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Government Reaping Whirlwind Of Its Own Fudge Over Aer Lingus Decision

Posted on: October 11th, 2007

On Wednesday, statements were made in the Seanad on the Aer Lingus controversy. I told the House that the government was in difficulty over the issue because of its decision to fudge the privatisation of Aer Lingus by keeping a large stake in the company. Thus, it would, we were told, still be under effective state control. The vested interests were kept happy, and this non-privatisation fudge would ensure decisions, like the one taken last week, would never happen.

This was the false impression that the government deliberatley gave at the time. Now they do not know if they have influence or control! Fortunately for them though, they can still use Aer Lingus to reward its party political patsies. Here’s what I told the House:

We should not be having this debate because the Government should have sold its 25% stake in Aer Lingus at the time of privatisation. Had that happened there would be no good reason for it to be a political football now. The Government is reaping the whirlwind of its fudge this time last year when it decided in its wisdom and its desire to cosy up to the unions in Aer Lingus and others, that it would hold on to 25%.

The impression was given, and not contradicted by the Government at the time, that as long as it held 25% and the unions 15%, everything would be all right and the privatisation would not really be a privatisation, but that the airline would remain under State control. The Government deliberately gave that impression to keep vested interests happy. Now when it is being called on to deliver on that unstated but deliberate impression it cannot do so.

I have little sympathy for the Government in this situation. I support fully the sale of State assets. The Government has no business being involved in airlines, airports or banking. If we fudge it this is exactly what will happen. Now it is hoist on its own petard, and does not know whether it has control or influence, which it does not have.

The appointment of directors does not give one control over the day-to-day management of Aer Lingus. While the Government has no business in respect of this decision, it appointed the directors and Members should not forget the other directors are also political appointees. Every one of them was appointed prior to the privatisation by the Government. No one should take great comfort from the forthcoming appointment of two more directors. The Government implies the directors to be appointed will be two of the greatest political patsies ever to have been appointed by it, which will be some record to beat.

They will be expected to deliver on a matter in respect of which they cannot. I feel sorry in advance for the unfortunate people who will be appointed to this board, because they will be expected to take orders directly from the Minister on non-commercial grounds. They will be unable to so do and the Government will be unable to deliver. While it wishes to surmount this problem by stating its intention to appoint two people who somehow will prevent it from happening in future, it will not be averted.

Were the Government really to desire to so do – I do not suggest it should – while it could not interfere with this decision today or tomorrow, it could certainly remove the board. There is no reason to prevent it from getting together with the unions and others to remove the board at the next annual general meeting. However, the Government will not do this.

Allow me to contrast the extraordinary inaction and feeble excuses provided by the Government on this issue with its incredible activity when Ryanair decided it wanted to take over Aer Lingus. No one could have been faster on the road to Europe than the Fianna Fáil Ministers who stated this should never happen. It used its 25% shareholding ruthlessly when it was politically practical. In this case, however, when the Government finds it impossible to deliver, it states there is nothing it can do legally. This problem arises when one is unable to make up one’s mind whether to privatise.

You can read the full text of the debate here.