Concerns persist as coffers grow

It looks like the ‘will they won’t they’ saga on Aer Lingus is coming to an end, writes Paul Mills.

They say that a week in politics is a long time. Clearly, a few hours in politics are a long time. On Tuesday morning we were still being led to believe that while the Government had received the report on the proposed sale of the State’s 25% shareholding to IAG, owners of British Airways and Iberia, its decision on which way it was going to jump could still take up to two weeks.

Later on, of course, it became clear that lest anyone steal Enda’s thunder, the news that a decision was imminent had to come from him and so it did.

Finally, and laterally not surprisingly, the Government confirmed it had agreed to sell its 25.1% shareholding as IAG had adequately modified its ‘unofficial’ offer and confirmed its assurances on routes and on the Heathrow slots.

It’s clearly been a thorny issue for a Government that wants to keep on side with the electorate and the strong public sector unions while needing the now €350m and change that it will accrue from the sale, if it is to have enough largesse coming up to the next general election.

Even now it’s not totally out of the woods. The Dáil will undoubtedly rubberstamp the Cabinet’s decision but that’s not the end of the tale. It still depends on Ryanair’s position. While Ryanair claims it has not received any offer for its 29.8% holding of Aer Lingus, it doesn’t seem to have too much leeway given the recent judgment from the UK that it should sell most of its shareholding in its Irish rival.

The day prior to the announcement, Impact, the union representing pilots, cabin crew, and others, wrote to Transport Minister Paschal Donohoe in an effort to ensure its concerns are addressed in any sale. It claimed IAG assurances on job security are worthless. It said selling Aer Lingus would result in “higher fares for consumers” and would damage economic recovery.

Siptu also entered the fray, suggesting it will fight the decision. It’s fair to assume that concerns of both unions are related to long-term job guarantees for their own members rather than any national interest.

IAG has confirmed, in an agreement that is being claimed as “legally binding”, that it will develop Dublin as a hub for transatlantic routes, that Aer Lingus will not only keep the slots at Heathrow and that the routes between the Irish airports and Heathrow will continue but that the Irish Government will also effectively get a “legally binding” veto that will allow it to safeguard the slots for an unlimited period. It also confirmed the Aer Lingus brand will continue and that the airline’s headquarters will remain in Dublin.

Other bodies across the State, including the Consumers’ Association of Ireland, have come out with a range of concerns and objections to the sale. While most are based more on nostalgia than anything else, there are genuine fears about what will happ-en in the future, and how the control of the slots and connectivity out of Ireland will be impacted in the longer term. It’s a fair but impossible question.

We can only guess the answer. That applies whether we sell the Government’s shares or not. The one thing we should have learned is that there are really no guarantees in this life.

Who would have thought even a year ago that oil would drop below $50 a barrel? Two years ago who would have known that a group such as Islamic State would spring up with the potential to change the shape of an already volatile Middle East and the potential to alter all of our lives in the worst possible way?

In a way it’s easy to understand distrust on assurances. Promises drop on a regular basis from the lips of politicians. Politicians have created this stick for us to beat them with.

‘Expert opinion’ is that a small, standalone airline cannot survive longer term. IAG seems to have addressed all of the politicians’ concerns. Aer Lingus has addressed the issue of redundancies and outsourcing. We still need to keep an eye on the ball. However, we are not helpless and will not be in the future.

Let’s not forget that Ryanair rose from nothing 30 something years ago...


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