[Article] Phoenix Magazine on Seamus Brennan's Connections

THE PHOENIX
July 30, 2004

BRENNAN BROTHERS REACH FOR THE SKY

WHAT an intriguing trio of buddies sit astride the Irish aviation industry as Aer Lingus, the jewel in the semi-state crown, is being prepared for privatisation. The Minister for Transport, Seamus Brennan, is regarded as the most enthusiastic privatiser of any cabinet minister; the minister's brother, Eamonn Brennan, is chief executive of the Irish Aviation Authority (IAA) and John Sharman, who specialises in raising capital for airline and aviation enterprises, is the recently appointed chairman of Aer Lingus. In the privatisation of Aer Lingus, British Airways is likely to be the dominant shareholder.

Both Sharman and Eamonn Brennan played key roles in the successful bid by the Airline Group composed of eight airlines, including British Airways and other British carriers - to take over Britain's air traffic control system - the National Air Traffic System (NATS) in 2001. The Airline Group took 46% of the equity in NATS, leaving 49% for the British Government and 5% for the workforce. The Airline Group retained the IAA as its technical adviser.

John Sharman is executive director of Spectrum Capital, which has sourced or funded more than $20 billion for non-US carriers in loan, leasing and debentures in the last 20 years. Sharman's company advised the Airline Group in its takeover of NATS.

Sharman had originally been appointed a director of Aer Lingus - by Seamus Brennan in March 2003. After Tom Mulcahy resigned as chairman on May 29, 2004, the chair was left vacant until July 2 when Willie Walsh suddenly announced his interest in an mbo. The following day, Seamus Brennan appointed Sharman as chairman of the state airline.

The IAA not only provided air traffic management expertise and advice to the Airline Group's bid for NATS but also provided the project leader for the bid in the shape of Eamonn Brennan. Then commercial director at the IAA, Brennan was seconded to the Airline Group as project director for the bid and led it to its successful conclusion. Thus Eamonn Brennan and John Sharman effectively co-managed the privatisation of NATS. Eamonn Brennan was appointed as chief executive of the IAA in May of last year.

Last February, Labour's Finance spokesperson, Joan Burton, asked for a list of appointments made by Minister Brennan since the general election. Brennan supplied a list of such appointments and noted that "Appointments to the board of the Irish Aviation Authority are made by my colleague, Dr James McDaid, TD, under the powers conferred on him by S.I. no 402 of 2002; Transport (Delegation of ministerial functions) Order 2002, eg IAA". Such devolution of powers vis-a-vis the IAA did not prevent the minister from opening the Authority's 83 million air traffic control system at Shannon earlier this month.

When Goldhawk asked Eamonn Brennan if he had brought Sharman to the attention of his brother prior to his appointment as Aer Lingus chairman, his spokesperson replied: "In 2002 (but not since) the chief executive, Mr Brennan, among others, was consulted by the Minister for Transport regarding Mr Sharman (whom Mr Brennan had met in the course of the NATS project) in relation to Mr Sharman's aviation background in the context of then vacancies on the board of Aer Lingus".

But if Aer Lingus is to be carved up for the privateers, why not the very profitable 1AA too? When asked if he could envisage privatisation of the IAA, or a management buy-out, Eamonn Brennan replied that this was a matter for the minister and the Government. The IAA made a profit of E6 million last year, up 25% on the previous year. But Ireland's strategic transatlantic position and the advent of the Single Sky traffic system in Europe means that the IAA could expand massively in the coming years.

It is widely known in the aviation world that British Airways covets Aer Lingus, partly because of the attractions of Dublin as another hub to feed London and partly because of Aer Lingus's very valuable "slots" at Heathrow.

Did BA feature in Willie Walsh's grand plan to buy out Aer Lingus? Would BA feature in any similar plan developed by the new chairman, John Sharman? Are the two plans complementary or in opposition to each other? Yes, intriguing times ahead in the lucrative carve-up of this jewel, in which the Brennan brothers and John Sharman will play an interesting part.