€1.5bn ‘vital’ for airline’s expansion

AER LINGUS needs up €1.5 billion if it is to expand its long-haul services, the airline’s chairman said yesterday.

John Sharman, who is also acting as chief executive until a successor to Willie Walsh is found, said the airline is looking to add new routes to America and is also eyeing destinations in Asia, the Middle East and Australia.

But Mr Sharman said the airline needs a decision by the Government on its future ownership if it is to raise the cash as it could not finance a major expansion from its own resources.

Transport Minister Martin Cullen is considering a number of proposals for the airline’s future. Among these are the possibility of floating the company. The proposals are expected to go before the Cabinet shortly.

Mr Sharman said he had no particular view as to whether the company should list on the stock market or be sold to private equity backers, so long as it could raise the capital for expanding its fleet.

The airline is reviewing long-haul destinations and this will be completed by the summer.

“Early summer this year is when the board will need to make a decision,” said Mr Sharman. America would present an ideal opportunity as its brand is well known in the market. However, expansion opportunities are limited and dependent on a new “open skies” agreement between the EU and the US.

The search for a new chief executive also continues. Mr Sharman said he hoped to announce a successor to Willie Walsh “very shortly.”

Mr Walsh, who will take over as chief executive designate of British Airways in May, quit at the end of January, along with finance director Séamus Kearney and chief operating officer Brian Dunne.

A number of potential candidates have been touted, including Alan Joyce of Jetstar in Australian and the Emirates Airlines boss Dermot Mannion.

Mr Sharman confirmed yesterday that he would continue as chairman until next March.

Mr Sharman also said he was disappointed that talks with unions over changes to work practices have stalled. The airline said the changes must be implemented if Aer Lingus was to compete with low-cost rivals.

Since 2001, some €350m in costs have been taken out of the business, with much of the savings going towards reducing fares, and the airline said fares would come down again this year.