Seanad Éireann - Volume 168 - 18 October, 2001

Aer Lingus: Statements.

  Minister for Public Enterprise (Mrs. O'Rourke): I thank the Leader and the Members of the House for the opportunity to be here today. Before I came back from Transport Council in Luxembourg, I phoned the Government Whips both here and in the Dáil to say that I wanted to go to both Houses. The Dáil had exactly one hour and I thought it would be reasonable to have the same in the Seanad. The matter will be ongoing for the next six to eight weeks and I am more than willing on any occasion to come to Seanad Éireann. As a former Member, I have affection for and trust in this House.

  I welcome the opportunity to report to the House on the current difficulties in Aer Lingus. As I said in the Dáil on 11 October, Aer Lingus is losing £2 million per day and without action, it will run out of cash early next year and it is forecasting significant losses in 2001 and 2002. To put it bluntly, if urgent action is not taken Aer Lingus will be insolvent within a short period of time.

  This morning the chairman met me to reinforce that message and to say that if the action proposed is not taken, it will result in the demise of Aer Lingus. I hope that the realism that has commenced will continue, because nobody wishes to see the demise of Aer Lingus. The Government is determined to keep Aer Lingus afloat and to retain the maximum number of sustainable jobs. It is also conscious that a company cannot continue to trade what is termed recklessly.

[428]   The horrendous events of 11 September have had a dramatic impact on the company with booking activity significantly down on last year on transatlantic, UK and European routes. Given the experts' view that there will be no recovery before the third quarter of 2002, this makes for gloomy prospects next year on all routes but particularly on the transatlantic ones.

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

  While losses in the region of £25 million to £30 million had been forecast by the company prior to the terrorist attacks, the company could have coped with the difficulties they were experiencing. It had already undertaken a review of operations and was about to put in place an integrated package of measures designed to yield savings from fleet reduction, operational efficiencies, reduced overheads, etc. However, following the terrorist attacks, the company advised the Department that the trading difficulties had developed into a crisis and that their previous forecast of £25 million to £30 million in losses for 2001 had now more than doubled.

  Aer Lingus immediately announced additional cutbacks to address the serious situation. Overall, the cutbacks will reduce the scale of the company's operations by 25%. In addition, the company has slashed fares on a number of routes in an effort to stimulate traffic. While those are very cheap – it is £169 to go to New York and Boston – no money is being made on those fares. The main purpose is to bring cash in hand to the company and it also hopes to reassure people about flying.

  In order to address this grave situation, Aer Lingus presented me with a survival plan last Monday. The plan, in summary, broadly confirms the key details already known in relation to the financial state of the company, including the cash crisis it will face in January. The plan sets out the various revised revenues and costs necessary to achieve viability and to take account of the company's reduced scale of operations. It also sets out the assumptions underpinning these figures and the job losses and flexibility changes required. It identifies the need for a loan guarantee in respect of a working capital facility. In addition, Aer Lingus stated that is does not have the cash resources to pay for a redundancy programme, including statutory redundancy and accordingly non-repayable funding is requested.

  I will be preparing a report for Cabinet next week in which I will be asking it to consider what form and extent of Government assistance would be appropriate both from the company's point of view and the view of seeking European Com[429] mission approval in due course for whatever form of assistance is to be provided. In addition to the requirement for approval by the European Commission, agreement within the airline for the survival plan is also critical. I cannot be more explicit than that. If the plan is not very rapidly taken on board, then the ultimate crisis faces the company.

  It would be lovely if I had soft words to say but I do not. There are no soft words to describe the situation which now exists. I am normally remarkably optimistic in the face of many challenges, but on this I am struck by the starkness of the crisis. If the plan is not adopted quickly, if not immediately, then it is the end of the road.

  Last Tuesday the Transport Council discussed the repercussions of the events of 11 September on aviation. Central to the discussions was a report by the Commission which included proposals for a limited package of horizontal measures to compensate for the events of 11 September. Those proposals are outlined in my script which I have circulated. The discussions ranged across the overall economic impact on airlines, including aviation security, insurance, air traffic control and competition issues.

  In preparation for the meeting, I had either face to face meetings or telephone conversations with a number of my EU ministerial colleagues, including those from Austria, France, Portugal, Italy and Greece. That is in addition to correspondence and a meeting with the Belgian President of the Transport Council. I also met Commissioner de Palacio on several occasions, most recently in a private meeting on Tuesday morning prior to the Council during which I was explicit about the position of Aer Lingus.

  I emphasised to the Council the exceptional nature and impact on Aer Lingus of the events of 11 September, which accounts for 70% of direct Ireland-US traffic. I highlighted that the transatlantic aviation market is proportionately more vital to our economy than it is to the economy of any other EU member state. I stated that direct transatlantic links are crucial in attracting US tourists and that it would be wrong to reward terrorism by allowing any EU airline to collapse because of the events of 11 September. I also warned against any agenda to hasten consolidation on the back of terrorism.

  In addition, I informed the Council that we do not advocate or seek a return to any regime of unco-ordinated or easy availability of state funding for European airlines and that we should not look at it as a normal state aid problem. I stressed that these are exceptional circumstances in aviation to which the European Commission should respond in an effective and measured way. I emphasised that we recognise the enormous strides which have been achieved under the liberalisation of the European aviation sector – more competition, new routes, greater variety and standards of service, different ownership profiles of [430] airlines etc. – all of which are in the consumers' overall interests. In concluding, I emphasised that the Commission proposals for compensating airlines as a result of the US terrorist attacks fell short of the measures deemed by Ireland to be necessary to address these difficulties.

  In relation to concerns expressed about possible distortions in competition, having regard to the assistance available to US airlines, which are in competition with European airlines, Commissioner de Palacio outlined that she had written to the US Secretary of Transport, Mr. Minetta, to convey the concerns of the European Commission on this issue. I should say, in support and approval of civil servants, it was somebody in my Department who accessed the information on the Internet, not just that Continental and Delta had received $0.5 billion in direct cash aid from the American Congress but also the amount of that aid they were using on the American routes. I presented that information to Commissioner de Palacio in the morning and she then wove it into her speech at the Council meeting. We talk about distortion of competition and what would happen if Ireland was given permission to help Aer Lingus, but it is nothing compared to the US aid to American airlines and how that is distorting the European market.

  Around the Council table, the majority of Ministers either backed the Commission's limited proposal or agreed that some aspects of it should be eased, but only in a horizontal manner available to all airlines. There was a significant amount of negotiating on the Council conclusions and a reference to the “exceptional circumstances” was included at my insistence. The relevant conclusions on the general economic situation facing airlines are set out in my script. I was glad to have the “exceptional circumstances” reference inserted and also the targeted aid which the Commission will examine on a case by case basis. Italy and Ireland combined on the wording of that proposal.

  The Taoiseach yesterday met the European Commission at which he spoke about the uniqueness of Aer Lingus's situation because of the transatlantic matter and its central role in Ireland's access transport policies. The Transport Commissioner assured him that within the framework of the state aid rules, the Commission would consider any proposal from Ireland. We face a daunting task in persuading the Commission and the Council to permit any form of direct financial assistance to Aer Lingus outside the horizontal measures I have mentioned.

  My officials are examining in detail every aspect of the Commission's guidelines for state aid and the Secretary General and the Assistant Secretary will travel to Brussels tomorrow to brief Commission officials on the general aviation situation appertaining to Ireland and on the Aer Lingus restructuring package. In addition, my [431] officials will meet Commissioner Byrne's Cabinet and other Irish officials from the Permanent Representation of Ireland to the EU.

  I assure the House that we will use every avenue open to us to explore these possibilities, but time is of the essence as Aer Lingus is haemorrhaging cash daily. We must find urgent solutions to this critical situation and significant work must be undertaken over the coming week.

  I have had several meetings with the central representatives committee of Aer Lingus unions on the current crisis. These were on 24 September, 11 October and yesterday. At yesterday's meeting I advised them, as I mentioned earlier, that I will be asking the Cabinet next Tuesday to consider the form and extent of assistance from the Government for Aer Lingus that would be appropriate, both from Aer Lingus's point of view and the view of seeking European Commission approval for whatever form of assistance will be provided.

  I also met the chairman of Aer Lingus this morning and I had very sobering discussions with him. Let nobody be in any doubt, there is no hidden message in my words, or any sense of joy. The situation is dire and desperate. To go back to what I said at the outset, if we do not all get together in a spirit of partnership to seek to save 4,000 plus jobs, it is the end of the road for Aer Lingus.

  This afternoon, the board of Aer Lingus is meeting to discuss the survival plan. We are committed to the survival of Aer Lingus, and I should imagine that is an all-party view. The time has come for all parties urgently to work together in an effort to ensure that we will have a fundamentally restructured airline going forward into the future and to protect the maximum number of sustainable jobs.

  The emphasis should be on the transatlantic routes, which represent the biggest percentage of Aer Lingus's operations. Highlighting that fact enables us to emphasise the distortion created by the US Congress's direct aid to airlines which are already using this route. The next four, five or six days will be crucial in terms of the survival of Aer Lingus.

  An Cathaoirleach: I call Senator Taylor-Quinn. The Senator has 12 minutes.

  Mrs. O'Rourke: No, I believe it is 15 minutes.

  Mrs. Taylor-Quinn: As the Minister had 20, I presume—

  Mrs. O'Rourke: No, I had exactly 15 minutes.

  Mrs. Taylor-Quinn: I presume I have 15 minutes. I welcome the Minister to the House.

[432]   Mr. Ross: On a point of order, is it 15 or 12 minutes?

  An Cathaoirleach: The House agreed that each speaker would have 12 minutes.

  Mrs. Taylor-Quinn: I appreciate the Minister is extremely busy and is currently under a great deal of pressure. I do not propose to go into detail on the negligence of the Government and how it has dealt with the situation of Aer Lingus over the past two to three years. That has been well documented in the Lower House and I do not intend to repeat it now because time is of the essence.

  I am delighted the Minister has put on record that the situation of Aer Lingus is dire and desperate, and that time is of the essence. I am glad she recognises that the transatlantic element of the Aer Lingus operation is vital, although I note she did not go into detail on that in her contribution. In addressing the survival plan, I ask the Minister to make a specific proposal to the Commission on the transatlantic element of the Aer Lingus operation.

  There are three airlines currently operating the Atlantic route from Ireland – Delta, Continental and Aer Lingus. Both Delta and Continental are substantially subsidised by the American Government and because they are operating to transatlantic rather than European destinations, the Minister can make a strong case to the Commission in terms of providing specific assistance for that element.

  Mrs. O'Rourke: That is what I did.

  Mrs. Taylor-Quinn: It is vitally important that that case is strongly put. A company already exists in the form of Aer Rianta and this money could be channelled through Aer Rianta specifically for the transatlantic route. The Minister has said that despite being the second smallest EU member state, Ireland is the seventh largest in terms of air traffic between the USA and Europe. Given our population, that means an extraordinarily high number of passengers travel between both countries.

  It is vital that the survival plan is addressed seriously and that in the restructuring process the best people are not obliged to leave the company. The criteria to be used suggest that those in last will be first out. The new people on the bottom of the top layer are often the best but they would be compelled to leave the airline if these criteria were adopted. That would not be to the long-term advantage of the airline. This issue must be considered in a prudent and cautious manner.

  Yesterday a number of people in the airline were told without consultation with their union that they would have to leave. That is unacceptable at a time when the Government speaks about the spirit of partnership. As the owner of the company it should be seen to be the [433] main standard bearer of partnership and it should insist on a consultative process, ensuring that the company first consults with the unions.

  The workforce faces a serious crisis. It is extraordinary that the Minister was only presented with the survival plan late on Monday night.

  Mrs. O'Rourke: Monday morning, before I travelled to Brussels.

  Mrs. Taylor-Quinn: The Minister had to travel to Brussels with the survival plan without the opportunity for her Department or the Government to examine the proposals. There is a need to consider the plan in a broader context. Aer Lingus is a company with specific problems and proposals have been made to deal with them. Some of these would have dire consequences for Shannon Airport. It is proposed to reduce the number of Aer Lingus movements through the airport by 68 per week, or 34 return flights. These include five return flights to Newark, five return flights to Baltimore, 16 return flights to Dublin, five return flights to Belfast, two return flights to Paris and one return flight to Chicago. A number of these routes have proven to be economically successful. They are not loss making. The Minister should ascertain the specific details from the company.

  Arguments have been made on the number of Aer Lingus bookings. According to figures before me the company has extensive bookings for November. I would appreciate if the Minister would listen rather than talking to her colleagues on the other side of the House.

  Mrs. O'Rourke: On a point of interest, I asked which of my two colleagues was to speak next. There is no point in the Senator trying to ridicule the proceedings. This matter is far too serious.

  Mrs. Taylor-Quinn: I am aware of that.

  Mrs. O'Rourke: The Senator should stop shouting.

  Mrs. Taylor-Quinn: I hope the Minister will treat the issue with the seriousness it deserves.

  Mrs. O'Rourke: I hope the Senator will also.

  Mrs. Taylor-Quinn: The figures before me detailing the numbers booked on Aer Lingus flights for November do not justify some of the propaganda given to the media by the company's management. The Minister should ascertain from management specific details on these bookings, especially with regard to the flights I detailed.

  The tragedy on 11 September is being widely claimed as the main cause of the crisis. The reality is that there already was a major crisis at Aer Lingus. The tragedy only accelerated it. Action should have been taken sooner.

[434]   Has the possibility of part-time and short-time work been explored? I have not heard any discussions on that aspect. The Minister has indicated that she hopes to secure the Government's approval for a guaranteed loan for the company next week. It is vital that she secures a loan or an equity injection of some kind. These issues must be urgently addressed.

  The Government has lost sight of the broader issue. The survival of Aer Lingus is far more critical for the economy and the country than for the airline itself. Given that we are an island nation, there could be a drastic fallout for the business, tourism and commercial sectors. For example, 168 companies export through Shannon Airport. They are located along the west coast, from counties Sligo, through Mayo, Galway, Tipperary, Clare, Limerick, Kerry and on to counties Cork and Waterford. If airlines are not providing flights which contain both cargo and passenger elements, a critical crisis will arise for the economy in terms of industrial and technological production.

  The crisis will also have a huge effect on the development of the regions. The Minister's colleague, the Minister for the Environment and Local Government, Deputy Dempsey, recently referred to the importance of developing a spatial strategy and the need to identify and develop regional areas. It is crucial to this strategy that Aer Lingus be viable and in a position to provide extensive services in terms of flight.

  Other Senators will make specific points in regard to the Shannon region. However, Aer Lingus is of crucial importance to the overall economy. There is no point in directing all airline traffic to Dublin, which faces critical congestion and traffic problems. There is a fine airport at Shannon which the Minister has visited on numerous occasions. It will be badly under utilised if it cannot generate more flights. I appeal to the Minister not to lose sight of this aspect.

  I understand why the management of Aer Lingus would approach the Minister with a specific agenda for saving the company. However, she and the Government are obliged to consider the matter in a far broader context. They must consider the overall impact on the national economy in terms of tourism, industry, imports and exports. There is also a need to consider the long-term attractiveness of regional locations in terms of industrial and technological development. That is vital.

  Ireland is the only island member state of the EU. While we have always tried to point this out, we appear only to get a deaf ear. However, given that we must travel by air or sea to reach other member states, we can make a special case.

  Aer Lingus has a record of producing a high quality product and delivering a first-class service. This is recognised throughout the world. The staff of the company are exceptionally well trained. [435] Only a few years ago the company was making very substantial profits and it is possible to do that again.

  We must look on this issue positively. Applying a hatchet to the current crisis could have serious national economic consequences. I ask the Minister to look at the broader implications of refining Aer Lingus at this stage, particularly in relation to Shannon Airport. The reduction in flights is disproportionately high there. Thankfully, Cork Airport has not been affected and Dublin Airport has suffered to a much lesser extent. It is very easy for Aer Lingus to make its proposals. The Minister and the Government have a responsibility to look at the broader dimensions and to recognise the fundamental importance of Aer Lingus to Shannon Airport and to development from Donegal to Waterford.

  Mr. L. Fitzgerald: I welcome the Minister and commend her for the efficient and businesslike manner in which she has taken the package presented to her to Government and the EU so quickly. That manner of doing things is her hallmark. Contrary to what my esteemed colleague on the Opposition side has said, I refute completely the notion that the Minister should sit on the management rescue package, that she should bring it to Cabinet, bring it to the attention of consultants and examine it in minute detail.

  Mrs. Taylor-Quinn: On a point of order, I did not mention consultants. Common sense and intelligence should work and I hope they exist at Cabinet.

  Mr. L. Fitzgerald: The implication clearly is that time should be taken out to look at the rescue package. I must respectfully suggest that on the basis of the information available to me through the Minister, her Department and sources in Aer Lingus it would be a case of Nero fiddling while Rome burned.

  Mrs. Taylor-Quinn: I did not remotely suggest that.

  Mr. L. Fitzgerald: That is not the essence of the Minister's—

  Mrs. Taylor-Quinn: That is misrepresenting me. I am surprised at Senator Fitzgerald.

  An Cathaoirleach: The Senator must be allowed to make his contribution without interruption.

  Mr. L. Fitzgerald: I do not want to be seen as facetious or jesting in anything I say or do, but I had to make that response to what I considered a strange statement from my esteemed colleague. I am still using the word “esteemed”, mark you.

[436]   There is no doubt that the horrific events of 11 September in the USA have created disaster and chaos. They have wreaked havoc throughout the aviation industry. Irrespective of what we say about what was already happening here and in other countries in relation to national airlines, that is the nub of the matter. There were domestic problems with aviation in the months preceding those events. There had been a litany of airline closures. Aer Lingus was not the only one in trouble. Airlines across Europe and in the United States are in trouble. Airlines have collapsed and at least one and perhaps two have been temporarily rescued. That is being debated at the moment and seems to be getting a reasonably favourable hearing in the EU. In the USA thousands of jobs have been shed by major airlines with far greater traffic than their European counterparts. We have to accept that whatever difficulties there were have been rapidly accelerated to crisis and to what the Minister rightly referred to as a very stark state of affairs.

  The taboo on national airlines going bust was broken twice in two days at the beginning of the month. It has been no respecter of aristocrats. Swissair was usually referred to as one of the aristocrats of the sky, but it collapsed followed immediately by Sabena. Within three days we had the case of KLM. The American air travel market, which is much bigger than Europe's, is dominated by just a handful of carriers and that is very relevant globally. As the Minister has so rightly and repeatedly said, it is also relevant to the future growth of tourism and of our economy generally. Airlines have the facility to enhance growth and the export trade.

  Airlines in the USA include United Airlines, AMR, which is at the cheaper end of the market, American West, Delta, Continental and Northwest. That is it. They are the main players and the others are quite small as I understand it, though I am not familiar with them. American Airlines and United Airlines have cut 20,000 jobs each and Continental has cut 12,000. In Europe British Airways, Virgin, SAS and Alitalia are laying off staff. Sabena has secured a temporary reprieve and that is currently being discussed at EU level. In the USA a monumental decision has been made by President Bush. He has provided $5 billion in direct aid and a secure loan of $10 billion. That, as has been rightly stressed, has huge implications for the aviation industry globally and for the EU.

  This is a nightmare scenario. Never has Aer Lingus been as vulnerable as in the past few weeks. This is extremely serious and the airline faces imminent closure. It may totally collapse within a few months because cash is running out. The Minister has referred to that on each occasion she has spoken in the Dáil and when she has spoken publicly. She has reminded us of that stark reality. It is the starkest reality of all that [437] affects us. Problems were occurring for a year before 11 September. If we look back further than that we see some very healthy returns from Aer Lingus.

  Mrs. Taylor-Quinn: The greater percentage of those were from cargo shipments going through Shannon.

  Mr. L. Fitzgerald: Last year saw a global economic downturn and problems in the USA which impacted in terms of cost. There was an outbreak of foot and mouth disease in Britain, which strongly affected our tourism industry. Americans decided not to take to the skies and simply would not come to Ireland. The aggregate of these problems was having an effect and there is no doubt about that. The Minister readily faced up to that and in a series of reviews before and during the summer, management prepared restructuring and refocusing plans for her. Over that period she had a number of meetings with the company's management so it was not as if the Minister was remiss in her duties as a member of the Government and in her responsibilities to the national carrier as a semi-State commercial company. The case was the contrary and the evidence is there to show it.

  The Minister told us this evening – as she told the Dáil yesterday – that she has been to Europe. She has presented a viability plan that was presented to her by the management. That plan has serious financial implications, but I am not going to ask the Minister to spell them out to us now. They have to be presented to the Cabinet and the Cabinet has to endorse them. She will then go back and hammer them out in greater detail with the utmost vigour, as she has done with her EU partners. There will be a few friendly voices around that table when she gets to that stage. There is no doubt in my mind as to her ability to present the national case, as Senator Taylor-Quinn has so appropriately referred to it.

  I can easily refer to the north Dublin case and to the thousands of jobs that will be lost directly if Aer Lingus collapses. I have the right to fight to save those jobs through the good offices of the Minister and I make no apologies to Senator Taylor-Quinn. I will continue to fight to the very end as I have a duty as public representative. I have a duty to ensure that the tremendous growth that has taken place across the north city and county of Dublin is maintained. It has been facilitated and enhanced significantly by our airline.

  Mrs. Taylor-Quinn: Do not do it at the expense of Shannon.

  Mr. L. Fitzgerald: I will do it unapologetically and with full vigour. I have a tremendous empathy for Shannon, having been reared and nurtured in its catchment area. I know all about it and do not need lectures or encouragement to fly [438] the flag for Shannon also. I do not imply that I have received lectures. Much of the difficulty referred to by the Minister relates to the transatlantic routes, which have a direct bearing on Shannon.

  One of the difficult issues the Minister faces is that of competition. Any State investment in the airline cannot be seen under EU rules of competition to distort competition. There is one great problem with the argument, apart from our being an island nation on the periphery of Europe heavily dependent on a national airline to facilitate our economic growth and tourism. It is that the United States will soon have the power, by presenting a package to a few large airlines, with no due reference to competition and in the absence of any meaningful package for its European counterparts, to sink the market and create a few monopolies in the world.

  I have read some of the economic gurus – not headbangers – who take the matter seriously, but those who suggest flotation as a solution are bordering on that category. The gurus who suggest that it is nonsense to talk about the national interest when talking about airlines and industry and that competition and the free market should be allowed dictate matters are incorrect. What they are saying, in effect, is that privatisation should precede commercialisation. Economic science, for what it is worth – being a false science at the best of times – has come round to the view that commercialisation must precede privatisation. Whatever future intentions the Minister may have, which will be firmly in the national interest, she has a responsibility to ensure that Aer Lingus retains its commercial viability, a view that she is articulating very strongly both here and in Europe.

  There is an equal onus on her colleagues in Europe to ensure that there is a significant degree of competition in Europe in terms of the global airline industry. In the absence of such competition, we will end up with a few monopolies who will dictate the pace. God help a small island nation like Ireland in such circumstances because very scant regard will be paid to its economy, tourism and other vital interests.

  Mr. Ross: We can take it from this evening's debate and from what is to follow that Aer Lingus is no normal commercial company. One can see from the strength of feeling in the House and the geographical origins of the Senators that Aer Lingus is a political football and people have huge political interests in its future and that of the Irish airline industry. They tend to have certain regional viewpoints, perhaps because jobs or development in their areas are at stake or some other reasons.

  We have not really heard any broad vision concerning the future of the airline. What we have heard today is the cloak of a broad vision disguis[439] ing local interests. There are certain myths pertaining to the airline crisis that I, for one, do not accept. The atrocities on 11 September did not seal the fate of Aer Lingus. They simply accelerated that fate. What happened on 11 September, as everybody has said, was catastrophic in terms of the transatlantic services. Everybody acknowledges that the events of that day had an immediate and dramatic effect. As the Minister quite rightly said, the cashflow was appallingly affected. As Senator Liam Fitzgerald rightly said, the foot and mouth crisis, the slowing of the US economy and other factors took place beforehand. None of these factors was helping Aer Lingus and there was a downturn in the aviation industry world-wide before 11 September.

  What we do not acknowledge is that the lift in Aer Lingus's fortunes since the Cahill plan may well have been the aberration and that the fortunes of Aer Lingus had been in decline for a very long period before that. The Cahill plan was to address the crisis. Everybody here will remember, however uncomfortable it may be, that £175 million was pumped into the airline and it failed to solve the problem. We have had various crises since then. The real problems with Aer Lingus were not resolved.

  The problem – which was to be resolved if Aer Lingus was privatised because it would not be in State hands – was that it was highly politicised and remained so, whoever was in Government. It was regularly subsidised and is about to be subsidised again. It was dominated by its trade unions. Trade union practices in Aer Lingus were totally unacceptable. The airline was vastly overmanned and still is.

  If the events of 11 September had not happened, those problems would still exist and Aer Lingus would be heading slowly towards a crisis of this sort, not in the immediate way that it has done so. That is the first myth. The Minister has dealt with this crisis extremely well and realistically. Although I would criticise the Minister for having been too soft on the unions in the past, she has taken a very realistic line, one that is politically difficult for her. I congratulate her in that regard. It is not easy when in Government to take a line that involves any redundancies at all. It would be easier to take a much softer line.

  The easiest political line would be to ask Europe for the money, and, if it is not allowed, pay it anyway, give people what they want to take the Government over the general election and get the votes. That would be the popular political line – to defy Europe for local reasons. That is an election winner but the Government has not taken that line. It would keep the unions and workforce happy and retain the jobs, but it would be the wrong decision.

  What I do not understand is not the Minister's position – with which I am not fully happy [440] because I am not in Government and it is easy for me to say what should happen – but that of the Opposition. The Opposition has no position whatsoever, as far as I can see.

  Mrs. Taylor-Quinn: The Senator was not listening.

  Mr. Ross: Let me say why.

  Mrs. Taylor-Quinn: The Senator was not listening.

  Mr. Ross: This is what is so important.

  An Cathaoirleach: Senator Ross, without interruption.

  Mrs. Taylor-Quinn: The monopoly of wisdom rests with Senator Ross.

  An Cathaoirleach: Senator Ross, without interruption.

  Mr. Ross: Let me continue. It may well be that Senator Costello will come forward with a beacon of light that will save Aer Lingus, but if he does not do so, maybe he should not attempt to interrupt me. I do know what Senator Taylor-Quinn said and I would be absolutely terrified if she were in the position of the Minister, Deputy O'Rourke. At least the Minister has some broad vision for the airline industry and she is employing a strategy, with which she will rightly or wrongly resolve this problem – for the moment, at least. As far as I can see, Senator Taylor-Quinn only wanted to save Shannon.

  Mrs. Taylor-Quinn: Senator Ross is deliberately misinterpreting me.

  An Cathaoirleach: The Senator has had her opportunity to make her contribution.

  Mrs. Taylor-Quinn: Senator Ross believes he has a monopoly of wisdom in this House and that his commentaries are so prudent and wise.

  An Cathaoirleach: Senator Taylor-Quinn must resume her seat. Senator Ross must be allowed make his contribution without interruption—

  Mrs. Taylor-Quinn: He has not a clue about the basic economics of this country.

  An Cathaoirleach: I ask Senator Taylor-Quinn to resume her seat.

  Mr. Ross: She has undoubtedly taken it upon herself to save Shannon, but anybody who is honest about Shannon knows perfectly well that it is a competitive anomaly. I understand the views of those who attach importance to Shannon, but the Shannon stopover will die and that will be the [441] end of it. I understand why it is Fine Gael policy to stand up—

  Mrs. Taylor-Quinn: This is not an issue pertaining solely to the stopover.

  Mr. Ross: I understand why it is Fine Gael policy to stand up for this anomaly, but the issue is more serious than politics, and the Minister at least realises that. This is more serious than local politics. The Fine Gael motion on the Order Paper exposes the party as being so empty of vision that it is not worthy to take this type of Ministry. It calls for financial assistance, for which it is easy to call in Opposition. Senator Taylor-Quinn called for an equity injection. There is nothing specific about what the Fine Gael Party is saying. Let it be spelled out. Let us hear the plan. Do the party's members want to save the jobs? Do they want Aer Lingus to save 4,000 or 6,000 jobs? Are they prepared to make cuts or say, as the Minister said, that we do not like it but we must recognise the seriousness of the situation and do something about it, however unpalatable? It is no good screaming in this House about Shannon Airport and the Shannon stopover. That is not a policy for the nation or the airline.

  Mrs. Taylor-Quinn: The Senator has a modest vision of what is required for the country.

  Mr. Ross: I wish to address the issue of Ireland being an island economy. This is a myth peddled regularly by all parties because it is convenient. They say that they are committed to the future of Aer Lingus. They do not say why but they know it appeals to people's emotions and they fly the shamrock and wrap the green flag around themselves. They justify the need for a national airline by saying we are an island economy, as if we would all be marooned and would not be able to get out were the national airline to disappear. We would be surrounded by the sea and that would be the end of it. That is nonsense and they know it. Any other airline in the world would be prepared to fly in and out of Ireland on commercial grounds provided it made sense. To suggest we have a vital interest in a national airline is like suggesting we have an interest in an airports authority. We desperately need the competition for the sake of the consumer.

  Other suggestions were peddled recently, not in this House but regularly on the radio, that people were prepared to pay more money to support Aer Lingus. I understand my colleague and friend, Senator Norris, said he was prepared to pay more money to support Aer Lingus rather than fly with other airlines because he had a sentimental attachment to it. Is anyone else in the [442] House in this position? If so, perhaps they would put up their hands.

  Mrs. Taylor-Quinn: Definitely not the Senator.

  Mr. Ross: There is not a single one. I challenged them to do so and none of them put up their hands.

  Mr. Costello: SIPTU.

  Mr. Ross: The only people who have claimed to do it are members of SIPTU. However, they were not paying double for their fares.

  Mr. Mooney: In that case everyone would fly Ryanair.

  Mr. Ross: I am trying to prove a point, which I believe I have done. Senator Costello may be the only one who can afford to pay extra for the fare.

  Mr. Costello: I do not have three salaries.

  Mr. Ross: We do not have any strategic interest in supporting Aer Lingus and that is a fact. I gather that one of the ways around the EU refusal to allow us subsidise or give guaranteed loans to Aer Lingus is for it to declare insolvency.

  Mrs. O'Rourke: That is what Sabena did.

  Mr. Ross: I gather Aer Lingus is not insolvent at this stage, despite the warnings given by the chairman about reckless trading.

  Mrs. O'Rourke: Not just yet.

  Mr. Ross: Would it not be more sensible, honest and straightforward to go that route and declare insolvency when it occurs and invest money if we want to at that stage? A plan such as this deserves serious analysis and examination. The Government will subsidise Aer Lingus again. The following would be a better plan and would be taking an honest, if flawed, position. If the Government maintains that it is investing on commercial grounds, which it apparently is doing, why would some outside, independent merchant bank or international investors not examine the same plan, conclude that it is a good one and be prepared to invest in it? Why does the Government not put it out to tender to see if anyone else will do it rather than the Government?

  Mr. Glennon: Approximately 15 months ago I made my maiden speech in the House in the presence of the Minister on the privatisation of Aer Lingus. Little did we anticipate on that day that, in such a short period, we would be involved in the current debate. If I remember correctly, the major issues facing us at the time were the extent of employee participation in the sale of the company and adequate and improved compensation [443] for retired staff. We spoke at length about the success story of Aer Lingus, the role of Seán Lemass and the place of Aer Lingus in the national psyche. Similar to Senator Taylor-Quinn and the people of Clare, Aer Lingus occupies a place in the hearts and minds of the people of north County Dublin.

  Speaking as a native of that area whose family has been rooted there for generations, it is fair to say the entire area is in a state of profound and deep shock at the state of affairs in which we find ourselves. What is especially difficult to deal with is the strength and regard with which we always considered Aer Lingus an absolute bedrock not only of our local economy, similar to the relationship the airline has with County Clare, but also as a bedrock of the national economy. Dublin Airport is one of the largest employers in the country, if not the largest. When the core business involved at that airport or any airport is in the trouble in which Aer Lingus is, the signs and indicators for the subsidiary industries in the area cannot be healthy.

  I welcome the Minister to the House and thank her and her officials for the manner in which they have dealt with a sensitive issue. We, as public representatives, have been kept informed by her and her staff in what is a sensitive time for all. I wish her well in the coming weeks and months in the pursuit of a successful conclusion to our current difficulties.

  Our colleagues in Opposition and their colleagues in the other House are to be commended for the largely constructive and realistic nature of their participation in the debate so far. It is an issue which supersedes politics.

  Mr. Ross: The Senator must be joking.

  Mr. Glennon: It is an issue which has profound difficulties for the people living in the area, regardless of the views of commentators who may be more detached from the situation than the rest of us. The debate has been conducted and dealt with in a realistic and constructive manner, by and large.

  On commending the two main Opposition parties for their attitude, questions must be asked of those opponents of all things, but especially the manner in which the debate is being dealt with, namely, the Green Party and the Socialist Party. Unfortunately, their time honoured tradition of the facile politics of opposition has been continued into this debate. I call on them to reconsider their position and to make a more realistic and constructive input to this debate.

  The point that comes across loud and clear from the Minister, the Taoiseach and others is that Aer Lingus must be a viable, commercial entity. It is difficult for us to face the loss of such a huge number of jobs but the reality is that if the cur[444] rent difficulties are not grappled with successfully there will be further disasters down the line. We must leave aside sentimentality and the desire to see the shamrock fly all over the world and to see our national airline as a viable entity for the sake of our pride. The reality is that the potential is there for a viable business. That is the crux of the issue and it should be protected at all costs even if it entails more lay-offs and redundancies. We must protect that potential by coming up with a viable alternative commercial plan. The Government has already committed its support subject to the delivery of the plan. The degree of realism prevalent throughout this debate leaves me in no doubt but that the plan will be produced and a successful conclusion will be delivered.

  Most of us have personal difficulties with Europe's intrusion in these current difficulties and on a broader basis. We enlisted in Europe back in 1973 and now we must march with it. Our role now is to influence, as far as we can, the direction of that march. In 1984 we failed miserably with Irish Shipping. When I was growing up in north County Dublin Irish Shipping was one of the major employers. It was not on the scale of Aer Lingus at present but it was a major player at the time. We must ensure there is no recurrence of the Irish Shipping debacle.

  The five major cargo carriers in this country are foreign owned. I accept what Senator Ross said in relation to our island status. We are unique in Europe and we must push that aspect. Our uniqueness in the European context means we deserve different treatment on account of our island status. The world has moved on over the past 30 years and no doubt that status will be recognised. I thank the Minister for the manner in which she has dealt with this sensitive issue and wish her well for the future.

  Mr. Costello: I know the Minister is in a rush.

  Mrs. O'Rourke: No, I am not. I have been here since 4.55 p.m. and I had arranged with the Leader to be here for an hour.

  Mr. Costello: We understood the debate was to take place from 5 p.m. to 8 p.m.

  Mrs. O'Rourke: I am sorry. The arrangement was made through my office to the Leader's secretary and it was for an hour. I would willingly have come for three hours but I then arranged other meetings about Aer Lingus, one at 7 p.m. and one at 8 p.m. There is nothing I can do about it now. I was acting according to what was said and there should be no misunderstanding about that.

  Mrs. Taylor-Quinn: We do not doubt the Minister.

  Mr. Costello: Certainly not. Senator Ross and I see the face of untrammelled capitalism – the marketplace in its most blunt form – from the good Senator. We have seen that also from Mr. [445] Michael O'Leary of Ryanair in his uncaring attitude to the people affected. Part of our function as legislators is to regulate the marketplace. Where it does not operate efficiently or for the benefit of the people we must ensure its regulation. There should be no such thing as an absolutely unregulated, untrammelled marketplace.

  The events of 11 September brought about the current crisis but of course the crisis had been there since the problem of the foot and mouth disease. That was being dealt with and Aer Lingus had taken steps to absorb the £25 million to £30 million involved. That indicates that the package put together in 1994, in operation for the past seven years, was effective. There were problems as there are always problems in an organisation the size of Aer Lingus or in any international operation. That is the nature of things, but Aer Lingus was functioning effectively.

  We should focus on the current crisis which has hit Aer Lingus harder than any other airline on this side of the Atlantic. Why? Whether Senator Ross likes it, we are an island nation with long historical traditional ties with the other side of the Atlantic. The Minister said that 70% of direct flights between Ireland and the United States are Aer Lingus flights and they constitute 60% of Aer Lingus profit. The connection is colossal. We are surely an exception to any of the other countries of the European Union and we have to argue on exceptional terms. It is ludicrous to say that the European Commission will only make a concession for the four days the United States airports were closed. That should be rejected. It is an insult. Nobody could accept that as a logical conclusion to the situation.

  That point must be driven home. I am sure the Minister has made the point but it must be made again and again. We cannot accept the European Union conclusion. There has been an agenda of consolidation in the European Union. It only wants a few airlines operating. I do not agree with the idea of consolidating into a few mammoth airlines and carriers. That puts an end to competition and creates monopolies. Despite my dislike of a lot of the activities of Ryanair it has shown the benefit of competition from a small airline.

  We have a strong case to make for concessions. They need not be great. The Government subsidy of £175 million provided in 1994 was an effective bail-out. I suffered then because I lost the whip on that occasion—

  Mrs. O'Rourke: Is that right?

  Mr. Costello: It is.

  Mrs. O'Rourke: Why? Was the Senator not in favour of it?

  Mr. Costello: I was in favour of a little more. I know what was going on at the time and the effort and hard graft that went into saving the airline then. Exactly the same things were said that Senator Ross says now. It was said it had no [446] future, that we must get rid of it and that we should let the private sector reign unregulated and untrammelled. However, there is much that can be done and that we must do. There will be changes in the restructuring but the national airline can be retained at the same size, although we must get guarantees on insurance from the European Union.

  We must also examine the survival plan. I am unhappy that, while management and the Minister know about it, the unions and workers do not. I would like to read it. The Minister referred to parts of it in her speech. All we know is that it entails job losses because of an accounting projection on performance. What period of time is taken into account? There could be an upturn soon, depending on the response.

  The Minister ought to take a broader view. Lufthansa is proposing a four day week for its workers. Some American airlines are using some of the £15 million to top up pensions so that workers may retire at 55 years on 80% pension for five years. They are using it as a direct subsidy. There are many steps that could be considered, but no one knows what is in the survival plan other than job cuts. We should be discussing that plan. It seems to have changed because originally 2,500 jobs were to go but now it is 2,100. What accounting exercise took place in the interim?

  The letter sent out to about 100 workers, employed on a probationary period for six months, telling them that anyone employed under two years could be dismissed with one week's notice was disgraceful. There was no consultation with the unions or the workers' representatives. Some knew it before they came to work while others did not because the post did not arrive in time.

  There is a case to be made with the European Union on exceptional grounds regarding Aer Lingus. Much more must be done in industrial relations. Any survival plan should be rescinded until all the component parts contribute to it. We are involved in a deal now with the social partners, but is it imaginable that the survival plan to save the livestock industry during the foot and mouth disease crisis would have been drawn up without consulting the farmers? Yet the staff of the airline are not consulted about their survival plan, which is very serious. It is a unilateral decision which goes against any form of partnership and will cause untold damage to industrial relations practices.

  I disagree with Senator Ross's position. He is talking through his hat. Perhaps he represents the interests of certain entrepreneurs—

  Mrs. Taylor-Quinn: Michael O'Leary.

  Mr. Costello: —but he is an entrepreneur himself in that respect. He attacked Aer Lingus without giving an analysis of how it survived so well after the first survival plan was put in place and the difficulties it overcame and continues to [447] overcome. We ought to look at that positive side and at the human side, bearing in mind that these people's lives and families are involved. A package can be put together to repeat what was done in 1994. Then there was a similar crisis which everyone said was terminal. However, it was dealt with successfully.

  Mrs. O'Rourke: I repeat that I took the initiative in coming here. I telephoned on Tuesday from Luxembourg to say that I wished to be here today. I was not dragged in here. I thank Senators Taylor-Quinn, Liam Fitzgerald, Ross, Glennon and Costello, as well as those who wished to contribute but were unable to do so. I thank also the leaders of the House and the Opposition for the opportunity to be here.

  I want to respond to some points. The Cahill plan was difficult for staff, but this crisis is six times greater. No one will ever forget the planes going into the twin towers and American minds are indelibly marked by that. It has brought a huge sea change to which is added the uncertainty brought about by the anthrax attacks and the war in Afghanistan – President Bush stated that he does not know how long that will last. This all makes for a greater catastrophe.

  I understand Senator Taylor-Quinn's loyalty because we all feel like that about our own areas, as was evidenced by what Senators on the other side of the House said about Shannon and elsewhere. I have an obligation to serve the country and, under my seal of office, not to allow Aer Lingus to fall through my inaction. When given the seal of office one is aware that there is a greater obligation than a local one.

  Senator Ross is correct in saying that it was when Sabena declared insolvency that it qualified for bridging finance. I do not want Aer Lingus to go that far. I tell other Senators, particularly Senator Costello, that last Sunday I phoned Aer Lingus requesting that the two unions' financial advisers be fully briefed. I confirmed on Monday morning that there were five sessions with the unions' advisers in which they were fully informed of the contents of the plan. Whether they told the unions is another matter.

  Mr. Costello: I spoke to the unions yesterday and they did not know.

  Mrs. O'Rourke: I refer to the financial advisers. I know the dates and times when they were consulted. We ought not to say things inadvertently which are not true. I know that the Senator did not do so deliberately. Job losses are undoubtedly sad and I regret any job loss. However, those who received the letter were employed for less than six months and were not permanent employees.

  The Taoiseach, the Tánaiste, the Minister for Finance and I received the plan on Monday. It was shown to the financial advisers and the board is getting it now. It will make it public as it is its plan and it is its responsibility to do so. There [448] are other matters I want to discuss and with the permission of the House and the Opposition, perhaps I would have an opportunity, say next week, to come to the House again to debate the issue. I cannot emphasise enough how serious is the situation. Asking for a list of special concessions cannot be entertained. The matter is too serious for that.

  I feel an obligation to fulfil the duties given to me and which I am honoured to undertake. I will give a clear picture of the situation. It is not an easy role and I thank Senators who recognise that. My nature is one that instinctively wants to keep jobs, and as Senator Ross identified, I am a person who likes to be au courant with the wishes of trade unions. However, that is just not possible in this case. My job is to save as many jobs as possible in Aer Lingus and to ensure that it remains a viable company, and one that can grow again.

  I recognise the huge input of the workers into the company, and that of the various chairmen. I pay tribute to the last chairman, who has passed away. He was always very dutiful in carrying out his remit. I pay tribute also to the new chairman, Tom Mulcahy. He has said to me, “if I knew then what I know now. . . ” and I can understand that comment in the light of recent events. He is fulfilling his duties very clearly as are all who work in Aer Lingus. I look forward to the time when that company can get over its difficulties and can grow again.

  An Cathaoirleach: When it is proposed to sit again?

  Mr. Cassidy: Wednesday next at 2.30 p.m.