Future of Aer Lingus - Confusion doesn’t help State airline

ON the face of it, the new-look Government has run into its first serious crisis as a result of what looks like a major communications gaffe at Cabinet level over the future of Aer Lingus.

There was considerable confusion last night as to whether Taoiseach Bertie Ahern was informed by new Transport Minister Martin Cullen that bosses at the State-owned airline had decided not to go ahead with their investment plans.

In the Dáil yesterday, the Taoiseach gave the thumbs down to a management buyout (MBO) because he believed it would be inappropriate.

From the tenor of his response, it was unclear if Mr Ahern knew at the time that the man spearheading the bid, Aer Lingus chief executive Willie Walsh, had told the department last Monday the management plan had been abandoned.

Whether he knew this or not, Mr Ahern failed to inform the Dáil of the dramatic move.

Adding to the confusion, Mr Walsh has denied there was any MBO proposal on the table and said the management no longer had any interest in pursuing permission to develop an investment proposal for Aer Lingus.

With the State-owned airline flying through difficult times, the last thing the company needs is confusion at Government level about its future.

There is now a strong impression that the Government is adopting a policy of steering away from controversial issues such as Aer Lingus.

Apparently, the coalition’s new policy is to push such thorny questions as far into the background as possible in a bid to improve its image in the eyes of the public.

Arguably, we can now expect similar issues, including the privatisation of some CIÉ operations, to be put on the back-burner.

For Fianna Fáil, the Aer Lingus situation has become something of a time bomb on Dublin’s north side, where Mr Ahern is now the only Cabinet member.

With airline unions threatening to run single-issue candidates in the next general election, the party is anxious to defuse the row over the company’s future.

It is vital that Aer Lingus not be turned into a football for party political ends.

Whatever emerges, the apparent communications gaffe represents a bad beginning for the new Cabinet and with Mr Ahern bound for Vietnam, it seems Mr Cullen will have to carry the can.

Fundamentally, the airline’s future has not changed. Competing in a cut-throat business, it must continue to evolve in order to survive.

With oil prices soaring, the need to cut costs remains a priority and management believe it is essential for the survival of the airline that the 1,300 job cuts go ahead.

Whether the management team remains with Aer Lingus is not yet clear.

Its loss would be a body blow.

Mr Walsh and his team have made major strides in salvaging the ailing group, turning it from a loss-maker into a slimmed down, low-cost and highly profitable operation.

Even though it is competing directly with Ryanair, which is Europe’s most successful airline, the national flagship is set to make a profit of over €100 million this year.

Confusion at Aer Lingus is not good for anyone, neither the workforce nor the travelling public.

There is a compelling onus on Government to bring greater clarity to the ongoing debate about the future of the State-owned airline.