mr. Daly: Deputy Wright is sharing his time with me and I appreciate that. We, in Shannon, are adamant that this temporary setback will not adversely affect the region. We will fight to restore business and safeguard our airline. Shannon airport employees will go through a difficult period, as will other airport employees throughout the world but these difficulties should be short lived.

During last night's debate on the atrocities in America, we witnessed Deputy Gormley's ambivalence about American aircraft utilising Shannon in an effort to beat the terrorists who sent thousands of people to early graves and who are responsible for the difficulties in the airline business internationally. Some people in the Labour Party and the Green Party, in particular, appear to be ambivalent as to whether we should deal with the terrorist threat. Further attacks are perhaps inevitable. It is not difficult to imagine what may happen if there are further terrorist attacks and I am baffled by the ambivalence displayed. Deputy Gormley criticised the Minister for Foreign Affairs for stating that there cannot be any neutrality in matters of terrorism. There is no neutrality in these matters and we, in Shannon, will not be neutral either. Having represented the region for 29 years, I want to put that on record.

The current difficulties in Shannon are not insurmountable. We, in Fianna Fáil, will support Shannon and I assure the Minister of my full backing in taking whatever action is deemed necessary. We will not, as a former Fine Gael Leader predicted, allow the rabbits to run over Shannon airport.

Mr. D. Carey: I wish to share time with Deputies Kenny, McCormack, Cosgrave,

Gormley, Ó Caoláin and Jim Higgins.

An Leas-Cheann Comhairle: Is that agreed? Agreed.

Mr. D. Carey: Poor Deputy Daly was plumbing the depths when he referred to the rabbits. I feel sorry for Deputy Daly; he is such a staunch Fianna Fáil supporter that, irrespective of the [764] pain experienced by our constituents, he still toes the party line. He paid for that in the past—

Mr. Daly: Deputy Carey is flying on only one wing at present.

Mr. D. Carey: He must have been sorely disappointed by the Minister's speech in which she did not refer to any of the difficulties at Shannon where a decision has been taken to cut services including 42 flights from Shannon to Dublin, ten flights to Baltimore, ten flights to Newark, four flights to Paris and ten to Belfast. How can people in Shannon be confident when the bulk of services have been cut in Shannon with a minimal reduction in Cork and no reduction at all in

Dublin? British Airways, which was Aer Lingus's competition on the Belfast-Shannon-US route, has pulled out of Belfast and I cannot understand why Aer Lingus pulled out too. Why does it not continue to provide a service to the people of Ireland about whom the Government professes to care so much? It took time to build up services and to gain people's confidence but, with one wave of his hand, the new chairman from the AIB has decided that Shannon is best able to withstand the cuts. I wonder whether this is a political gesture although I hope it is not. I hope the Government has reliable information that its three seats are so safe that it can make these cuts in County Clare.

Aer Lingus employees in Shannon have already experienced severe income cuts and have foregone substantial salary increases to sustain the services at Shannon. When Deputy Cowen held the transport portfolio, he outlined his intention to set aside £1 million towards a task force although we were worn out trying to ascertain when it would be provided. Given the current Minister's prevarication, it is unlikely that she will set up a task force and there will be no hope at all for Shannon. The people of Shannon feel abused by the decisions taken by senior management in Dublin. There does not appear to be any continuity in the Minister's policies – when the regulator legislation was going through the House, the Minister stated that the Government's regional policies must be acknowledged particularly in regard to airlines such as Aer Lingus.

The Minister has availed of many photo opportunities in Shannon and has assured people that no harm will come to the airport while she holds office. Yet, her 17-page script does not contain any assurances for the people in Shannon. The only thing she said in relation to Shannon is that Aer Rianta will be instructed to provide an extension from three years to four years exemption from landing charges for new routes. That is not much comfort to people in Shannon, the mid-west, Kerry and up along the west coast. Indeed, from time to time, the Leas-Cheann Comhairle might find it easier to use Shannon than Dublin, such is the traffic chaos in this city.

Just look at this Minister and what is happening on her watch. Aer Lingus and all the other air[765] lines are coming into Dublin bursting at the seams. Yet I am told that Dublin Airport has an operating loss this year, despite record numbers of people going through it. Is the Minister looking after the resource in which she has a 95% shareholding? What efforts have been made on behalf of those people who have given constant and loyal service to the national airline to see that they are properly looked after? The position is well illustrated by the promise which the Minister made in relation to looking after the pensions. Having sat on that for four and a half years, why did she make the promise at all? Why did she raise expectations about this among employees and former employees in Aer Lingus?

Mrs. Owen: And having Fianna Fáil backbenchers bringing them into the Visitors' Gallery to hear nothing.

Mr. D. Carey: It is unbelievable. I made one suggestion about the Belfast routes. We must consider the effect of all these decisions on business people in the mid-west region, particularly senior employees with international companies. They cannot get to Dublin until evening time; there is no morning flight. They cannot travel onwards to Europe, which does not seem to be too badly affected by the aviation disaster. They just cannot connect. The situation is getting worse and worse.

It appears that the Minister for Enterprise, Trade and Employment, Deputy Harney, has no interest in that. She is so busy trying to get industry into Dublin that she has forgotten there is such a place as Shannon and the Shannon region. The entire Government is indicted by this sloppy prevarication on this whole issue of Aer Lingus. It is not giving the right signal to people, especially to young people who want to stay in our area. Whenever there is a crisis in Aer Lingus or Aer Rianta, Shannon Airport is first to be kicked. The media are the best kickers of all. They say we are too biased, that we should not fight for our own workers in the Shannon region. The attitude seems to be that if the city is well catered for, everything is all right. That is not right. The quality of life in the regions is quite superior to that in Dublin. Further concentration there is simply compounding the problem.

There is mention of a second or third terminal or a development at Baldonnel. We do not really know what the Government intends. This Government has lost the case. The Minister for Public Enterprise, Deputy O'Rourke, should take a long break and hand over to someone else. The poor woman was here today and made an attempt to defend herself but I did not think it was up to her fighting quality.

An Leas-Cheann Comhairle: Deputy Carey, you have used ten minutes.

Mr. D. Carey: Thank you very much. I know the Minister has had her own problems – per[766] sonal problems. Maybe they are affecting her. I believe she should get some assistance because, at the present time, I do not think the initiative is there.

I join with the Minister in expressing sympathy to the widow of Bernie Cahill, the former chairman. Mrs. Cahill is a Clare woman, from Ennistymon. I argued with the late Mr. Cahill about the future of Shannon Airport. He made promises which he did not fulfil in relation to Shannon Airport. I am sure God will reward him for the fine work he did but it was not all in Shannon's favour.

Mr. Kenny: There are a number of certainties arising from the consequences of the terrorist attack in New York with world implications. One certainty arising from this disaster is that there is no leadership from Government in respect of the national airline, either for Dublin or Shannon, nor is there any leadership within Aer Lingus to enable a demoralised staff to understand what sort of future lies ahead. People have eulogised over Michael O'Leary in Ryanair. Within 48 hours of the US disaster, Ryanair had a plan on paper. They had a plan. Ryanair is not exposed on the north Atlantic. It is not a long haul service airline but rather a low cost no frills operator.

This year, over a million American tourists came to Ireland and spent £556 million. They are our biggest tourism spenders. Most of Ireland's business and exports depend on airlines. One certainty arising from all of this is that, if leadership is not shown, Aer Lingus will be no more. I understand there are over 2,500 staff in headquarters in Dublin. The first decision to be made by Government is do we want a national airline? Does the Government want to save Aer Lingus and, if so, in what state? The European Commission has opened the door for assistance. Will that assistance be on the basis of subvention for the redundancy packages which must be made?

Deputies from the mid-west are right to fight vehemently for their interests regionally and for the workers who live there. It should not be the pilots and cabin staff who are seen to be the most vulnerable. Aer Lingus has spent about £3 million on training 43 cadet pilots. A number of those are within two or three weeks of completing their training and they are being let go. Many of the more senior pilots, who have accumulated leave, are due for retirement next year. One such salary would equal that of three of the younger pilots. If the company gives away its newly trained young pilots, it gives away the future.

I believe the Government has to set out its long-term view of Aer Lingus. The chairman, from whom we have not heard a single sentence in respect of this, should set out his view and his plan for Aer Lingus. Staff are demoralised. Why has there been no approval from Government for the $198 return fare from the States? We see plans by Ryanair based on £9.99 to any city in Europe. Why has a decision not been taken by Aer Lingus to approve the low fare return rate [767] from the United States? Aer Lingus planes are going out with about 120 passengers instead of carrying 330. On a return flight, instead of carrying 660 passengers, there may be 200 or fewer. That may be due to paranoia or whatever, but there is no plan in place in Aer Lingus to deal with this. If there are to be redundancies, as there will be, then where and how they are implemented should be part of the plan. Aer Lingus itself is suffering from paralysis. There is no indication of an urgency or an outrage to fight back.

The Minister for Education and Science, Deputy Woods, recently waved a blank cheque at disadvantaged society in Ireland. The European Commission has opened the door for Government assistance in this matter. Before that assistance is paid out, Government should have a clear view of what it wants. Does it want Aer Lingus at all? Is it its view that it should continue in terminal decline as is now happening? The Fine Gael motion sets out the case for Government. The Minister for Public Enterprise should show some leadership in this and should be backed up by her Taoiseach and Aer Lingus should set out the details of its plan now.

Mr. McCormack: The Minister painted a very bleak and serious picture of Aer Lingus. She did not sound very confident that Aer Lingus has a future. I would have expected something a little more positive from the Minister. It is obvious that she is under severe pressure and in a very difficult position. I will attribute her unfortunate opening remarks to the severe pressure she is under. She offered an abundance of doom and gloom and very little that was positive.

The Minister seems to have no solution to offer in this crisis in Aer Lingus. She needs help badly. It is frightening that the Minister feels powerless in reaching a solution to what she describes as the crisis in Aer Lingus. I have no doubt her appeal for co-operation from the Opposition will be heeded because she desperately needs it. That is why Fine Gael put down this motion to facilitate an all-party debate in the Dáil on the airline industry and Aer Lingus.

The Minister appears to hold out very little hope for the next meeting of EU Transport Ministers on 6 October. She seems to concede that even limited compensation is unlikely. This is a desperate attitude for the Minister to have. The Minister and her officials should approach this in the strongest and most positive manner possible given that the US Government has announced substantial aid to its airlines – some $5 billion in direct grants and a further $10 billion loan guarantees. I do not see why EU Ministers cannot allow EU national governments to give financial assistance to their airlines. EU countries have responded very positively to the US call for a united approach to deal with terrorism after the shocking events of 11 September. Why should [768] EU countries be debarred from grant aiding airlines, particularly in Ireland where the Government has a major shareholding in Aer Lingus?

Ireland so desperately depends on tourism that it cannot afford a major collapse of Aer Lingus. Already the fall-out from the events in America is having a critical effect on tourism and hotels and related industries, particularly in the west. Last year in the September to December period more than 30,000 American visitors came to Ireland. This year that figure is reckoned to be down by 60% with a loss of £36 million in revenue. It is estimated that Galway city and county will lose £25 million during the September to December period. Approximately 25 hotels in Galway city and county would have a high dependence on American leisure and corporate business during the September to December period. The hotels surveyed said the American business for the month of September alone is down by between 28,000 and 80,000. Similar amounts are estimated for October.

Aer Lingus should adopt a positive marketing attitude and go out and sell the empty seats. Americans will search for a bargain in travel. I appeal to the management and those in marketing in Aer Lingus to go out and sell the empty seats and bring the visitors, American and European tourists, to Ireland to sustain the present and previous positions.

Mr. Cosgrave: I too support speakers, especially on this side of the House, who mentioned the pensioners of Aer Lingus and the anxiety which they and their families are experiencing at present. I call on the Minister to make up her mind quickly and to bring their plight or anxiety to a conclusion and grant to them what they request. They have worked hard over the years and have given a life's service to this company. At a time when they should be enjoying life – during their pension years – they are not adequately provided for. The Minister should address this straight away.

The Minister stated that she will not sell off Aer Lingus. She is perfectly right in that because the middle of a downturn in the market is not the time to sell off Aer Lingus. There is a greater responsibility here than mere cash management and the creation of an open competitive market. We have got enormous return on the investments made in the carrier and its staff over the years. They have represented the interest of the State at times when our prosperity did not entice the entrepreneurs to fly their flag in cheap air travel. A time may well come again when we will wish to have a company of distinction to bring our national flag around the world.

We are an island nation which needs, more than other nations, ease of access to and from our land. Will companies which are now ready to scavenge the bodies of airline corporations be prepared to meet the need of the people when times are bad? I do not think so. Therefore, we must be sure that it is not just the euro value [769] which is considered but that when, or if, we dispose of our stake in Aer Lingus, we can be reasonably assured that the purchaser is committed to maintaining our routes and the levels of service which affect quality business traffic and tourists who are prepared to pay for added value not only for service on board an airline, but also when they arrive in Ireland.

The Minister must find ways to defer the sale of this national jewel until stability has returned to the industry throughout the world. The effect of the creation of a job at the airport was always viewed as generating up to five jobs in the wider local community. We cannot afford to lose one job there because to lose one is to lose six. North Dublin needs Aer Lingus to survive just as the nation needs the services of this great airline.

The United States federal government has seen the need to change its investment policy arising from the events of 11 September. We need our Minister to press for a change in the European approach. Ministers must go out and convince their colleagues within the European Union of the mistakes in retaining the present position. In times of crisis new leadership is called for. The certainties of the past stand to be questioned. To conform may be to die while change gives the opportunity for fresh growth capable of taking the strain of an increased healthy crop. The message must be put with conviction that to be forced to sell the national airline is a very bad thing. It will have an negative effect in the immediate term and on the morale of the employees.

Mr. Gormley: The Green Party supports the motion from Fine Gael but our support is qualified as we believe an island nation needs to retain a State airline in public ownership. The background to this crisis is largely, but not solely, due the fall out from the terrorist attacks in the USA. Aer Lingus is the only Irish carrier on the North Atlantic routes. These routes provide the bulk of the airline's income. Ironically, my colleague, Deputy Sargent, who has a long track record supporting Aer Lingus is prevented from speaking here today due to his efforts to make the Government accountable for handing over Irish airports for foreign military use. If Irish airports, as a result of the Government's actions, become targets in a terrorist attack, then this debate will be seen as somewhat cosmetic and irrelevant.

It would be foolish for the EU to refuse some type of compensation package for European airlines affected because to do nothing will ensure that American airlines will survive this period of crisis while their European counterparts will go out of business. This would be a disaster for any airline, but for Ireland, an island nation, losing Aer Lingus would represent the end of the most visible badge of Irish sovereignty to be seen around the world as well as landing a catastrophic blow to the employment prospects of so many people in north Dublin, Limerick and Cork. The aid package must also be accompanied by renewed interest from the State shareholder in [770] the airline, not a prelude to sell off or privatisation. It is our belief that the State, not a private venture capitalist, should benefit from this aid package in the long and short-term.

We pledge our full support to the workers in this company. In light of his criticism of me, Deputy Daly is obviously afraid of losing his seat to the Greens. I also support the case for improved pension rights for former employees of Aer Lingus.

Caoimhghín Ó Caoláin: On 25 September I addressed a SIPTU seminar on the future of Aer Lingus. Some 200 union members, representing thousands of others who work for the airline, were present. All were deeply concerned about the future of Aer Lingus and the prospect of massive job losses. Estimates for employment cuts in the company have since greatly increased. A senior official of the Department of Public Enterprise informed the seminar that he was personally in favour of the privatisation of Aer Lingus. He is entitled to his opinion, but it is very revealing about the dominant thinking within the Department charged with responsibility for State owned companies. There is no passion there for making public ownership work. On the contrary, preparation for privatisation, as handed down by the Government, is the order of the day.

In this international aviation crisis, the Government should make State aid available to the national airline without delay. The Government has allowed its hands to be tied by the EU and has meekly accepted the dictation that no State aid can be given. That was reiterated by the Minister for Finance, Deputy McCreevy, after the recent EU Finance Ministers' meeting and is restated in the Government amendment. Privatisation, either in the medium or long-term, would mean the break-up of the company, the loss of thousands of jobs and the destruction of a strategic pillar of the Irish economy. It must not be allowed to happen. We have seen how well the company fared in recent years and the benefits this had for the Irish economy. Tougher times are here, but they will not last forever. We need to look beyond the current crisis and go forward with a strategic review of the future.

I support the amendment in the name of Deputy Joe Higgins. The Government's amendment is a stay of execution for Aer Lingus. We need a strong commitment to Aer Lingus remaining and being developed in public ownership. The greatest asset of Aer Lingus is its skilled workforce. The members of that workforce must be central to decision making for the future. Their rights and interests must be safeguarded. Aer Lingus is our company and the Minister is charged with responsibility for it. It must remain our company.

Mr. Higgins (Dublin West): The 11 September atrocity in the United States where passenger airliners were cruelly commandeered to become guided missiles was inevitably going to lead to a [771] dramatic decrease in the number of people prepared to fly. This is a temporary effect, but major airlines have cynically used the atrocity to ruthlessly cut their workforces by tens of thousands. The indications are that there is to be a similar process in Aer Lingus. That must not be allowed to happen.

The Fine Gael motion calls for the possibility of State investment and I obviously support that. However, I draw attention to the amendment in my name with states that Aer Lingus should be developed “without job losses” and that Dáil Éireann “further calls for maintaining the national airline in public ownership with the overhaul of inefficient management structures and bringing the Aer Lingus workforce into the heart of the airline's management”. The board of Aer Lingus needs to be cleaned out of the assorted hacks who made their way onto its membership. These include people whose only qualification in aviation is to be hacks of one or other of the establishment political parties. How can they develop Aer Lingus as a viable entity?

The management structures in the company need to be radically overhauled because they have proven grossly inefficient. Aer Lingus workers should be brought to the very heart of the management of the company because they know what needs to be done and have the commitment to do it. It would be a huge step forward if, instead of being treated like workers and enemies in a capitalist enterprise, they were treated as partners and the board and management structures made fully democratic.

Former workers of Aer Lingus now depending on pensions must also have justice done to them and this new turn of events must not be used as an excuse to put their just cause on the long finger once again. The Minister and the Government have dragged their feet for long enough. The demands of those who made a major contribution to the airline, an important national asset, in the past must be met.

Mr. Killeen: I agree with one of the points made by Deputy Higgins, namely, that the difficulties which beset companies in the aviation sector, particularly Aer Lingus, must not be used to advance particular agendas which people in management and elsewhere may have. This is a genuine crisis with which we must deal.

Aer Lingus has a very skilled workforce and, as virtually every speaker indicated, the company is involved in a cyclical industry which can either encounter severe downturns – sometimes, as on this occasion, with little or no warning – or can slowly enter a trough. Just as surely as this crisis has happened, however, the airline industry will return to a state of vigour. The priority must be to ensure, in the first instance, that Aer Lingus, the national carrier, survives this crisis and, in the second, that the people who have given their time, energy and commitment to the airline over a long period are treated decently.

[772] The first prerogative is that anybody who will be made redundant as a result of this crisis will have a proper pension fund put in place for them. That has not happened heretofore but it must happen now. We cannot countenance the excuse which, when I spoke last April, I predicted we might be given, namely, that things are difficult. I accept that things are difficult but it is the duty of the State to face up to its responsibility for the people who work and have worked for the airline and also for the people who will consider taking voluntary redundancy if the pension scheme is equitable and fair, as it ought to be. In my opinion, there are a great many members of staff who will be returning quite quickly to jobs in Aer Lingus. The temporary lay-offs that will be required must be structured in such a way so as to ensure that these people will be available to the airline as soon as there is an upturn and as soon as it is possible to re-employ them. Many of these individuals are extremely skilled and are committed to their work.

I wish the Minister well in her endeavours in Europe. I commend her for having already met her Belgian counterpart, which was an extremely important and constructive move on her part. There will be difficulties in obtaining European approval for cash injections. However, in view of the fact that the Americans have poured many billions of dollars into their industry, it should not be an impossible task. In the meantime there are many other initiatives which can be taken. Aer Rianta is in a position to use its marketing arm and should have a huge injection of cash pumped into it. The State could also have an input into other areas, such as security, which lead to airlines and Aer Rianta incurring enormous costs.

This is an occasion when all possibilities and alternatives should be considered and taken on board. In that regard, I welcome the Minister's announcement of the reduced fare structure on transatlantic routes for people whose journeys originate on the other side of the ocean. In the circumstances, this development ought also to have been extended to Irish customers because it would help to increase passenger numbers and restore the confidence which was destroyed by the events of 11 September. We must face the fact that there were difficulties in the airline sector long before those events took place. The advent of 11 September precipitated the difficulties encountered by Swissair and other airlines, particularly in this instance, Aer Lingus.

Those of us who represent constituencies in the mid-west have particular concerns. One of the points I wish to drive home strongly is that we will not stand for this difficulty for the airline being used as an excuse to wipe out Shannon.

Mr. Stagg: Hear, hear.

Mr. Killeen: There are those in senior management positions in Aer Lingus who were previously accused of being most anxious to inflict pain on Shannon, if that was possible, and not [773] elsewhere. On this occasion, there are going to be difficulties all around. However, there is no way it will be acceptable to have additional difficulties inflicted on Shannon in these circumstances.

Perhaps the most important point we should remember is that this recession will end. When it does, Aer Lingus will need to be able to call on its skilled workforce as has been the case heretofore. We want to ensure that the members of that workforce are, in the meantme, treated decently and kept on standby in the best terms possible for them.

Minister of State at the Department of Public Enterprise (Mr. Jacob): I thank all Members for their contributions to the motion. Before dealing with specific issues raised in the debate I wish to express my horror at the tragic events that occurred on the United States on 11 September. Turning to the economic impact of the attacks, it is clear they will have an adverse financial impact on several sectors of the global economy, particularly the aviation sector.

I share the concerns expressed by Members about the very serious financial difficulties being experienced by Aer Lingus. While all of Aer Lingus's current difficulties do not stem from the tragic events of 11 September, those events seriously exacerbated a difficult trading environment for the airline. A number of internal and economic factors had already begun to impact on company profits prior to the tragic events in the US but those events turned a trading problem into a major crisis.

The Minister has already indicated that the board will urgently present proposals which will outline the full extent of the difficulties of the airline and the recommended solutions to address current difficulties. These proposals must form the basis for securing a viable airline operation. Many Members raised the question of State aid. The Minister clearly set out her thinking on this matter. At the risk of being repetitive, neither the European Commission nor the Government would support any return to a regime of State aid for airlines which are not viable. This is the position that has been adopted by all Governments since 1997. The Minister is fully au fait with the Commission's thinking on these issues arising from her recent contacts with the Commissioner for Energy and Transport – Madame de Palacio. These contacts are ongoing.

If some limited form of compensation is provided, the Minister believes it would be supported on a non-discriminatory basis to viable airlines in line with appropriate guidelines which would have to be agreed at European level.

Members on all sides of the House are concerned at the potential negative consequences for employment in Aer Lingus. The Minister will make every effort to secure a viable future for the airline so that it can play a significant role in aviation. However, let there be no doubt that this future can only be secured through a major restructuring of the airline. Uncertainty and vola[774] tility in the current business environment demands radical and rapid change in the airline. The current crisis demands significant changes by management and staff and sacrifices by staff. It will mean that staff will have to adapt and adjust themselves to changing market conditions. Change is painful, yet absolutely necessary to secure the future of Aer Lingus.

As the Minister already stated, one of the key aims will be the protection of the maximum number of sustainable jobs in the airline. I reassure all the stakeholders that the Minister will work with all parties to achieve that objective. However, the time for tackling Aer Lingus's difficulties is limited because of the grave cash position of the airline. If decisive action is not taken quickly, it is inevitable that more unpalatable measures will be forced on the airline sooner rather than later. The current crisis in Aer Lingus is not a short-term problem and short-term solutions will not resolve the current difficulties of the airline.

Securing the future of Aer Lingus is the Minister's aim and that of the Government. She will work ceaselessly with all the stakeholders to achieve that objective. Difficult times are ahead for the airline and staff but I have no doubt that with goodwill, flexibility and a commitment to succeed, Aer Lingus can have a viable future.

Mr. Stanton: I wish to share my time with Deputies Ring and Jim Higgins.

We will live in exceptional times following the terrible events in the US and elsewhere. These events have led to major problems for Aer Lingus. Strong action is called for and the main reason we tabled the motion was to allow the House to support the Minister when she makes a case to the EU. I am disappointed the Government has seen fit to dilute the motion and is insistent on dividing the House. I call on the Minister of State to impress on his colleagues how positive it would be for the Government to support the motion. There is not much between us. We want the Minister to go to the EU to seek assistance for Aer Lingus so that the company can continue to trade. There is a great deal of uncertainty surrounding the company. However, it is certain that if the company does not receive assistance and support it will cease to trade.

I did not detect a fighting spirit in the Minister's contribution and the Minister of State's contribution was weak. I detect a code whereby the Government would possibly be satisfied if Aer Lingus closed. I am worried about that prospect. If the Minister wants the company to survive she should not divide the House. We should all support her in her battle in Europe and by dividing the House her position will not be as strong as it could be. The motion is positive and should be supported.

The Government's amendment mentions a number of issues but it does not refer to action and what the Government will do. The Minister does not propose State aid for airlines. She said [775] it might help if someone else proposes such aid. That is a weak position. We need to strengthen the Minister's hand when she attends the EU because the consequences of Aer Lingus closing would be absolutely horrendous. Ireland is an island nation and we would be totally dependent on other carriers if Aer Lingus shut down.

There already have been significant losses in the tourism sector which have compounded earlier losses following the foot and mouth disease crisis. I call on the Government to support the Opposition motion. Let us move forward with a united front. The US moved quickly to put a £5 billion package together. The EU most do likewise because the aviation industry cannot be allowed to collapse. I am afraid the Government has a hidden agenda and I fear it wants Aer Lingus to close. Unless action is taken, that will be the case. The Government has said if the industry is viable, aid might be provided but current figures demonstrate that the industry is not viable. It cannot become viable unless it receives aid. The hidden message emanating from the Government is that the company will not become viable and, therefore, it must shut down.

Perhaps this is a way of exacting some form of revenge on the company. The Minister has had a rough time over the past while dealing with Aer Lingus and perhaps it is a way for her to get her own back by closing the company and opening it again in a restructured form. That is not the way to go. Aer Lingus must be supported through State aid now. The Minister must seek such assistance from the EU and that call must be backed by the House later. By dividing the House, the Government is flying on one wing as it attempts to make a case to the EU and that is not good enough. Extended discount schemes, lower fares to the US and other measures have been taken but this should have happened some time ago. I hope it is not too late but the Government will stand indicted if Aer Lingus does not survive.

The Minister for Tourism, Sport and Recreation, Deputy McDaid, will be in the House for Question Time later. The tourism sector is in serious trouble but if Aer Lingus goes to the wall it will be wiped out.

Mrs. Owen: There will be no need for Deputy McDaid then.

Mr. Stanton: I call on the Government to do everything possible to help Aer Lingus to survive. The first step is to show a united front to the EU and the world this evening by not dividing on the motion. The Government wants to divide the House, not us. Government backbenchers have made similar contributions to ours and they should not troop in to support a division in the House later. A vital, national interest is at stake. Deputy Haughey said it would potentially be disastrous if the company closed and other Members have made similar comments. The Government [776] should not divide the House on this matter. We should go forward with a united front.

Mr. Ring: This is the second time recently that Private Members' time has been used to discuss Aer Lingus. I wish to be associated with the condemnation of the tragedy that took place in America, but I am sad that the Government and the Minister are using it as an excuse in relation to Aer Lingus. We should call a spade a spade. The company has been in trouble for a long time, but the Minister, Deputy O'Rourke, and the board of Aer Lingus have done nothing about it. They are using the events of a fortnight ago to deal with a serious problem that has been swept under the carpet for a long time.

The workers are the people who will suffer. They had to strike on many occasions over the past two years because of their bad pay. I would welcome an investigation into Aer Lingus to find out where all the money went. I suspect we would discover that much of it was used by the board, its members and executives to pay for big dinners and trips abroad. I doubt there is an airport anywhere in the world that they did not visit, but the taxpayers picked up the tab.

As previous speakers said, the Government must do something about this matter. The Minister will have to wake up because she has got away with many things in relation to public transport. She has washed her hands of every issue, including the traffic situation in Dublin and Aer Lingus, and tried to laugh them off. However, the laugh is over. This matter is serious for the workers, the country and the economy. The Government and the Minister must do something now about Aer Lingus and protect as many workers as possible. A plan must be put in place and funding must be provided. However, I hope it will not affect the funding of regional airports.

I have been appalled over the years by the way Aer Lingus treated the regional airports. However, it may now have to consider using them. It will have to work to sell its flights, something to which it is not used. It will have to do what Ryanair did. I am not a fan of Ryanair but at least it operated as a private company in terms of getting out and selling its seats. Americans will travel an extra 100 or 200 miles if they can save a few dollars. Aer Lingus must get out there and try to sell its seats. It must also promote the regional airports. People would feel safer if they could depart from Knock and fly into destinations in America. People would also feel safer departing from Shannon. They no longer feel safe in cities and there is a major job to be done in relation to tourism in Ireland.

The Minister and the Minister for Tourism, Sport and Recreation must wake up because this issue will have a huge effect on tourism interests throughout the State. Hotels have received many cancellations in the past few weeks and there will be knock-on effects. The Exchequer surplus has been affected already, which means the Government will not be in a position to buy the people [777] on 5 December. It will have to introduce a realistic budget. However, even if the recent events in America had not happened, we faced a serious situation with regard to Aer Lingus. Those events have just moved the problem to the fore and it must be dealt with now.

I was not impressed by the Minister's speech. If I was a worker in Aer Lingus, I would not see much hope or understand what the Government intended to do for me. Something must be done. It would be an outrage if the national carrier ceased operations. Aer Lingus has always been a part of Ireland. It was marketed as symbolising the country, but it could close in the next few months because of a shortage of money. The American Government responded to the difficulties there. America constantly complains about subsidisation in Europe, but the minute one of its sectors got into difficulties, it did not mind going to the exchequer and helping the airlines.

A similar situation has existed with regard to the agricultural sector for years. America put pressure on Europe to stop giving subsidies. However, when it found itself in a corner, it quickly put its hand into the kitty and looked after its own. I hope something can be done for Aer Lingus and that the Minister will respond.

Mr. Higgins (Mayo): I am sorry I was not in a position to contribute earlier, given that I helped draft the motion, but I was detained in another forum. I thank all those who contributed to the debate. The fact that so many people on all sides considered it imperative to contribute to the discussion speaks for itself. However, the moment of truth will be in five minutes in terms of how people vote.

As has been constantly repeated, Aer Lingus is not only an aviation company. It is the national carrier and for years it has carried the badge and emblem – the shamrock and the Tricolour – of Ireland around the world. The people have a special affinity and affection for Aer Lingus. It is one of the cornerstones of Ireland; it is part of what we are. It grew from a fledgling company into one with international status. It is synonymous with service, safety and success. The figures speak for themselves. It carries 6.5 million passengers each year and it made a £16 million group profit in 2000. Nevertheless, it has real difficulties.

International aviation, by its nature, is a cyclical business. The threat of war can have a drastic effect in terms of passenger numbers. The threat of recession has a similar effect. If there is a threat of currency fluctuations, Americans do not travel. Foot and mouth disease had a devastating effect on Aer Lingus figures from March, partly because of the mixed messages that were sent by [778] the Government and the failure to counteract the propaganda. There were misconceived ideas about what was happening in Ireland – one would imagine there was a human plague rather than an animal disease.

The company has not helped itself in terms of industrial relations problems. Over the past year, the airline and the airport were closed down because of strikes by cabin crew, ground handling staff, clerical staff, catering staff and pilots. The twin towers tragedy on 11 September has caused a major problem for Aer Lingus. However, as other speakers noted, the problems were on the horizon for a long time but were not addressed by the Minister.

I listened to the Minister and although she was long on verbiage, she was extremely sparse in terms of suggestions or solutions. In addition, the company since 11 September must be found guilty of failing to put in place a fight back strategy. The decision by the United States Government to salvage US airlines is extremely serious for Ireland. It is a change of policy on the part of the United States Federal Government that must be countered. If that does not happen, it will be disastrous for all EU airlines. We know what happened to Swissair and Sabena. Aer Lingus is already in a vulnerable state and it will be extremely serious for the airline. However, a chance exists. There is no excuse for the EU not ensuring that member states' governments are allowed to subsidise their own airlines. Who is calling the shots? Is the European Union a political federation or is it a bureaucracy? Ultimately, it is a federation of the member states and the politicians should call the shots. Meetings of the Council of Ministers must call the shots.

The Government amendment contains very little reassurance. It is long on verbiage but short on specifics. On the basis of the contributions by the Minister and the Minister of State, there is a sense of grim foreboding and helplessness. They are throwing up their hands and saying they cannot do anything. My colleagues are correct in believing that a decision has been made to allow Aer Lingus to go to the wall. I agree it must be restructured, but that must be done in a sensitive and ordered way. It must be viable and return to profit. That will happen if it is restructured and given time and capital.

Aer Lingus must be retained in State ownership for at least three to four years. The company must not be allowed to go under. The people are watching, waiting and listening and woe betide any Government or political party that allows Aer Lingus to go to the wall. It cannot happen.

Question put: “That the words proposed to be deleted stand.”

[779]

Ahern, Dermot.

Ahern, Michael.

Ahern, Noel.

Aylward, Liam.

Blaney, Harry.

Brady, Johnny.

Brady, Martin.

Brennan, Matt.

Brennan, Séamus.

Briscoe, Ben.

Browne, John (Wexford).Byrne, Hugh.

Collins, Michael.

Cooper-Flynn, Beverley.

Coughlan, Mary.

Cowen, Brian.

Cullen, Martin.

Daly, Brendan.

Davern, Noel.

Dempsey, Noel.

Dennehy, John.

Ellis, John.

Fahey, Frank.

Fleming, Seán.

Flood, Chris.

Fox, Mildred.

Gildea, Thomas.

Hanafin, Mary.

Haughey, Seán.

Healy-Rae, Jackie.

Jacob, Joe.

Keaveney, Cecilia.

Kelleher, Billy.

Kenneally, Brendan.

[780] Killeen, Tony.

Kirk, Séamus.

Kitt, Michael P.

Kitt, Tom.

Lenihan, Brian.

Lenihan, Conor.

McCreevy, Charlie.

McDaid, James.

McGennis, Marian.

McGuinness, John J.

Martin, Micheál.

Moloney, John.

Moynihan, Donal.

Moynihan, Michael.

Ó Cuív, Éamon.

O'Dea, Willie.

O'Donnell, Liz.

O'Flynn, Noel.

O'Hanlon, Rory.

O'Keeffe, Batt.

O'Keeffe, Ned.

O'Malley, Desmond.

O'Rourke, Mary.

Power, Seán.

Roche, Dick.

Ryan, Eoin.

Smith, Brendan.

Treacy, Noel.

Wade, Eddie.

Wallace, Dan.

Wallace, Mary.

Woods, Michael.

Wright, G. V.

Níl

Barnes, Monica.

Bell, Michael.

Belton, Louis J.

Boylan, Andrew.

Bradford, Paul.

Broughan, Thomas P.

Browne, John (Carlow-Kilkenny).Bruton, Richard.

Burke, Ulick.

Carey, Donal.

Clune, Deirdre.

Cosgrave, Michael.

Coveney, Simon.

Currie, Austin.

Deasy, Austin.

Deenihan, Jimmy.

Dukes, Alan.

Enright, Thomas.

Fitzgerald, Frances.

Flanagan, Charles.

Gilmore, Éamon.

Gormley, John.

Hayes, Brian.

Hayes, Tom.

Higgins, Jim.

Higgins, Joe.

Higgins, Michael.

Howlin, Brendan.

Kenny, Enda.

McCormack, Pádraic.

McDowell, Derek.

McGahon, Brendan.

McGinley, Dinny.

McGrath, Paul.

McManus, Liz.

Mitchell, Gay.

Mitchell, Olivia.

Noonan, Michael.

Ó Caoláin, Caoimhghín.

O'Shea, Brian.

O'Sullivan, Jan.

Owen, Nora.

Perry, John.

Quinn, Ruairí.

Rabbitte, Pat.

Ring, Michael.

Ryan, Seán.

Sheehan, Patrick.

Shortall, Róisín.

Stagg, Emmet.

Stanton, David.

Timmins, Billy.

Upton, Mary.

Tellers: Tá, Deputies S. Brennan and Power; Níl, Deputies Bradford and Stagg.

Question declared carried.

Amendment No. 1 put.

[781]

Ahern, Dermot.

Ahern, Michael.

Ahern, Noel.

Aylward, Liam.

Blaney, Harry.

Brady, Johnny.

Brennan, Matt.

Brennan, Séamus.

Briscoe, Ben.

Browne, John (Wexford).Byrne, Hugh.

Collins, Michael.

Cooper-Flynn, Beverley.

Coughlan, Mary.

Cowen, Brian.

Cullen, Martin.

Daly, Brendan.

Davern, Noel.

Dempsey, Noel.

Dennehy, John.

Ellis, John.

Fahey, Frank.

Fleming, Seán.

Flood, Chris.

Fox, Mildred.

Gildea, Thomas.

Hanafin, Mary.

Haughey, Seán.

Healy-Rae, Jackie.

Jacob, Joe.

Keaveney, Cecilia.

Kelleher, Billy.

Kenneally, Brendan.

[782] Killeen, Tony.

Kirk, Séamus.

Kitt, Michael P.

Kitt, Tom.

Lenihan, Brian.

Lenihan, Conor.

McCreevy, Charlie.

McDaid, James.

McGennis, Marian.

McGuinness, John J.

Martin, Micheál.

Moloney, John.

Moynihan, Donal.

Moynihan, Michael.

Ó Cuív, Éamon.

O'Dea, Willie.

O'Donnell, Liz.

O'Flynn, Noel.

O'Hanlon, Rory.

O'Keeffe, Batt.

O'Keeffe, Ned.

O'Rourke, Mary.

Power, Seán.

Roche, Dick.

Ryan, Eoin.

Smith, Brendan.

Treacy, Noel.

Wade, Eddie.

Wallace, Dan.

Wallace, Mary.

Woods, Michael.

Wright, G. V.

Níl

Barnes, Monica.

Bell, Michael.

Belton, Louis J.

Boylan, Andrew.

Bradford, Paul.

Broughan, Thomas P.

Browne, John (Carlow-Kilkenny).Bruton, Richard.

Burke, Ulick.

Carey, Donal.

Clune, Deirdre.

Cosgrave, Michael.

Coveney, Simon.

Currie, Austin.

Deenihan, Jimmy.

Dukes, Alan.

Enright, Thomas.

Fitzgerald, Frances.

Flanagan, Charles.

Gilmore, Éamon.

Gormley, John.

Gregory, Tony.

Hayes, Brian.

Hayes, Tom.

Higgins, Joe.

Higgins, Michael.

Kenny, Enda.

McCormack, Pádraic.

McDowell, Derek.

McGahon, Brendan.

McGinley, Dinny.

McGrath, Paul.

McManus, Liz.

Mitchell, Gay.

Mitchell, Olivia.

Noonan, Michael.

Ó Caoláin, Caoimhghín.

O'Shea, Brian.

Owen, Nora.

Perry, John.

Rabbitte, Pat.

Ring, Michael.

Ryan, Seán.

Sheehan, Patrick.

Shortall, Róisín.

Stagg, Emmet.

Stanton, David.

Timmins, Billy.

Upton, Mary.

Tellers: Tá, Deputies S. Brennan and Power; Níl, Deputies Bradford and Stagg.

Amendment declared carried.

Motion, as amended, put and declared carried.

[783]