Dáil Éireann - Volume 685 - 18 June, 2009

Written Answers. - Air Services.

Deputy Kieran O’Donnell asked the Minister for Transport his definition of a strategic interest in the context of the State’s 25% shareholding in Aer Lingus; if he has directed his nominees on the Aer Lingus board to regard the routes out of Shannon Airport as a strategic interest; and if he will make a statement on the matter. [24209/09]

[361]   Deputy Noel Dempsey: The State retained a 25% ownership in Aer Lingus to protect strategic interests. The primary concern in this context was to provide a basis to oppose a takeover of the company that may not have been in Ireland’s strategic interests. The value of the State’s stake in this context has already been demonstrated. As a 25% shareholder, the Government has no role in the day-to-day management of the company.

In addition to providing a basis to oppose takeovers, a stake of over 25% also allows a shareholder to block special resolutions. One notable example of where such a resolution is required is for the purpose of making changes in the Memorandum and Articles of Association of the Company. This provides a protection for two specific interests of the State. It means that the relevant provisions of the Memorandum and Articles of Associations that (a) ensure that the State will have the right to appoint three directors and (b) provide for a safeguard against any disposal of Heathrow slots, cannot be changed without the approval of the State.

The duties of all directors on the Board of Aer Lingus derive from the Companies Acts and they are obliged to pursue the best interests of the company. Subject to that duty, the State-nominated directors on the Board were issued with a mandate on the date of their respective appointments requesting them to seek to ensure that all future decisions of the company that have significant implications for wider Government, aviation or regional development policies are considered at board level. In any such decisions they are directed to seek to reconcile commercial and public policy objectives.

On 11 June 2009 the Chairman of Aer Lingus briefed me on proposals for transatlantic services for the winter season 2009/10 and for the enhancement of the Shannon-Heathrow service. Following that meeting I immediately wrote to the three directors to remind them of their mandate and requested that they take account of this in the Board’s consideration of the proposals.