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16 March 2006 Edition

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Aer Lingus: Privatisation imminent

BY Justin Moran

SIPTU national industrial secretary Michael Halpenny

SIPTU national industrial secretary Michael Halpenny

Preparing for a fight at Aer Lingus

The impending government decision to sell Aer Lingus will be strongly opposed by a SIPTU campaign growing in momentum. Members in Shannon and Dublin Airports have enthusiastically backed proposals for a protective ballot on industrial action. A meeting in Cork Airport is expected to yield a similar result.

Speaking to An Phoblacht, SIPTU national industrial secretary Michael Halpenny said the ballot would greenlight industrial action in the event of unilateral movement on privatisation. "The ballot will only come into effect if the company proceeds unilaterally towards privatisation without addressing our core concerns on employment, job security and pensions."

Halpenny drew a distinction between the political decision on privatisation and the threat to employee's interests from such a proposal. "Our dispute is with management over the threat to the terms and conditions for employees. The decision to privatise the airline is a political one for the Government and one we are determined to resist, but it is only in the context of the implications of privatisation for workers that we can consider taking industrial action.

"It is by no means certain that it would even be possible for management to address our concerns in the event of privatisation of the airline."

SIPTU has also written to the Department of Transport in an effort to pin the Government down on the issue of state investment in Aer Lingus. Many commentators have inaccurately reported that EU rules forbid the state investing in publically owned companies.

The EU Commission recently confirmed that it has no objection to state investment in public companies so long as it meets the 'market investor principle', which means simply that if a prudent investor would not invest then such an investment would be a state aid and against EU rules. If the company is viable, the state can invest in it.

In the year ending 2005 Aer Lingus made a pre-tax profit of €82.6 million with passenger numbers up 15.6% to eight million and 16 new routes, underlining the company's position as a viable, profitable and successful asset.

'Golden share'

The Government's suggestion that in any floatation of the company it will retain a 'golden share' of 25% to ensure the interests of the Irish people are protected is a proposal that Halpenny is sceptical about.

"According to the Goldman-Sachs report of 2004 commissioned by the Government, the EU's position on the state retaining a 'golden share' following floatation of a company is not at all clear. In fact the EU Court of Justice recently found against the British and Spanish governments in their efforts to do the same in two publically owned companies", he said.

"People also need to understand that any investor who comes into the company is going to be planning an exit strategy from day one that maximises a quick, profitable return on their investment and there is no sign the Government has taken this into account."

Following the Eircom debacle, SIPTU's warning should be closely heeded. Last week Dermot Mannion, Chief Executive of Aer Lingus made clear his view that any Government blocking share would be used very sparingly.

SIPTU also question a number of the figures being thrown about in discussions around the proposed sale, some of which seem to have been plucked out of thin air in an effort to undermine the argument that the state can, and should, retain ownership.

"Management claim that the company's capital requirement is for €2 billion up until 2012 but this is substantially more than the €1.2 billion Willie Walsh said was necessary when he was in charge", Halpenny said.

"Similarly, the Government's own advisors UBS and AIB Capital Markets claim that the sale of the state's holding, less the 25% it proposes to keep, could only realise approximately €400m (or the price roughly of four wide bodied jets).

"This means that the National Airline would be effectively delivered to private investors for the price of four planes, with the company still having to chase the balance of the €2 billion capital requirement outlined by them.

"There would be nil gain to the Exchequer, marginal gain for the company, major concern for our members and the removal of public, democratic control over a strategic asset vital to the economic security of the State."

Political opposition to the sale of the company appears limited to Sinn Féin and Labour at Leinster House level, though councillors in Fianna Fáil and Fine Gael backed Sinn Féin motions opposing the sale of the company on Dublin City and South Dublin Councils and increased pressure on Fianna Fáil TDs on the northside of Dublin could cause difficulties for the Government.

The announcement of a share floatation and the privatisation of Aer Lingus is expected from the cabinet before the end of the month as the Government, in an act of economic vandalism, seems unalterable from its intended course. SIPTU are equally determined to resist but will need a great deal of support to inflict what would be a most significant defeat on the Coalition government and the failed politics of neo-liberalism and privatisation.


An Phoblacht
44 Parnell Sq.
Dublin 1

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