Top Issue 1-2024

6 May 1999 Edition

Resize: A A A Print

Workers in struggle

One world for whom?



BY NEIL FORDE

The privatisation bandwagon rolls on this week with the announcement of a possible strategic alliance for Aer Lingus with the One World airline consortium. One World is the largest global alliance of airlines and includes British Airways (BA), American Airlines, Cathay Pacific, Canadian Airlines. Quantas, Iberia and FinnAir. BA, the world's largest airline, is undoubtedly the dominant airline in the consortium.

There are, though, two sides to every story. Last week's announcement of a strategic alliance for Aer Lingus is such a case. We have in one corner the successful competitive dynamic airline company eager to grow and forge new alliances. In the other we have the company back from the brink of financial disaster forced to sell out to foreign opposition.

We have a strategic alliance promised for Aer Lingus which will be a ``mutually beneficial partnership'' or could it be an alliance that is in fact a gradual take-over of Aer Lingus by BA?

We have two government policies on the Aer Lingus alliance. Public Enterprise minister Mary O'Rourke has stated that she doesn't envisage any foreign company taking equity in Aer Lingus. However, Employment and Enterprise Minister Mary Harney thinks BA taking equity in Aer Lingus would be a logical step.

So what is the real story of Aer Lingus's proposed alliance? In the early 1990s, Aer Lingus was a heavily indebted company on the brink of disaster. A series of managerial mistakes and failures brought the airline to its knees. Apart from failure to control non-wage costs, Aer Lingus had leased aircraft that sat on tarmac for over a year costing the airline hundreds of thousands of pounds.

Even Aer Lingus's subsidiaries were in trouble, with its travel company, Aer Lingus Holiday, running up debts of over £10 million. A further £7.2 million had to be set aside to cover other losses. The company's accounts had been falsified for five years, hiding the losses. In the case of Aer Lingus itself, the Dublin government had to put up £175 million to secure its future.

Now the bad days have been forgotten at the national airline. Last year, they registered pre-tax profits of £52.4 million, an increase of 14% on 1997. Passenger numbers increased by 10% to 5.8 million. Received wisdom is that if Aer Lingus is to grow further it must forge an alliance with other companies outside Ireland. This would give it access to more passengers, higher sales and more profits.

At first glance this sounds like a good deal. However, there has been little comment about the proposed strategic alliance partners. What role, for example, will British Airways play in the future of Aer Lingus? If they did end up holding a share of Aer Lingus, would their industrial relations practices be implemented in Aer Lingus?

In 1997, BA had an industrial dispute with its workers. They threatened to sack and sue cabin crew and ground staff who went on strike. A letter sent to each worker threatened ``You could be dismissed and you could be sued by BA for damages as a result of the losses incurred''. They would also lose the prospect of promotion and the option of early retirement if they went on strike.

Workers were coerced to break the strike and were told they would be transported secretly into Heathrow and housed in hotels at the airport. Senior management at BA formed a committee called the ``Miner's Group''. to encourage the strikers to split as the coalminer's union had done in the 1984 strike. Their aim was to reduce ``the hold of trade union power over cabin crew members''. The group reported to Robert Ayling, who is now BA's chief executive

In the end of the dispute, BA lost £125 million. The cost cuts the union wanted to fight would have saved the company only £42 million. The recent chequered past of Both Aer Lingus and BA was glossed over last week when the strategic alliance announcement was made. It seems that the media, Aer Lingus and the Dublin government are only interested in the sunny side of this story.

The reality is that there is possibly only one likely outcome from the alliance process. Yes, Aer Lingus might end up with more passengers and more profits, but this might also mean less workers earning less wages, working in worse conditions with less benefits flowing to the Irish people. Are ministers O'Rourke and Harney prepared for that eventuality?


Cablelink - sell off or sell out



BY NEIL FORDE

It was privatisation alright, but not as we know it. The sell off of Cablelink was a case of privatisation for consenting adults last week. The allegations counter allegations and High Court writs flew.

At stake is control of a simple wire network that runs into 360,000 homes across small pockets of the 26 Counties but mostly concentrated in Dublin. This network is owned by Telecom and RTE. Telecom are the major shareholder owning 75% of the company. Cablelink has to be sold off as part of the Telecom privatisation process.

Just last December Cablelink was valued at £160 million by BSkyB. Cablelink's last recorded profits were just £5 million. This week ESAT Telecom were demanding that they should be allowed buy the company for £410 million. Another company NTL owned by Bill Gates' Microsoft is prepared to top any bid made for the company by 15%.

Clearly something fundamentally important is up for grabs. The fact that ESAT who last year lost £44 million and already plan to spend £100 million on capital developments this year see something very valuable in Cablelink.

So does Tony O'Reilly. His Independent Newspapers is part of a consortium including TCI the largest cable company in the USA. ESAT's beef with the Cablelink sell off was a simple one. They believe that NTL tried to rig the bidding process asking them to bid lower prices and then make a tender that offered to bid more than any of the tenders. This week all the parties are in court fighting it out.

What has been overlooked is why Cablelink's network is so important. The reason is this. In a world where households are buying more and more communications and information based products control of one of the methods of delivery is crucially important.

The cable into your home cannot only deliver TV but could also be a phone connection, internet service, video on demand, video phone, pay-per-view TV, home shopping and banking. There are a range of profitable commercial enterprises waiting to be exploited.

The fact that companies like Microsoft and Independent Newspapers are interested in Cablelink shows that there must be significant gains to be made.

Surely there is a need for such a potent communications medium to remain in public ownership. Last week we highlighted the fact the public are not being include in the Cablelink sell off. Why not?

Something is very rotten in the Cablelink sell off. It is wrong that the Dublin Government are standing by while the corporate dogs fight it out. They should retain control of Cablelink. A quick £500 million now is not enough. In the long run £500 million will seem paltry compared to the money Cablelink could make for the Irish people.

Afterall we are going to be ones buying the videos, using the internet and watching the television programmes. Why should we not share the profits? Bill Gates and Tony OReilly already have enough money.


Telecom workers threaten strike


Members of The Communications Workers Union of Ireland, meeting at the their annual conference in Waterford this week, have threatened to ballot their members on strike action.

The CWU want the worker directors who are currently on the board of Telecom to be promised places on the board when it becomes a public limited company.

MEP's expenses


Irish voices were silent in Brussels this week as the 500 other MEPs fought it out over proposals that they should receive fixed salaries, paying tax and that they should have to produce receipts for their expenses.

The European Council wants MEPs to be paid an average of the rate paid to members of national parliaments and to pay tax in the states they represent.

The council also wants the MEPs to actually produce receipts for the expenses they claim. Up until now, the MEPs have been claiming the top rate of expenses and pocketing the money they didn't actually spend.

Some Irish MEPs have said they will support the proposals even though British MEPs will lose out because of exchange rate changes as sterling is not participating in the euro project. Sympathy for the pampered and overpaid MEPs is not high in An Phoblacht. They already enjoy an income that is over twice the average industrial wage.

An Phoblacht
44 Parnell Sq.
Dublin 1
Ireland