Aer Lingus privatisation - Turbulence ahead over airline sale

THE sudden injection of energy into the Government’s lumbering bid to privatise Aer Lingus has been greeted, inevitably, by growing concern from the trade unions.

That they are fearful for their future livelihoods is understandable. Given the massive gains likely to be reaped from staff shares in the group, however, workers at Aer Lingus could be laughing all the way to the bank.

Aer Lingus staff, doubtless, are taking a keen interest in the looming takeover of Eircom, by Australian investment giant Babcock & Brown, and the handsome benefits that members of ESOT, the employee trust at former State-owned telecoms company, are in line for as a result.

Eircom workers stand to gain €1.2 billion from privatisation, with many picking up a bonanza of over €82,000 after tax.

The outlook is equally rosy for Aer Lingus workers, who own 15% of the company. Yet, in a stark reminder of recent turbulence at the airline, workers are holding emergency meetings to decide on a possible strike ballot if the sell-off is not to their liking.

They would be ill-advised to embark on a course of militant action. An airline grounded by industrial action would less attractive to prospective buyers - a scenario tantamount to workers shooting themselves in the foot.

Trade unions have a right to protect the terms and conditions of their members’ employment, but the financial benefits likely to accrue to staff from a successful sale of the group could diminish if would-be buyers were turned off by a sour industrial relations scenario.

It is easy to understand, however, why the unions are fearful - especially in view of the whopping €340 million deficit in the airline’s pension scheme.

The Government must commit to addressing this vexed issue after the flotation, which is expected to raise between €700 million and €800 million.

Not surprisingly, the push for privatisation has come from the airline’s chief executive Dermot Mannion, having piloted the group, last year, to pre-tax profits of €72.4 million.

Former boss, Willie Walsh, left after turning the loss-making airline around, restoring it to profit.

A high flier in the airline business, he resigned in frustration over Government dithering over the future of Aer Lingus. He now runs British Airways.

The mood of yesterday’s meeting, between union members and Transport Minister Martin Cullen, set the scene for an uncertain journey towards privatisation.

As an island nation, there are compelling reasons for the State to retain it’s golden share in Aer Lingus; to exercise a degree of control over the airline’s future.

The likelihood is that Government will retain a 25% stake in the airline - the minimum needed to give it muscle in the boardroom.

Union demands for the creation of an overall holding operation that would encompass the assets of all State companies, are unlikely to be entertained given the Coalition’s penchant for privatisation, a policy largely driven by the PDs.

Jobs are expected to be at risk after Aer Lingus is privatised, so the issue is set to become a political hot potato in next year’s general election campaign.

And, with most of the workers living on Taoiseach Bertie Ahern’s doorstep, Fianna Fáil is on collision course with grassroots voters in Dublin constituencies where seats are highly vulnerable.