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Written Answers. - Aer Lingus.

Wednesday, 6 February 2002

Dáil Éireann Debate
Vol. 547 No. 4

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 105. Mr. Gregory Information on Tony Gregory Zoom on Tony Gregory  asked the Minister for Public Enterprise Information on Mary O'Rourke Zoom on Mary O'Rourke  her views on the issues raised in correspondence (details supplied) regarding the proposed industrial action at Aer Lingus. [3791/02]

108.

Mr. R. Bruton: Information on Richard Bruton Zoom on Richard Bruton ask the Minister for Public Enterprise the latest report she has received from Aer Lingus on recovery in passenger numbers, revenue and profitability; her views on the implementation of the recovery plan and in particular the dispute with pilots who seek alternative methods of cost reduction in place of compulsory redundancy. [3879/02]

Minister for Public Enterprise (Mrs. O'Rourke): Information on Mary O'Rourke Zoom on Mary O'Rourke I propose to take Questions Nos. 105 and 108 together.

I am pleased that following a day of talks on Monday last, the Labour Relations Commission issued proposals to resolve the pilots dispute which were accepted by both sides. These proposals involve the appointment of an arbitrator to resolve outstanding issues relating to the changes in work practices with the process to be completed by 25 February 2002 and a facilitator to examine all mechanisms for addressing pilot surplus with the process to be completed by 1 March 2002. The LRC also proposed that the notice of redundancy already issued by Aer Lingus management to pilots be withdrawn and that IMPACT-IALPA withdraw notice of industrial action for 11 February 2002 with no further notice of industrial action to be issued during the process. This was agreed by both Aer Lingus and unions.

I urge all parties involved in the next few weeks to make every effort to resolve this dispute. It is essential that agreement be reached and that all the remaining changes which are fundamental to the company's survival and the retention of 4,000 jobs can be fully implemented.

I am informed by Aer Lingus that there has been substantial progress on the survival plan's implementation and the company is on course to meet the financial targets set out in it. Progress has been made on the following key elements – 25% reduction in capacity which came into effect with the introduction of the winter flight schedules, reduction in staffing – over 740 staff have left the company since last September and a further 600 will leave within the next two weeks and arrangements for the departure of remaining staff are under way – extensive work practice and other changes as set out in the survival plan are being implemented, and a number of non-essential assets have been sold. Furthermore, the plan has been assisted by aggressive cost management and by a recovery in volume of sales due to fare promotion initiatives and the upgraded internet facility.

[1602]In relation to 2001 overall, I expect shortly the company's draft accounts. However, due to the progress on survival plan measures outlined earlier, the results for the year will show an improvement on the projected substantial loss at the operational level in the plan. On top of this, significant exceptional costs arose in 2001 with the result that a large overall loss will arise for the year. The company advises that, as set out in the plan, it does not expect any significant improvement in market conditions before the end of quarter three and at this stage does not see any change in the plan's projections for a loss in 2002.

While significant progress has been made and a degree of stability has emerged, the company is still in a very vulnerable position due to its strained cash position and weak balance sheet. Considerable management action and initiative will be required in 2002 both to implement the very significant changes envisaged and to continue to meet the revenue and operating targets. External investment is necessary to support the future development of the company and the Government decision in this regard still stands. However, arrangements to give effect to this decision will not be activated pending resolution of the pilots dispute. Considerable progress has been made on the increased staff shareholding in the company and I expect talks to resume on this matter shortly.

A total of €6,668,770 was paid by the Irish Exchequer to Aer Lingus in December for the four day compensation measures agreed for all EU airlines in respect of the events of 11 September 2001. My Department has formally notified the Commission that we have asked Aer Lingus to provide the relevant figures to the end of December which we are now awaiting. On receipt of that information, I will submit a case to the Commission under the provision agreed at the October Transport Council.


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