9 November 2006 Edition

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What now for Aer Lingus?


As Aer Lingus management and worker shareholders this weekend presented their formal rebuttals to the Ryanair €1.4 billion takeover offer, and with the public acknowledgement by Michael O'Leary that he believes his bid will fail, what now for Aer Lingus? It still has to spell out its long term strategy as a national transport resource.

This has become all the more compelling as the recent British and Irish Government study on the all-Ireland economy points to the need for a joined up strategy of airport development and aviation on the island. It makes sense that Aer Lingus would play a central role in any such strategy.

The present Aer Lingus strategy is to accelerate its new short haul routes and to have a 28% growth in long haul capacity in 2007. Speaking on RTÉ radio, when pressed on whether there would be more job cuts in the airline, CEO Dermot Mannion glibly replied that he "would rule nothing in or out".

The Aer Lingus Employee Share Ownership Trust (ESOT) has begun to ballot its 4,665 members on the takeover. Though the ESOT board is not formally recommending a No vote, it did say that Ryanair had been silent on "profit sharing" agreements now in place in Aer Lingus, and that Michael O'Leary's claim that his offer is worth €60,000 to each member is incorrect.

Sinn Féin TD and Transport spokesperson Seán Crowe raised the hostile takeover in Leinster House last week, describing the flotation as a "fiasco". "There is a crisis in the airline," Crowe said. "The flotation has not created stability and certainly has not guaranteed jobs."

Crowe also raised the recommendations in the new British-Irish study on the all-Ireland economy for the development of the airports and aviation. He said that for now it seems that Aer Lingus is "on course to become a Ryanair Lite, when it has a significant role to play in freight transport and in keeping Dublin and Ireland as a major hub of international air travel". He asked, "When will we have the joined-up national aviation strategy with Aer Lingus at its centre?" The coalition government has, according to Crowe, "undermined Aer Lingus as a company instead of improving it".

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