[Article] Aer Lingus sub-committee meets for the first time

Victor

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Aer Lingus sub-committee meets for the first time
From:ireland.com
Monday, 22nd November, 2004


The Aer Lingus sub-committee charged with examing the future options for the State airline has held its first meeting this afternoon, nearly a week after the resignation of its three top executives.

The sub-committee, made up of the Taoiseach Mr Ahern, the Tanaiste Ms Harney, the Minister for Finance, Mr Cowen and the Minister for Transport Mr Cullen - studied the options outlined in the recent Goldman Sacchs report on the airline.

These include a stock market floatation similar to the Eircom privatisation, an injection of funds from private investors or no action at all.

In an interview with RTE'sWeek in Politics programme, Minister for Education Ms Hanafin said the decision on the future of Aer Lingus would definitely be made before Christmas.

The national carrier has been pressing the Government for a decision because it wants to raise up to one €1 billion over the next five years to fund its expansion. Under current EU regulations, it would be difficult for the Government to grant the company this money in state aid.

SIPTU, which represents workers at Aer Lingus, has said it was not aware of the Government's plans for privatisation.

"No case has been presented to the union at this point in time supporting privatisation or part-privatisation and the union's position remains one of opposition to the same," said a spokesman.

Last week, Aer Lingus chief executive Willie Walsh, Chief financial officer Mr Brian Dunne and chief operations officer Mr Seamus Kearney announced their resignation. Their proposal for a management buy-out of the airline had earlier been rejected by Mr Ahern.

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Aer Lingus decision before Christmas - Hanafin
From:ireland.com
Monday, 22nd November, 2004


The Minister for Education and Science, Ms Hanafin, confirmed on RTÉ last night that a decision on the future of Aer Lingus would be made before Christmas.

Aer Lingus chief executive Mr Willie Walsh said yesterday he had detected "growing unease" at the direction in which he and his management had brought the airline.

He said on RTÉ Radio's This Weekprogramme that his decision of last week to resign was "final" and would not be changed.

The Labour Party leader, Mr Pat Rabbitte, told a Siptu regional conference in Waterford that privatising Aer Lingus could result in a repeat of what had happened to Eircom.

He said Eircom had been been a strong semi-state company, providing an essential utility to the Irish economy.

Following an "extraordinary sequence of changes in ownership", it was now a much depleted company, with no presence in the mobile phone market, considerably higher debts and obligations to pay dividends, he said.

Mr Rabbitte proposed that Aer Lingus and other commercial semi-state companies should be transferred into the ownership of a new State holding company that could take in private capital.

He proposed the company would take responsibility for the development of each company with the private sector investing no more than 49 per cent in the company.

Victor

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Rabbitte urges holding company for Aer Lingus
From:ireland.com
Monday, 22nd November, 2004

Aer Lingus and other commercial semi-state companies should be transferred into the ownership of a new State holding company that could take in private capital, the Labour Party has proposed.

The holding company should be given a mandate to develop each company, subject to taking in no more than 49 per cent in private funds, the party leader, Mr Pat Rabbitte, said at the weekend.

His comments came as the Cabinet sub-committee established to consider the future of Aer Lingus prepared to meet today to discuss the Goldman Sachs report on the funding options for the airline.

The Minister for Education and Science, Ms Hanafin, confirmed to RTÉ's Week in Politics programme last night that a decision on the future of Aer Lingus would be made before Christmas.

Aer Lingus chief executive, Mr Willie Walsh, said yesterday that he had detected "growing unease" at the direction in which he and his management had brought the airline.

He said on RTE Radio's This Week programme that his decision of last week to resign was "final" and would not be changed.

Mr Rabbitte told a SIPTU regional conference in Waterford that privatising Aer Lingus could result in a repeat of what had happened to Eircom.

He said Eircom had been been a strong semi-state company, providing an essential utility to the Irish economy.

Following an "extraordinary sequence of changes in ownership", it was now a much depleted company, with no presence in the mobile phone market, considerably higher debts and obligations to pay dividends, he said.

"Who can say the same will not happen to the next semi-state [ company] to be privatised? Who can say that Aer Lingus will not be asset-stripped in the same way, with slots at Heathrow being put up for sale?"

The way forward, in Labour's view, was to create a holding company into which ownership of all commercial semi-state companies should be transferred, Mr Rabbitte said.

"In this way, each of the semi-states could enter into strategic alliances or joint ventures, as approved by the Public Management Enterprise Company, or by raising equity finance or issuing debt in the financial markets."

The board of the holding company, Mr Rabbitte said, would be appointed by the Government and the company would be answerable to the Oireachtas. The entire structure would be underpinned by primary legislation. Mr Rabbitte criticised the Government's handling of Aer Lingus, claiming the "provoked resignations" of its senior management had "shot to shreds" the company's value.

The result of last week's events was that one of the most strategically important companies in the Irish economy had no executive leadership and no direction from its shareholder as to what its future should be. "It is, quite simply, paralysed."

Victor

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Government set to sell off part of Aer Lingus
From:ireland.com
Tuesday, 23rd November, 2004

The Government is on the point of making a decision in principle to privatise part of Aer Lingus, although there is still no agreement on the timing or scope of the sale.

None of the ministers at a crucial Cabinet subcommittee meeting yesterday argued in favour of State investment in the airline, it emerged last night.

As Fianna Fáil and the PDs last night changed their tone in the debate, a spokesman for the Taoiseach, Mr Ahern, said that "there were never any differences over Aer Lingus" between the Coalition partners.

The meeting was described as "very good" by a spokesman for the Tánaiste, Ms Harney, only days after she acknowledged "differences of emphasis" within the Government on the airline's future.

The Cabinet will make its formal decision on ownership before Christmas after ministers decide whether to sell part or all of the company or a majority stake in it.

A stock market flotation is seen as the most likely option at this stage, although not all ministers are convinced that the State should float a minimum of 51 per cent of the airline.

The release of such a stake, which would give private investors overall control of the company, would increase the price the Government could command in the market.

This may yet emerge as an important factor in the debate, because the resignation last week of the chief executive, Mr Willie Walsh, has depressed the airline's valuation.

The subcommittee meeting was prompted by Mr Walsh's departure, and that of the chief operations officer Mr Seamus Kearney and the chief financial officer Mr Brian Dunne.

The Government wants to advance its discussions quickly to provide clarity on the airline's future direction before the process of recruiting a successor to Mr Walsh begins.

It is also recruiting a permanent chairman to replace Mr John Sharman, whose mandate as temporary chairman ends at the start of the new year.

Failure to reach a decision on ownership in the short term would damage the prospects of recruiting experienced business figures for the chairmanship and the post of chief executive.

Despite the Government moves to prioritise its discussions on Aer Lingus, sources said yesterday that a decision to sell a stake did not necessarily mean that a sale would follow in the short term.

It is understood that the credibility to the stock market of the incoming chief executive is seen as a crucial factor in determining whether a sale in the first half of 2005 is possible.

While timing will also be influenced by stock market conditions and the state of the airline industry generally, it is recognised that the privatisation might not take place until after next year.

However, the Government will be free to initiate the process whenever it wants because it is empowered under existing legislation to sell its stake.

Speaking in Dublin yesterday, Mr Ahern indicated support for the current business plan at the airline.

He said: "we have a work programme that has to be implemented".

Mr Ahern did not repeat his attack on the management team but said he saw the retention of large-scale employment in the airline as a long-term strategic issue.

Mr Walsh and his colleagues gave six months' notice of their resignation last week after they sensed increasing Government "unease" at the direction and pace of their plans for the company.

The Labour leader, Mr Rabbitte, last night claimed the Government's stewardship of the airline had been incompetent.

He told Labour activists in Carlow-Kilkenny that Mr Walsh and his colleagues had resigned because they were finding its impossible to work with a Government that could not decide what it wanted to do with the airline.

Victor

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Cabinet meeting discusses Aer Lingus plan
From:ireland.com
Tuesday, 14th December, 2004

The Cabinet is expected to make a decision on the injection of private equity into Aer Lingus at its final meeting of the year today.

A busy agenda is expected to include discussion of the Aer Lingus issue, as well as the question of a TV licence fee increase for RTÉ.

It is expected the Cabinet will rule out putting any State money into the airline and that it will back a part-privatisation, subject to consultation with the trade unions.

Aer Lingus is also still in the midst of implementing a redundancy programme that will cut its workforce by 1,325, or around a third of its staff.

The airline, which will lose its chief executive, chairman and two more senior executives over the coming months, also faces a cash crisis and needs to spend around €1 billion on new aircraft from 2008.

The Minister for Transport, Mr Cullen, will brief his Government colleagues today following a meeting of the Cabinet sub-committee on Aer Lingus last week.

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Decision on Aer Lingus investment deferred
From:ireland.com
Tuesday, 14th December, 2004

A decision on future funding for Aer Lingus has been deferred by the Cabinet until the new year in a move described by Fine Gael as another "broken promise".

The Minister for Transport, Mr Cullen, is to begin talks on the company's future this week with unions and management but a decision on how outside investment can be introduced into the company was due today.

However after the Cabinet's weekly meeting a statement was issued saying Mr Cullen would report back at the end of January.

Fine Gael spokesperson on transport, Ms Olivia Mitchell said the failure to make a decision condemned the airline and its staff to further uncertainty.

"Uncertainty in the airline business can be terminal. It is impossible to run a business in such a volatile industry without a clear strategic plan, a confirmed budget and a motivated management team," Ms Mitchell said.

She said the situation was particularly pressing because the chairman, Mr John Sharman, is stepping down in January and three senior members of the management team including chief executive, Mr Willie Walsh, are leaving in May.

"This serious absence of leadership can do nothing but harm to the company and further diminish its potential to attract investors.

"However difficult the decision, the Government must give some direction and stability to this airline before it goes into freefall," Ms Mitchell said.

Aer Lingus needs an estimated €1 billion to invest in new planes by 2008 and a Government policy to facilitate outside investment is required to raise the finance.

The Government would appear to have learned nothing from the management loss fiasco caused directly by their failure to make a timely decision.