Aer Lingus chief executive backs part-privatisation plans
The part-privatisation of Aer Lingus is the best way to secure the airline’s future, its chief executive said today.
Dermot Mannion said the state-owned body needed €400m in new capital to fund borrowing of €1.6bn for new aircraft.
“I honestly believe, and I’ve had extensive meetings across the organisation, not just with unions, but with members of staff, and my view to them is that the best way of ensuring job security for all of us going forward is that Aer Lingus can continue to build on its successful track record. In order to do that, we need new equity,” he said.
The Government is planning to retain a share of at least 25.1% in the airline, with another 14.9% being retained by the Aer Lingus workers through their Employee Share Ownership Trust (ESOT).
At the Oireachtas Joint Committee on Transport, Mr Mannion said the airline was the only full service carrier in Europe that had a profitable short haul service but added that it needed more funds to expand its services.
He was asked by committee members if the part-privatisation would lead to Aer Lingus’ valuable landing slots at Heathrow Airport being sold off, which would create difficulties for Irish passengers wishing to use the world hub airport.
“Heathrow is a profitable operation for Aer Lingus. I expect that to continue. I expect Aer Lingus to have a presence at Heathrow into the future,” said Mr Mannion.
SIPTU has issued notice of industrial action if its members’ concerns over job security, pensions deficits and share ownership are not addressed.
Its national industrial secretary Michael Halpenny said the estimated return to Aer Lingus from the sale would be between 300 and 400 million euro, which was the price of four wide-bodied jets.
“So effective ownership and control is being handed over for less than one quarter of the company’s capital needs (€1.6bn), or four planes,” he said.
But Mr Mannion said the state would also get the income from the sale of its shares, although some of this would have to used to pay the pension fund deficit.
“The total deficit is at the order of €171m. The solution that’s being talked about would involved a lump sum but also a contribution from the company and the employees going forward,” he said.
The committee heard that although SIPTU was opposed to the part-privatisation in principle, it would go along with it if its concerns on pensions, job security and share ownership were addressed.
Mr Halpenny said workers at Aer Lingus were sceptical about the Government’s plan to retain a ’golden share’ of the airline – a minority stake with enough voting rights to influence major decisions.
“Goldman Sachs, the consultants engaged by the Government, warned there were legal complications around this,” he said.
Aer Lingus workers are concerned that their share in the airline will be diluted by the issuing of more shares.
Mr Halpenny pointed out that Aer Lingus had made average annual profits of €80m for the last four years and that since 2001, the number of staff had halved from 7,000 to 3,500.
He said the primary concern of the 1,600 SIPTU members at Aer Lingus was the security of their jobs.
“Obviously, our position is that we don’t believe there’s any need for privatisation.
Whether it’s about a race to the bottom, we don’t know, but you can quite clearly see that there is a fear among our members about that,” he said.
