Category: Archive

Aer Lingus gets a double take

February 17, 2011

By Staff Reporter

The cabinet last week agreed upon a package of measures that, if implemented, will represent the biggest-ever transformation to Irish aviation.
At the heart of the proposals is an intention to privatize part of Aer Lingus. The specifics have yet to be finalized, but it now seems certain that more than 50 percent of the airline will be sold off.
Ireland’s Transport Minister, Martin Cullen, has said that the government will retain “at least” a 25 percent stake. Aer Lingus staff will also continue to hold their 14.9 percent stake.
The cabinet has also agreed that a second terminal will be built at Dublin Airport by 2009. There had been disagreement between the two parties in the current coalition government, Fianna Fail (FF) and the Progressive Democrats (PDs), over how much competition should be allowed in relation to the additional terminal.
The PDs had favored direct competition between the new and existing terminals, but most members of FF were resistant to that idea. The final plan is, perhaps unsurprisingly, a compromise.
The new terminal will be owned by the Dublin Airport Authority (DAA), but there will be an open tendering process to decide who will run it. The DAA will also be allowed to enter that process.
The government announced that a third terminal would be considered. However, that idea remains in its infancy, and the government has given few details of how it envisages the third terminal being built or operated.
The partial privatization of Aer Lingus could take the form of a stock market flotation, or of a stake in the airline being “placed” with private investors. A flotation is thought to be more likely, although it is unlikely to take place until early next year.
The idea of a part-privatization has found support among financial experts. The current Aer Lingus board also welcomed the government’s plan.
“It is good news for the future development of the airline,” Aer Lingus chairman John Sharman said in a statement released to the media. “The announcement starts the process of securing more diverse sources of vital funding needed to grow and develop the business.”
Sharman and others at Aer Lingus had been concerned about where the money was going to come from for the acquisition of new aircraft.
Bitter criticism of the government’s plan came from the opposition parties, particularly those on the left of Ireland’s political spectrum. Roisin Shortall, the Labor Party’s Transport spokesperson described the decision to part-privatize Aer Lingus as “shameful.”
Shortall also said that the whole aviation plan was “clearly designed to meet the political requirements of the two parties in government rather than meet the aviation needs of this country and air travelers.”
Sean Crowe, Transport spokesperson for Sinn Fein, welcomed the fact that the government had stopped “dithering” about plans for a second airport terminal. However, in relation to the Aer Lingus plan, Crowe said that “the decision to sell off a majority stake in the company is nothing short of an act of sabotage against a vital piece of national and strategic infrastructure.”
Opponents of part-privatization believe that if the plan goes through, Aer Lingus’s decision-making will be driven by commercial concerns rather than the national interest. The government has argued that its retention of the 25 percent stake will prevent this from happening.

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