Aer Rianta Break-up

ZENER

Says it all really ! I sympathise with the staff of Shannon, they've been protected for so long that when the cord is cut they wont know what has happened ! I read with interest that local intrests in Shannon are delighted that the airport will be independantly able to bid for routes and new business ! Interesting when on the other hand airlines want to rid themselves of the obligation to stop there. You cant really say Shannon is a hub are a central location - it's miles from anywhere ! It would be great to see some new low cost carrier start up in Shannon but how could it possibly compete with the likes of Ryanair with it's easy access to Dublin.

I believe Dublin airport is well capable of surviving on it's own if it has to but this task will be made all the more difficult by loading the debt from the 2 smaller ports on it. I have my own theories on this one . . later maybe . .

ZENER

Victor

http://www.rte.ie/business/2004/0521/AerRianta.html

Aer Rianta meeting held to discuss PWC report
May 21, 2004 14:04

An emergency board meeting of Aer Rianta was held this morning to discuss the PricewaterhouseCoopers report commissioned by the department of Transport, on the three airpots and the proposed break-up of the firm.

It's believed the confidential PricewaaterhouseCoopers report says that passenger charges may immediately rise at Dublin Airport following Aer Rianta's break-up. The report says the current ceiling on passenger charges of €5.29 will need to be seriously examined. The report suggests a maximum Dublin ceiling of €7.50 may be necessary, with the possibility of a rise to €9.50.

The report is said to show that Dublin will have to bear debt from Shannon and Cork, the Great Southern Hotel chain will need to be sold and passenger charges will need to increase.

At the meeting the board agreed unanimously that as the PwC report will form a critical basis for the restructuring of the company, the directors should be provided with a copy of the report for their consideration.

Victor

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Airlines could face 50% rise in airport charges
From:ireland.com
Saturday, 22nd May, 2004

Airlines based at Dublin Airport could be facing a rise of 50 per cent or more in airport charges if the break-up of Aer Rianta goes ahead, a confidential report seen by The Irish Times reveals.

The current per-passenger charge of €5 will need to rise by at least €2.50 and possibly up to €4 because of the break-up, warns the report from PricewaterhouseCoopers (PWC). Increases in airport charges are normally passed on to passengers by airlines.

The report is likely to increase pressure from trade unions and the Opposition on the Minister for Transport, Mr Brennan, to modify or abandon his plans to break up the company.

It was commissioned by a working group which included Aer Rianta, the Department of Transport and company trade unions.

SIPTU, in a statement yesterday announcing that it was going back into pay talks as part of the national agreement, said it had received reassurances that workers' interests in relation to charges in the aviation sector would be honoured.

The Government had earlier committed itself to full consultation in restructuring Aer Rianta and SIPTU, the main unions in Aer Rianta, and indicated that recent talks with Mr Dermot McCarthy, secretary general in the Taoiseach's Department, had reaffirmed this.

However, it remains to be seen whether the unions will be satisfied with the level of consultation in advance of the publication of legislation on the break-up.

Sources believe the issue could still prove highly contentious, particularly if Mr Brennan pushes ahead with the publication of legislation before what the unions consider adequate consultation.

The report warns that Dublin Airport may need to sell off "ancillary assets" in future to meet its debts. This is because the debts of Cork and Shannon Airports would be transferred to Dublin.

The report states that breaking Aer Rianta into three separate airport authorities - Dublin, Cork and Shannon - will involve rebalancing funding between the airports, but it warns that this comes at a cost.

"Given the present financial position, it is estimated that increases in charges in the range of €2.50 per passenger to €4 per passenger, alongside further efficiency improvements, would be required to rebalance the funding ratios."

It says such increases would be needed for other purposes "to enable Dublin Airport authority to meet its capital expenditure requirements to fund capacity growth, service its debt levels and operate to a commercial mandate". The current airport charges at Dublin Airport are capped by the Commission for Aviation Regulation (CAR).

The report acknowledges that any changes would be subject to the determination of this body.

The report points out that Aer Rianta itself is already facing "financial strain" due to an ambitious expansion programme at Cork, proposals for a terminal known as Pier D at Dublin and high debt levels compared with income.

The report outlines six scenarios for the future of Shannon Airport. One of these, based on figures previously produced by the international ratings agency, Standards & Poor, is extremely pessimistic. It suggests Shannon Airport will have debts of €125 million by the end of 2008 which would be "clearly unsustainable".

The authors suggest a new low-cost model for Shannon where the airport takes advantage of a new "open skies" policy likely to be in place by 2007-2008.

But it warns that a start-up investment of at least €20 million will be needed to get the airport up and running as an independent entity and that another €10 million could be required to protect against "external shocks".

The Department of Transport declined to comment on the report. The board of Aer Rianta held a special meeting yesterday to consider it.

The company issues its annual results next week, and the Minister's plans are likely to be addressed by its chairman, Mr Noel Hanlon.

Victor

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Union chief warns Ahern over break-up of Aer Rianta
23/05/04 00:00
By Niamh Connolly

Jack O'Connor, the president of Siptu, has warned Taoiseach Bertie Ahern that advancing Aer Rianta's break-up at cabinet this week would "constitute a complete breach of the undertakings" given by the government.

The legislation enabling the break-up of Aer Rianta will go to cabinet on Tuesday in a massive push by the government in the remaining six weeks of Dáil sittings before the summer recess.

The fast-tracking of the legislation will place Seamus Brennan, the Minister for Transport, on a collision course with trade unions in the run-up to the local elections and the busy summer season at


Dublin, Shannon and Cork airports.

O'Connor wrote to Ahern this weekend, saying that he had noted that rumour is rife that legislation is about to be finalised and introduced in the Oireachtas imminently.

He warned that this would have a serious impact on Siptu's decision to re-enter the Sustaining Progress partnership talks.

O'Connor reminded the Taoiseach this weekend of his written promise last January that both sides could lay out their position before the government finalises the legislation.

Brennan wants to advance the break-up following the release of a consultants report on the viability of independent Dublin, Cork and Shannon airports to Aer Rianta directors last Friday.

The minister allowed a period of two weeks for union consultation when the report was issued to Farrell Grant Sparks, the auditor of the Irish Congress of Trade Unions (ICTU), three weeks ago.

Farrell Grant Sparks, a Dublin firm of accountants, has yet to report back on the report's implications for Aer Rianta employees. David Begg, the president of the ICTU, told The Sunday Business Post that he expected the auditors to report to the ICTU leadership this week.

Farrell Grant Sparks and Siptu's financial adviser, Mazars, signed a confidentiality agreement on the report's contents.

It was sought by the Department of Transport to protect Aer Rianta's commercial interests.

The report fails to take account of the impact of a second terminal on the finances of the new Dublin Airport Authority, according to sources.

Dublin Airport would lose one of its two anchor tenants, Aer Lingus or Ryanair, to a second terminal. This would mean a loss of up to 40 per cent of Dublin's tenants when charter airlines are taken into account.

The report, written by consultants PricewaterhouseCoopers (PwC), also anticipates hikes in passenger charges at both Dublin and Cork airports, which could add €4 million yearly to the cost base of Ryanair and Aer Lingus at Dublin.

It predicts price rises of between €2.50 and €4 for every passenger in Dublin Airport and of €2 in Cork.

In the case of Cork Airport, the report anticipates "significant increases in airport charges for 2003 and 2005, increasing by CPI [consumer price index] thereafter".

The PwC analysis is based on the assumption that the Shannon stopover will end by 2008 and on an US-EU open skies agreement.

Meanwhile, there is speculation that Aer Rianta worker director Peter Dunne could take legal proceedings against the company this week.

In a legal case, he could claim a breach of fiduciary duties, alleging that all the directors could be given sensitive commercial details on soon to-be competing companies at Wednesday's annual general meeting.

Dunne has previously threatened to injunct proceedings on the grounds that the directors of Aer Rianta, including the new chairpersons of Cork and Shannon airports, are now interested parties in the demerger proposals.

Victor

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Anger over Shannon Airport debt
16/05/04 00:00
By Niamh Connoly and Ian Kehoe

Business figures in the midwest have reacted angrily to proposals to use the profits of Shannon Development to eliminate debts at Shannon Airport.

Paul Fitzpatrick, the managing director of the Fitzpatrick Hotel in Bunratty, said business were shocked and alarmed at ``knee-jerk'' proposals for a policy change.

He said the plan, revealed by The Sunday Business Post last week, ``was ill thought-out and a quick-fix solution to a long-term problem''. A report for the Minister for Transport, Seamus Brennan, on the break-up of Aer Rianta proposed using profits earned by the Shannon Free Zone industrial park to wipe out Shannon Airport's e5 million debt.

Shannon Development receives e6 million a year from renting property to about 120 multinationals in the 600-acre tax-free park. Fitzpatrick said Shannon Development was an ``essential component'' of local business and had been responsible for attracting high levels of foreign direct investment to the area.

``I have spoken to most of the main chief executives in the area and they are all staunchly against the proposal,'' Fitzpatrick said. ``We need an overall plan for the region, not a knee-jerk reaction. A lot of multinationals only came to the area because of Shannon Development. We view it as essential to the future growth of the region.''

Under the plan, Enterprise Ireland, which is being decentralised, would take over the foreign investment portfolio of Shannon Development and IDA Ireland would increase its industrial role. A spokesman for Dell Ireland said it was unlikely that any new body would have the same success as Shannon Development or ``bring the same level of expertise''.

``Businesses only heard about this through reports in the media,'' he said. ``There was absolutely no consultation with us. There was no survey or impact study conducted. There are 150,000 people employed in the region and not one of them was asked for their opinion.''

Roger Downer, the president of the University of Limerick, said that Shannon Development was essential to the development of the region.

Victor

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Poll fears led Cabinet to delay Aer Rianta break-up
From:ireland.com
Thursday, 27th May, 2004

Fear of damage to the Coalition parties in the elections was the main reason that Ministers decided to postpone the plan to break up Aer Rianta at their meeting on Tuesday, it has emerged.

Several Ministers became alarmed at newspaper reports that the Minister for Transport, Mr Brennan, was to seek Cabinet approval for his scheme that day, despite strenuous union objections.

Although Ministers were concerned not to jeopardise the partnership talks with unions, the main reason for postponing Mr Brennan's plan was a fear of losing votes in the local and European elections, sources said yesterday.

It now seems likely that no break-up plan will be approved by the Cabinet until a meeting on June 15th at the earliest, four days after polling day.

It became clear to Mr Brennan at Cabinet on Tuesday that he would not have his colleagues' support for his plan. Yesterday the Taoiseach, Mr Ahern, told the Dáil that the reason for postponement was the need for consultations with unions.

The general secretary of the ICTU, Mr David Begg, wrote to the Minister this week arguing that the break-up should not go ahead as it would not bring financial benefits to the airports.

Yesterday the Aer Rianta chairman, Mr Noel Hanlon, raised serious concerns about Mr Brennan's plan at his final AGM. He said while he would implement Government policy, there were "considerable difficulties" with the plan and there was a "serious vacuum" in relation to airport policy in Ireland.

Mr Hanlon said he would be "disappointed" to see Aer Rianta broken up and warned it could have dire financial consequences.

"Aer Rianta is a great company. A worldwide company, recognised throughout the world. We have duty-free shops in 34 locations throughout the world, and as I understand it, a lot of that will go in the break-up of Aer Rianta because the disposal of assets is probably one of the items on the agenda, and I will be very sorry to see that happening, to witness the demise of the jewel in the crown of State companies in Ireland," Mr Hanlon said.

The Aer Lingus chairman also strongly criticised the aviation regulator, Mr Bill Prasifka, whom he claimed had proven "to be a disaster" for the aviation sector.

It has also been disclosed that Mr Hanlon wrote to the Minister for Finance, Mr McCreevy, in recent days about his concerns.

Yesterday a Government spokeswoman said the Government still intended to have the legislation enacted before the Oireachtas recess in early July. The Taoiseach told the Dáil yesterday that the Government would continue negotiations with the unions and "we hope to bring those to fruition as soon as possible, after which we can introduce the Bill."

Trade unions that have had sight of a Pricewaterhouse Coopers report say the Brennan plan casts doubt on the financial viability of the airports operating as independent entities, and thus threatens the future of their members.

In the wake of what the Labour leader, Mr Pat Rabbitte, called Mr Brennan's "aborted attempt" to win Cabinet approval on Tuesday, the Taoiseach said the Government had decided last year against privatisation of the State's airports, and would retain them in State ownership. However, the Government would establish Dublin, Shannon and Cork airports as "fully independent autonomous authorities under State ownership".

In response to trade union concerns over the pay and security of existing Aer Rianta workers under the plan, he insisted that staff would not be affected by the changes. He said Mr Brennan had "repeatedly stated publicly that there will be no diminution in the tenure or terms and conditions of employment of Aer Rianta workers arising from the decisions on which he is working".

Victor

http://www.rte.ie/business/2004/0531/aerrianta.html

Brennan denies any Aer Rianta row
May 31, 2004 09:27

Transport Minister Seamus Brennan has said there will be no turning back from proposals to break up Aer Rianta.

Over the weekend there had been reports of a split in the Cabinet over the proposals involving Finance Minister Charlie McCreevy.

However, speaking on Morning Ireland, Mr Brennan said he hoped to resolve what he termed 'financial issues' with the Department of Finance in the not too distant future.

Tanaiste Mary Harney has also dismissed suggestions of a row over the proposals to break up Aer Rianta.

Asked on the Week in Politics programme about the delay in publishing the Bill to allow for the break-up, Ms Harney said there were technical issues and technical challenges involved but said she would see the Bill 'before the summer'.

Labour Leader Pat Rabbitte had claimed the Department of Finance were 'appalled' because the proposal would end up costing the taxpayer a lot of money and was breaking up a successful company.

Victor

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Break-up could trim €110m off assets of Aer Rianta
From:ireland.com
Thursday, 3rd June, 2004

Aer Rianta's assets face a €110 million write-down if the break-up plan goes ahead, a report by two leading financial consultancies has claimed.

The report, by Farrell Grant Sparks (FGS) and Mazars, claims such write-downs raise significant issues for the Minister for Finance, Mr McCreevy. At present the Government plans to split Aer Rianta into three autonomous entities: Dublin, Cork and Shannon.

The report, commissioned by ICTU and SIPTU, estimates that the value of Shannon will be reduced by €65 million, while Cork's value will drop by €45 million following the break-up.

Last night ICTU general secretary Mr David Begg, in a letter to the Minister for Transport, Mr Brennan, and the Taoiseach, said the case for breaking-up Aer Rianta had "not been made".

The report claims the assets of Shannon and Cork will now be valued based on their "fair value", rather than their carrying value. This will lead to a reduction in Shannon's asset value of €65 million, claim the authors.

The situation with Cork is slightly different with the Government planning to lease Cork Airport from Dublin Airport and place it in the hands of local management. But based on their reading of an earlier PricewaterhouseCoopers' report, Mazars and FGS, say this will still reduce Cork's value by about €45 million.

"The position with regard to Cork will be dependent upon the value being attributed to the lease and the other assets to be transferred. For illustrative purposes the PricewaterhouseCoopers report uses a reduction in value of €45 million," says their report.

The report describes the assets as "drastically reduced" in value when they are assessed on a market value basis and as individual entities.

"In our opinion, the foregoing raises significant matters for consideration by the Minister for Finance prior to any decision to proceed. It is imperative in our opinion that full legal and accounting clearance is obtained with regard to these proposed transactions and a basis for market value is determined as they are central to the proposed restructuring," says the report.

The report also questions the view, included in other reports, that Shannon can switch to a new "low-cost model" and manage to increase passenger numbers by 50 per cent by 2008.

The report says detailed projections have not been produced to support this view.

Overall the report is bleak about the plan's potential for success and the authors say they can "provide no comfort to the employees of Aer Rianta" on the future. They say the business case for the plan has not been proven.

They say there is an inherent contradiction in the plan, because Aer Rianta directors have a fiduciary duty to protect the company's assets while they are under pressure to execute the transfer of these assets.

The report also suggests that without clarity on a second terminal for Dublin Airport, projections relating to the break-up lack relevance. The report suggests Shannon Airport should only be spun off after "robust sensitivity analysis" has been undertaken.

Overall the report is a blow to Mr Brennan who has been championing the plan, although some reports have suggested the Minister for Finance, Mr McCreevy has major reservations.

This report suggests too many questions remain unanswered. "In our view, until such time as these issues are demonstrably addressed in an objectively verifiable manner, the proposed restructuring cannot be seriously considered," it says.

Victor

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'Figures back Aer Rianta break-up'
From:ireland.com
Friday, 4th June, 2004

The Minister for Transport, Mr Brennan, has claimed new figures given to him strongly support the break-up of Aer Rianta and contradict the findings of a report released this week by the unions.

Following the release of a report by Mazars and Farrell Grant Sparks, Mr Brennan and the unions remain deeply divided over the controversial proposals.

ICTU general secretary Mr David Begg has told the Taoiseach and Mr Brennan this week that, based on the Mazars and Farrell Grant Sparks report, the break-up should not go ahead.

But speaking to The Irish Times before the Airline of the Year Awards, the Minister said he did not accept this analysis.

"I have asked PricewaterhouseCoopers, who advise the Department, to work up their response to that report and tell me their thinking," he said.

In the meantime, other fresh information had been submitted to the Department, he said.

"Pricewaterhouse have, in the last few days, given me additional information which expresses the view that the restructuring of Aer Rianta is the right thing to do and I hope to publish that shortly. It also tells me that Shannon, Cork, Dublin, all three, will be viable.

"I'd like to remind everybody this is Government policy. It is firm Government policy and the reasons are Shannon, Cork, no longer need to play second fiddle to Dublin. They need their independence, so they can grow those airports.

"The people in the regions want that and I am determined they will have that freedom to grow those airports strongly and bring in new airlines," he said.

Asked for his views on the Mazars/Farrell Grant Sparks report, which said the break-up plan was not convincing, Mr Brennan replied: "Well that has been the view of the trade unions involved for a long time and what the report does say is they are not convinced, it does not go as far as to say this will not work. The PricewaterhouseCoopers document I will be releasing in the next few days does demonstrate the opposite to what these consultants are saying."

Mr Brennan was speaking at the Airline of the Year event, sponsored by the Chambers of Commerce of Ireland. British Midland won the title of airline of the year. The annual awards are organised by the chamber's air transport users' council and the winners were selected following a survey by MORI of 500 firms.

Mr Brennan also criticised Ryanair chief executive Mr Michael O'Leary during his speech. He said profits at Ryanair would be "a lot higher" if the company did not take out full-page advertisements criticising the Government. He said the Government was not going to be lectured to by any "high-flying taxi driver".

Asked about his view on the stream of recent reports on Aer Rianta, Mr Brennan said: " I think we are into a stage now where every second consultant has a different view. I am totally convinced, as are the Government, that strong regional leadership, a determination to grow the business, with new boards which are high-profile, respected boards, is the only way to secure the future of Shannon and Cork."

Fears for future of development body, page 3

Victor

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New data for McCreevy on Aer Rianta plan
06/06/04 00:00
By Niamh Connolly

The Minister for Finance, Charlie McCreevy, has been supplied with the financial accounts of four profitable British airports of similar size to Cork and Shannon in a bid to overcome a new impasse over the government's plan to break up Aer Rianta.

The Transport Minister, Seamus Brennan, is expected to press ahead with his plans to bring legislation to cabinet on June 15 to break up the company after the local and European elections, The Sunday Business Post has learned.

The legislation is expected to go before the Dáil two days later on June 17, and the Seanad on June 29, with a view to its passage byJuly 9, just before the Dáil's summer recess.

McCreevy's support is critical to any legislation passing through the Oireachtas, but strong support for Brennan's plan has come from the Taoiseach Bertie Ahern and Ta-naiste Mary Harney.

In its response to Dublin firms, Mazars and Farrell Grant Sparks, auditors for the trade unions, PricewaterhouseCoopers (PwC) last Friday stressed that "commercial negotiations would be pursued by the new boards with a range of stakeholders and influencers...that would have a significant impact on the business plan and future financial performance of each of the airports".

McCreevy last week confirmed his reservations over the break-up plan championed by the transport minister, which first received cabinet support last summer. The PwC report was initially out lined to ministers last July.

The PwC report predicted accumulated debts of €125 million for Shannon over four years as a standalone entity unless the airport's losses were arrested by the new authority.

The figures supplied to the Department of Finance contained the following information:

. Cardiff airport with 1.5 million passengers and €15.7 million operating profits
. Leeds Bradford with 1.6 million passengers and €7.4 million operating profits
. Aberdeen with 2.5 million passengers and €10 million operating profits
. Bristol with 2 million passengers and €17 million operating profits.

Meanwhile, Aer Rianta worker-director Pat Fitzgerald has warned that Shannon will become a "social and economic wasteland" if Brennan succeeds in breaking up the airport company.

"Brennan has refused to accept the findings of all the reports, which say that the break-up of Aer Rianta makes no sense at all. His proposals are irresponsible and unworkable," said Fitzgerald.

Victor

http://www.rte.ie/business/2004/0614/aerrianta.html

More threats of action at Aer Rianta

June 14, 2004 16:20
Members of the Civil Aviation Branch of SIPTU have called on the Taoiseach to confirm that he will honour his commitment given to Aer Rianta employees to consult with them before any legislation is finalised in relation to the breakup of the company.

The branch, which represents 1,200 workers including clerical staff, cleaners and baggage handlers, met at Dublin Airport this morning after media speculation that legislation on the break up of the company is to approved at tomorrow's Cabinet meeting.

The union says that unless it gets confirmation from Taoiseach Bertie Ahern today that legislation will not be approved, industrial action will be inevitable.

Victor

http://www.rte.ie/business/2004/0617/aerrianta.html

Aer Rianta deal not yet complete
June 17, 2004 19:55

The Department of Transport has denied that a deal on the breakup of Aer Rianta has been completed.

A Department spokesperson said that the continuing talks on the issue remain difficult. He also disputed reports from some sources that two pieces of legislation - one now and one in a year's time - would be involved in the establishment of the three separate airport companies at Dublin, Cork and Shannon.

He said the State Airports Bill, due to be published over the next few days, would be the only legislation involving Aer Rianta because any further enactment would be by ministerial order. He also said that a final decision on a second Dublin terminal had not been made and that discussions are ongoing.

Meanwhile, talks on the key pay issues resumed today and are continuing tonight.

http://www.rte.ie/news/2004/0617/partnership.html

Government plays down Aer Rianta deal
17 June 2004 22:04

The Department of Transport has denied that a deal on the break-up of Aer Rianta has been completed.

A spokesperson for the department said that the talks on the issue, which are continuing, remain difficult.

He also disputed reports from some sources that two pieces of legislation, one now and one in a year's time, would be involved in the establishment of the three separate airport companies at Dublin, Cork and Shannon.

The spokesperson said the State Airports Bill, which is due to be published over the next few days, would be the only legislation involving Aer Rianta because any further enactment would be by ministerial order.

He also said that final decisions on a second Dublin terminal had not been made and that discussions are ongoing.


Talks on pay deal continue

Separately, talks on the key outstanding pay issues resumed at 11am this morning and are continuing at Government Buildings.

While there had been pessimism on all sides about the pay aspect, a Government spokesman was upbeat this morning, saying the Government now believes that a pay deal is 'do-able' within the next 24 hours.

Victor

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Unions seek deferral of Aer Rianta break-up
From:ireland.com
Thursday, 17th June, 2004

Unions are pressing the Government to defer the final break-up of Aer Rianta until next year as part of a bid to save the faltering pay talks which are set to run late into tonight.

With discussions continuing this evening between the employers group, IBEC and the Irish Congress of Trade Unions (ICTU) it was suggested that breaking up the State-owned airports operator may be achieved under two pieces of legislation.

The first of these, the State Airports Bill, is due to be published over the next few days. It is understood that any remaining legislation would be enacted under ministerial order.

Last night the pay talks were stymied last night by the Aer Rianta issue.

Sources around the discussions today said the unions insisted the Aer Rianta issue must be sorted out before the key elements of a wage deal could be agreed.

Unions are confident that the boards to run Cork, Limerick and Dublin Airports will be established immediately. These boards will then prepare business plans for each airport. These will then have to be approved by the Department of Finance before any final break-up of the airports.

If these plans are seen as viable by the Department of Finance legislation to break-up the company will proceed next June at the earliest, according to the plan.

The unions have also insisted the Minister for Transport, Mr Brennan's plan to separate the company into three individual operators at Cork, Dublin and Shannon airports should not affect workers pay and conditions.

On Tuesday, the Cabinet deferred a decision on the legislation needed to effect the break-up of the semi-State company.

Victor

http://www.rte.ie/business/2004/0618/aerrianta.html

SIPTU still opposes Aer Rianta split
June 18, 2004 14:42
The president of SIPTU, Jack O'Connor, has warned that his union remains opposed in principle to the break-up of Aer Rianta despite new proposals for legislation setting up three boards for Dublin, Cork and Shannon airports.

Mr O'Connor described media reports that SIPTU had agreed to the break-up of Aer Rianta as 'totally untrue'. He said that no business case had been made for the restructuring.

He warned that he could not reassure his members that their security and quality of employment would not be endangered by the break-up. Mr O'Connor said that what has happened is that Transport Minister Seamus Brennan's assurances about security and quality of employment would be provided for in the proposed legislation.

Undertakings have been obtained that no staff or assets would be transferred to the new identities until a number of key conditions had been met, including business plans by the Minister for Finance and consultation with employee and trade unions interests in the formulation of these plans.

He said the proposals offered the possibility for all parties to test the viability of the proposal and the business plans before any further moves were taken.

The future of the airport authority has been central to negotiations on a new national pay agreement, which are continuing at Government Buildings.

Under a deal finalised in the early hours of this morning, legislation setting up three new boards for Dublin, Cork and Shannon airports will be published on Monday and will be enacted by July 8.

But the implementation date for the transfer of staff and assets to the new companies was brought forward from June 2005 to April 2005.

Victor

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Aer Rianta plans in crisis
20/06/04 00:00
By Niamh Connolly

Government plans to break up Aer Rianta were plunged into crisis yesterday, with the board of the company, which is chaired by Noel Hanlon, refusing to stand down early next month.

Legislation to be presented to the Dáil on July 8 will dissolve the board, following an agreement reached at the national pay talks last week, according to gover nment sources.

However, senior sources within the semi-state company warned that any move to dissolve the board before April 2005 would breach last week's deal.

Under the legislation to be published by the government on Tuesday, a new Dublin Airport Authority, chaired by former Smurfit executive Gary McGann, will replace the Aer Rianta board.

But the board has insisted it will remain in control until next April at the earliest. This has set the government on a collision course with Hanlon, who is opposed to the breakup policy.

Aer Rianta sources said the board would not budge from its position.

A senior company source said: "It is the understanding of Aer Rianta that the functions of the board, management and the structures of all appropriate decision-making [powers] will remain with the board of Aer Rianta until, at the very earliest, April 2005."

A two-phase deal on the break-up was negotiated last week between Finance minister Charlie McCreevy, Transport minister Seamus Brennan and Siptu president Jack O'Connor.

Three boards will be established for Dublin, Cork and Shannon airports in the first phase, but the two smaller airports will fall under the control of the Dublin Airport Authority until next April.

The second phase of the break-up in April 2005 will finalise the division of the assets of the company between the three airports and give full autonomy to Cork and Shannon.

While the precise details of the legislation have not yet been released, it has emerged that there are major disagreements between the parties over what was decided last week.

The level of autonomy to be granted to the new boards at Cork and Shannon airports over the next nine months is also a highly contentious issue.

A spokesman for the Department of Transport declined to disclose the details of the legislation, except to say that it will be published on Tuesday.

Jack O'Connor of Siptu said he was informed on three separate occasions during the talks that the new boards would have no operational control until next April. "The boards' main function would be drawing up the business plan and we would not see them as having any role in running the airport," he said.

However, this version of events is challenged by government sources, who said the new boards will have operational control over the airports once the legislation is passed on July 8.

The delay in the break-up represents a blow to Tanaiste Mary Harney, who has championed radical transport reform as a condition of staying in government with Fianna Fail. The new plan is closer to the Fianna Fail election manifesto, which proposed regional boards acting under the authority of the Aer Rianta board, than to the PDs' stance on the issue.

A cabinet reshuffle could see the break-up postponed for the foreseeable future.

Victor

http://www.rte.ie/news/2004/0701/rianta.html

Tánaiste in warning on future of Shannon
01 July 2004 16:51

The Tánaiste has warned that no amount of plans will save Shannon Airport if it does not get more passengers and services.

Mary Harney told the Dáil that the airport faced serious difficulty, and even if you had all the plans in the world, it would not save Shannon.

She was responding to Fine Gael's Richard Bruton, who commended the 'very sensible' view of Fianna Fáil backbenchers, who wanted to see the rationale for breaking up Aer Rianta before the legislation was finalised.

Ms Harney said the proposal was in the Programme for Government, and had been endorsed by the Government three times.

http://home.eircom.net/content/irelandcom/topstories/3503287?view=Eircomnet

Aer Rianta break-up Bill proceeds
From:ireland.com
Thursday, 1st July, 2004



The Government is pressing ahead with plans to complete legislation on the break-up of Aer Rianta next week, despite continued resistance from the Fianna Fáil backbenches. Arthur Beesley, Political Reporter, reports.

As senior Government figures made efforts yesterday to mollify dissenting TDs, it emerged that some 19 of 23 speakers at a Fianna Fáil meeting on Tuesday had expressed reservations about the break-up plan or the speed with which the legislation is being processed.

Such concerns, which have renewed tension with the PDs, will surface again next Monday when the Fianna Fáil parliamentary party holds a special meeting in Leinster House to discuss its poor performance in the European and local elections.

Despite doubts about the feasibility of the timetable for passing the legislation, the Minister for Transport, Mr Brennan, is determined to complete the process before the summer recess at the end of next week.

Fianna Fáil TDs said they understood Mr Brennan was lobbying hard yesterday to ensure that there would be no deviation from that timetable after a Cabinet briefing on the backbench reservations next Tuesday by the the Minister for Foreign Affairs, Mr Cowen.

Such efforts appeared to have paid off last night after spokeswomen for both the Taoiseach, Mr Ahern, and the Tánaiste, Ms Harney, said the Government still planned to have the legislation through the Dáil before the recess.

But reservations about the Bill were expressed again yesterday when one Fianna Fail TD described the rushing of the legislation of such complexity as "insane". "This is the sort of Bill that you'd expect a heavy amount of drafting and redrafting on," he said.

"A lot of people are speculating that few if anybody in the Cabinet other than the sponsoring Minister and the PDs are in favour of this. Seamus is very much out on a limb on this."

However, the PD's transport spokesman, Senator Tom Morrissey, rejected the claims. "Some TDs feel that some senior ministers are on their side but my understanding is that the Cabinet has taken a decision," he said.

"Some backbenchers are probably operating under the impression that their comments are being taken more seriously than they might be."

A spokesman for Mr Brennan said the Bill would be subject to the same average length of debate as most other legislation.

There was a recognition among senior sources that the timetable for a debate was extremely tight and could be upset if the Seanad voted for amendments to the legislation.

The next phase of the process takes place today when the committee stage debate on the State Airports Bill begins. An eight-hour debate is scheduled.

Victor

http://www.rte.ie/news/2004/0706/aerrianta.html

Seanad to pass State Airports bill next week
06 July 2004 22:52

The Seanad is expected to sit next week to pass the State airports bill providing for the break-up of Aer Rianta.

The Bill passed all stages in the Dail this evening.

Earlier, the leader of the Seanad, Mary O'Rourke, said that there would not be enough time to pass the legislation through the Upper House before the summer recess started on Thursday.

However, following consultations with the Taoiseach, Senator O'Rourke will ask senators to delay their holidays to deal with the bill next week.

Victor

http://home.eircom.net/content/irelandcom/breaking/3538149?view=Eircomnet

Break-up 'would leave Aer Rianta in default'
From:ireland.com
Tuesday, 6th July, 2004

The Government's plan to break-up Aer Rianta will leave the company in default of its loans, the Labour leader, Mr Pat Rabbitte, claimed in the Dail this evening.

Mr Rabbitte said in the opinion of the company's legal advisers, the restructuring would constitute "an event of default" entitling the banks and bond holders to demand immediate repayment of loans.

He said the legal advice stated the bank's terms did not permit Aer Rianta "to cease to carry on any substantial part of its business" or "to cease ownership of its operations in Cork or Shannon".

The advice concluded that the provisions in the Minister for Transport's State Airports Bill , which will pave the way for the break-up of Aer Rianta, were "problematic", he claimed.

Mr Rabbitte said it appeared that waivers would be required from lenders to avoid default arising from the proposed restructuring of Aer Rianta . He said the legal advice had warned that creditors "may baulk" at issuing such waivers preferring instead to adopt "a wait-and-see approach".

He asked the Taoiseach if he or the Minister for Transport had been in contact with any of the company's lenders to seek such waivers.

Mr Ahern said "the maintenance of good relations" between Aer Rianta and all of its funders was a fundamental part of the Government's restructuring process. He said the fundamental relations between the company and its creditors were being handled in a "professional and business-like manner".

"While the handling of this important matter of the restructuring process was matter for the company", he claimed both the Department of Transport and the Department of Finance were involved.

Victor

http://www.thepost.ie/web/DocumentView/did-218837874-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

Seanad to grill Brennan on Aer Rianta bill flaws
11/07/04 00:00
By Niamh Connolly

Transport minister Seamus Brennan is to come under siege from senators this week, as they seek to expose flaws in the bill to break up Aer Rianta in September.

The final stage of the bill to dissolve the state company is planned for Tuesday, when Brennan will appear before the Seanad.

It has emerged that a problem may exist in the drafting of the legislation, which would mean that the new State Airports Bill conflicts with another piece of legislation, the Aviation Regulation Act 2001.

Senator Joe O'Toole will ask Brennan whether the legislation was fully examined and approved by the Attorney General's office before it passed through the Dail.

It has also emerged that the new Dublin Airport Authority will now take charge in September, instead of the end of this month. Aer Rianta chairman Noel Hanlon will have ended his term of office by September.

Political sources said that finance minister Charlie McCreevy intervened personally to ensure that the current Aer Rianta board would not be dissolved until September.

The Dail passed legislation to dissolve Aer Rianta and create three independent airports at Dublin, Cork and Shannon two weeks ago.

An adjournment of the Seanad debate was sought by Senate leader Mary O'Rourke on grounds that the Seanad should not be seen as a chamber that rushed legislation through.

The State Airports Bill allows the aviation regulator, Bill Prasifka, to set passenger charges for Dublin, but removes Shannon and Cork from regulation due to their weaker financial position.

This provision appears to conflict with the Aviation Regulation Act 2001,which obliges the regulator to oversee all airports handling more than one million passengers a year.

Shannon and Cork each handle more than two million passengers a year. Informed sources said that section 17 of the State Airports Bill - which was passed by the Dail last week - may also include a drafting inaccuracy.

Political sources said the Attorney General's office was involved in the early stages of the legislation, but there is some doubt whether the office approved the final draft.

A leading firm of solicitors was contracted to advise on the bill.

O'Toole is also to seek assurances that the Attorney General's office is satisfied that a waiver is not necessary from Aer Rianta's bond-holders arising from its €482 million debt.

Two Fianna Fail senators from Co Clare, Timmy Dooley and Brendan Daly, will also raise concerns about the level of authority the Dublin board will have over Shannon and Cork until April 2005, at which time the minister for finance is to approve a final separation.

The senators want Shannon to have an input in the decision-making board in Dublin.

There are fears that if McCreevy fails to sign off in April, or if there is a cabinet reshuffle, Shannon could be left with even less authority than it has now.

Daly is also pushing for the Shannon board's borrowing cap to be raised from €20 million to €100 million in the legislation.

The Clare senators plan to vote in favour of the legislation.

Victor

http://www.breakingnews.ie/2004/07/11/story156537.html

Aer Rianta break up 'rushed and premature'
11/07/2004 - 16:07:56

The leader of the Seanad today described the legislation to break up Aer Rianta as rushed and premature.

Senator Mary O’Rourke criticised Transport Minister Seamus Brennan’s attempt to put the State Airport Bill through the Dáil and the Seanad before the summer recess.

“I can see no reason for the haste. The force of the legislation does not come into play until next April and I believe it would be better to leave it until the autumn,” she said.

The former Minister for Public Enterprise, who lost her Dáil seat in Westmeath at the last election, said the State Airport Bill was not good legislation.

“But I will be supporting it because it’s Government legislation,” she told RTÉ radio.

Ms O’Rourke delayed the adjournment of the Seanad for a week to give more time to debating the Bill.

She said rushing at bill through the Dáil and Seanad at 10pm was not good practice by any country’s standards.

“The two chambers should not be seen as a stamping ground for legislation.”

When the State Airport Bill is passed by the Seanad, Aer Rianta will be split up into three separate companies.

However, only Dublin Airport, which will be controlled by the new Dublin Airport Authority, will have full independence.

Due to union pressure, the new boards of Cork and Shannon airports will not be granted independent unless they present business plans to Finance Minister Charlie McCreevy before April 30 next year.

http://www.breakingnews.ie/2004/07/11/story156565.html

Govt called to clarify Aer Lingus plans
11/07/2004 - 19:47:15

Opposition parties tonight called for the Government to clarify its position on any possible sale of Aer Lingus.

The debate follows comments made by the leader of the Seanad, Mary O'Rourke, that the proposed bill to break up Aer Rianta is rushed and premature.

Fine Gael spokesman on transport, Denis Naughten, says it is time for a white paper on the issue.

Victor

http://www.rte.ie/news/2004/0713/aerrianta.html

O'Rourke questions Aer Rianta break-up plan
13 July 2004 21:48

The Fianna Fáil leader in the Seanad Mary O'Rourke has told the upper house that she could see no urgency or imperative for the plan to break up Aer Rianta.

Ms O'Rourke wondered who might be ultimately behind the plan and expressed concern that it might see Shannon Airport in particular falling prey in time to commercial interests.

Ms O'Rourke said it was not enough to base legislation on a hunch - a reference to a phrase used by the Minister for Transport Séamus Brennan in interviews on the issue - that the airports could compete successfully with each other.

Earlier, Mr Brennan denounced leaks that suggested the company's financiers were poised to call in their loans, denying that he had heard of any unease from bankers.

Mr Brennan added that he deplored the leaking of financial information, which he said was designed to frustrate the Government in its plans.

Mr Brennan also rejected reports that there was a drafting error in his bill to allow for the breaking up of Aer Rianta into three separate companies.

Mr Brennan told the Seanad that he checked these reports with the Attorney General, who has assured him there were no errors in the Bill.

Fine Gael suggested that the plan did not have the backing of the Taoiseach, while Labour questioned the rationale for the plan, saying that Aer Rianta was working well as a company.

Independent Senator Shane Ross claimed that Aer Rianta was an ugly monster that had gone walkabout, and commended Mr Brennan for attempting to slay it.

Earlier, Fianna Fáil Senator Timmy Dooley expressed concern that Shannon and Cork airports might find themselves without access to investment capital under the new scheme.

Victor

http://home.eircom.net/content/unison/national/3589444?view=Eircomnet

Call to veto Aer Rianta break-up
From:The Irish Independent
Wednesday, 14th July, 2004

Seanad leader O'Rourke savages plans for dismantling airport authority

THE Department of Finance should torpedo Transport Minister Seamus Brennan's plans for the break-up of Aer Rianta, Seanad leader Mary O'Rourke declared yesterday.

Mrs O'Rourke continued her trenchant criticism of Government moves to establish separate stand-alone businesses at Dublin, Cork and Shannon Airports directly in front of Transport Minister Seamus Brennan.

She expressed the hope that Finance Minister Charlie McCreevy would halt the launch of the three new outfits from April next. She also repeated her criticism that the legislation to dismantle Aer Rianta was "premature and rushed."

Mrs O'Rourke, formerly the minister responsible for the airports, said she had "great faith" that the Department of Finance would eventually step in and tell Seamus Brennan: "You're going no further."

The remarks constituted a new rift in the bitter war of words between the Leader of the Seanad and Transport Minister Seamus Brennan on the issue. Yesterday Mr Brennan attended and spoke at the Seanad debate on the State Airports Bill.

Mrs O'Rourke, formerly the minister responsible for the airports, also took a swipe at the Tanaiste. She said when she was minister herself she had advocated the development of Baldonnel as a second airport for Dublin, but the PD leader had fought the proposal.

The Tanaiste's "strong views" may have changed in the interim, Mrs O'Rourke suggested, and she may now want to put them into action.

Last night these remarks were being interpreted as backing Ms Harney as the next occupant of the Transport portfolio, amid speculation that the PD leader could displace Mr Brennan from his job in any cabinet reshuffle.

Mrs O'Rourke said she would back the legislation when it concludes by vote tonight, having last week insisted that there was not enough time in the Seanad to process the Bill before Dail rose. She later agreed to two days' sittings this week.

Yesterday she said the Bill was "imperfect" because it did not incorporate business plans for the three airport authorities. She also pointed out that the Programme for Government spoke of giving Cork and Shannon "greater" autonomy and not full independence. "I think autonomy for the regions is excellent - without this elaborate structure for which I don't see a reason."

Mr Brennan meanwhile attacked the leaking of departmental correspondence which was used to suggest that the break up could trigger a default in Aer Rianta's debt support.

It was a "reckless thing to do," Mr Brennan said, and was "designed to create an erroneous and dangerous impression of instability in the company." There was no such debt instability, he insisted.

Mr Brennan pointed out that the three new airport authorities would continue to be state-owned, saying there appeared to be some confusion on this point.

"Airports of similar size to Cork and Shannon have been successful elsewhere. I believe the new airport authorities will bring a new impetus and drive to our major airports."

And Mr Brennan blasted back at Mrs O'Rourke's criticism, citing a reply she made to a parliamentary question on May 10, 2001, that "I concur with the view that private sector participation in Aer Rianta is the best way forward."

He added: "I say this with full respect - she is entitled to disagree with me, and I am entitled to disagree with her direction, because that direction, in my view leads to private ownership."

Mr Brennan also quoted a previous letter from the company which raised the possible sale of one-third of Aer Rianta to a large international bank. "Now might be the time to consider this further when a minimum of fuss might provide for the Exchequer €1bn," the note said.

"I didn't like that policy, and I don't like it now," Mr Brennan said, concluding a spirited defence of his own position.

Senan Molony Political Correspondent

http://home.eircom.net/content/irelandcom/topstories/3589072?view=Eircomnet

Brennan attacks O'Rourke over Aer Rianta break-up
From:ireland.com
Wednesday, 14th July, 2004

The Minister for Transport, Mr Brennan, has attacked his predecessor, Senator Mary O'Rourke, over her opposition to the break-up of Aer Rianta, claiming that her policies would have resulted in houses being built on the site of Shannon Airport.

Mr Brennan went on the offensive in the Seanad last night to dismiss claims by Mrs O'Rourke, who is the leader of the Seanad, that "people in the shadows" were influencing the Government's airport policy.

Closing a six-hour debate which heard repeated criticism of the break-up policy, Mr Brennan called for an end to the broader political campaign against the policy. "I am sick and tired of the relentless, personalised campaign that is being fought on a lot of levels and I want an end to it."

Mrs O'Rourke had claimed during the debate on the State Airports Bill that there was "no grand plan" for the break-up and said she was confident that the Minister for Finance, Mr McCreevy, would reject business plans produced for the airports at Dublin, Shannon and Cork.

The former minister for public enterprise also said she was worried that "people in the shadows, of whom we are not aware", were setting the scene for claims that Dublin Airport was an over-crowded disaster-zone to gain currency.

Mr Brennan said he utterly rejected "any suggestion about any shadowy figures" and went on to say that the only interest he ever served in his political life was the public interest. "You're fully entitled to tell me that I'm an eejit, that I'm getting it wrong, that I'm only acting on a hunch, that it's imperfect," he told Mrs O'Rourke, adding that he was entitled to disagree with her point of view.

Mrs O'Rourke favoured opening Aer Rianta to private investment and this inevitably led to private ownership, he said. "What do private owners sitting around the table in Dublin do about Shannon Airport? They build houses on it, that's what they do."

Mr Brennan said the leaking of correspondence to the Government from Aer Rianta about its bonds was reckless and designed to create the erroneous impression of instability.

"There is no such instability," he said.

The debate heard a denunciation of Aer Rianta by Senator Shane Ross, who described the company as an "ugly monster". Questioning whether the Taoiseach, Mr Ahern, was fully behind the break-up policy, Senator Ross said the Aer Rianta chairman, Mr Noel Hanlon, and its board should have been sacked for thwarting Mr Brennan.

Senator Feargal Quinn said the break-up initiative was badly conceived and would be singled out "as one of the great follies of our time".

Victor

http://www.rte.ie/news/2004/0714/aerrianta.html

Aer Rianta Bill passed in Seanad
14 July 2004 22:28

The Seanad has passed all stages of the controversial bill to break up Aer Rianta, despite the continued opposition of Fianna Fáil Senator Mary O'Rourke.

In the Seanad, she earlier supported a Fine Gael claim that there was a factual error in the bill and that it should be amended.

Senator O'Rourke said that yesterday she had said the bill was deficient and faulty - and she again insisted it was.

Then she revealed that it had not been drafted by the parliamentary drafting team, but by Matheson Ormsby Prentice, a private legal firm. Senator O'Rourke said while ministers could employ outside firms, it had rarely been done.

Transport Minister Séamus Brennan insisted that the section had been deliberately drafted in that manner by the Government and its legal advisers and that it was not deficient.

However, the debate ended on a peaceful note with the minister expressing his admiration for Senator O'Rourke.

http://www.rte.ie/business/2004/0714/aerrianta.html

Aer Rianta bill passed despite row
July 14, 2004 15:49

The Seanad has passed all stages of the controversial bill to break up Aer Rianta, despite the continued opposition of Fianna Fail Senator Mary O'Rourke.

The Senator supported a Fine Gael claim that there was a drafting error in it and that it should be changed.

She also revealed that the bill had been drafted by a private firm of solicitors, Matheson Ormsby Prentice, rather than by the parliamentary draftsman's office. She said while Ministers could employ outside firms, it had rarely been done. She insisted the bill was deficient and faulty.

Labour spokesman Derek McDowell thanked her for the 'sterling leadership' she had given to the Opposition on this bill.

Transport Minister Seamus Brennan rejected the calls, saying there was no error in the bill.

Victor

http://home.eircom.net/content/irelandcom/breaking/3591557?view=Eircomnet

Brennan defends plan for Aer Rianta break-up
From:ireland.com
Wednesday, 14th July, 2004

The Minister for Transport has defended breaking-up airports operator Aer Rianta without business plans for the individual airports, saying that the new management boards being installed at Shannon and Cork Airports are best placed to develop and implement plans for their development.

Speaking ahead of the final day of debate on the State Airports Bill in the Seanad, Mr Brennan said: "The business plans are being undertaken by the new boards, [they are] the right people to undertake business plans are the people who are going to have to implement them."

"I am fully committed to giving Shannon and Cork their commercial freedom. With State-owned companies running those two airports for the future they have a much better chance of survival than playing second fiddle to Dublin."

Last night the viability of the business plans being produced came in for criticism from Mr Brennan's predecessor, Senator Mary O'Rourke who said there was no plan for the break-up of the company.

The former minister for public enterprise said she was confident that the business plans, once produced, would be rejected by the Minister for Finance, Mr McCreevy.

At the end of a six-hour debate on the issue, Mrs O'Rourke voted with the Government in support of the State Airports Bill which was passed at second stage.

Speaking on RTE radio this morning, Mr Brennan said the decision to break-up the State-owned airports operator was based on a strategic view following a number of Cabinet decisions. "The strategic view being that we have to build-up Shannon airport, and we have to build-up Cork Airport."

"The alternative scenario being offered to them of just receiving subsidies, staying quiet, settling for 10 per cent of the entire air business in this State, whereas Dublin has 90 [per cent]. That's no - future for two very fine airports."

"The future for those two fine airports is to go out and grow that business with strong regional leadership and that is why I am taking these reforms. They are difficult reforms but they are necessary reforms."

Victor

http://home.eircom.net/content/irelandcom/breaking/3594562?view=Eircomnet

Aer Rianta break-up Bill clears final hurdle
From:ireland.com
Wednesday, 14th July, 2004


The leader of the Seanad, Mrs Mary O'Rourke, today oversaw the passing of a Bill paving the way for the break-up of Aer Rianta while, unusually, opposing the Government-sponsored plan.

The controversial Airports Bill, which provides for creating three separate companies to run Dublin, Cork and Shannon airports, is being hurriedly pushed through by the Minister for Transport, Mr Brennan, after the issue threatened to scupper agreement in the recent national pay talks.

Mrs O'Rourke, his party colleague and predecessor as minister in charge of transport, today told the house the Bill was rushed, ill-thought-out and faulty.

She continued the attack she began yesterday by saying a part of the Bill she claimed was drafted by the private law firm Matheson Ormsby Prentice, contained errors in a section relating to the the Aer Rianta chief executive.

Mr Brennan said that while the firm had an input in the drafting process as consultants to the department the wording was drafted by the Office of the Chief Parliamentary Counsel and the Office of the Attorney General.

The Bill which has now passed all stages of the Oireachtas and will empower the Minister to stand down the board of Aer Rianta and rename the company once it has been signed into law by the President, Mrs McAleese.

Fine Gael's Seanad transport spokesman Mr Fergal Browne later warned that questions remained unanswered.

"The distribution of assets between the three airports is just one aspect of this flawed legislation which could cause problems in the future.

"In the longer-term, there is a real danger that Transport Minister Seamus Brennan's premature actions, in rail-roading this legislation through, could undermine the long-term viability of this successful state entity."

Mr Browne also claimed there was no independent mechanism in place to deal with potential disputes arising between the three airports over the distribution of assets.

Victor

http://home.eircom.net/content/irelandcom/topstories/3603538?view=Eircomnet

Restructuring at Aer Rianta will not trigger debt repayment - S&P
From:ireland.com
Friday, 16th July, 2004

The restructuring of Aer Rianta will not trigger the repayment of its €479 million debt, according to Standard & Poor's (S&P).

The opinion of the respected corporate credit-rating agency contradicts that of the company's chief executive, Ms Margaret Sweeney, who has warned the Minster for Transport, Mr Brennan, that the restructuring might constitute a default on the terms of the bond. Her view, expressed in a letter to the Minister last week, was based on advice from the company's solicitors.

"The way we see it, there is only a default if the company is restructured while insolvent. We assume the Government does not intend for the company to become insolvent," said Mr Jan Plantagie, director and head of project finance and transport at S&P.

He said S&P had looked beyond the narrow issue of the legal opinion of Aer Rianta's lawyers to the wider issue of what the holders of Aer Rianta's €250 million in bonds and more than €200 million in loans might do. The bulk of the loans are extended by the European Investment Bank.

"We don't see what the incentive is for bondholders. They are not interested in premature payments," he said.

The most important issue from the bondholders' perspective was that the company retaining responsibility for the debt, the new Dublin Airport Authority, will retain ownership of the critical assets. "We see the company in the future as still having the material assets," he said.

S&P also says that Cork and Shannon airports - which are to be established as separate companies - contribute little to cashflow at present.

"Continuing State ownership of Dublin Airport . . . is positive and the business position of the new company is expected to remain very strong," S&P said in a statement. Cork and Shannon were expected to provide only limited competition to Dublin.

The agency affirmed its A long-term and A-1 short-term corporate credit ratings for the company, but reiterated that the outlook for those ratings was negative. It said it "does not expect the restructuring to result in an immediate requirement to repay the eurobond and/or the EIB loans. Key issues for future credit quality, which cannot yet be assessed are regulation, tariffs and political interference."

The charges that Aer Rianta can levy airlines are set by the aviation regulator and the current regime will be reviewed when the company is broken up. The tariffs that the new airport authority will be allowed to charge will have a major impact on its ability to service the €420 million or so debt it will assume under the break-up, S&P believes.

Uncertainty over this is the main reason for the negative outlook, rather than risk of a bond default due to the restructuring, according to S&P. "Furthermore, any decision to approve an independent terminal at Dublin Airport could be detrimental to credit quality," said Mr Plantagie.

"The implementation of the restructuring could take more than a year and the credit quality of the 'new' Aer Rianta will only become apparent as new regulatory tariffs are proposed and its business plan developed," according to the statement.

S&P added that the company had "sufficient financial flexibility". It said it had undrawn committed bank facilities of more than €150 million and €80 million in cash.