Monday 11 December 2017

Aer Lingus takeover in disarray as Labour and unions split

Joan Burton and Pat Rabbitte
Joan Burton and Pat Rabbitte

Philip Ryan and John Mulligan

The €1.4bn deal to buy Aer Lingus has been thrown into further jeopardy after major splits emerged in the union movement and the Labour Party.

A crunch meeting is expected to be held today involving airline management unions, as well as representatives of aviation giant IAG, which wants to take over Aer Lingus.

The meeting is aimed at making progress towards a potential sale and allaying concerns that have dogged workers since news of the takeover bid first broke last month.

However, fresh splits within the unions and the Labour Party are hampering progress.

Union opposition to the sale appeared to have lessened over the weekend, as an e-mail emerged from a senior official claiming staff were warming to the idea.

The secretary of the airline's central representative council, Myles Worth, also warned the airline could be in a "precarious" position in the future if it did not accept a bid.

However, a spokesman for the Irish Congress of Trade Unions, which also represents workers, said it was "surprised" by Mr Worth's comments.

And IMPACT, which represents 1750 staff, has written to the Aer Lingus CEO Stephen Kavanagh saying Mr Worth's comments were not authorised by the union.

Meanwhile, Labour remains in disarray on the issue - with former Cabinet Minister Pat Rabbitte facing a backlash after he suggested the Government should sell its share in the company.

"If we don't take this opportunity, when will another come along?" asked Mr Rabbitte.

But this was immediately dismissed by Labour leader Joan Burton.

"Our position remains unchanged, we still have concerns about the potential job losses and issues around the Heathrow slots and connectivity," a spokesman for the Tanaiste said.

The fate of the 25pc stake held by the State will be crucial in any deal with IAG, the airline group headed up by former Aer Lingus CEO Willie Walsh.

Aer Lingus will publish financial results for 2014 tomorrow, and executives will also host a presentation for investors in London to provide more detail about its strategy.

There appeared to be a shift in favour of a sale at the weekend when it emerged union official Mr Worth had sent an email to new CEO Stephen Kavanagh, in which he said staff were "excited" about the prospective takeover.

He expressed enthusiasm about more routes to the USA and the hope of 500 new jobs.

Mr Worth later told RTE: "The danger of this (deal) going away is that the company could eventually go into a downward spin and who knows going forward what would happen if that was the case."

He added: "If this bid was to fail and the share price went down, there is a likelihood the chief executive Stephen Kavanagh would have to put together an aggressive cost-cutting plan anyway."

But a Siptu source said it had not yet reached a decision on the issue, adding that further clarification was required. Other unions were also said to be puzzled by Mr Worth's enthusiasm.

An Irish Congress of Trade Unions (ICTU) spokesman also told the Irish Independent that it remained "unconvinced" by any proposed sale.

Mr Worth did not return calls last night.

Comments by Mr Rabbitte also sent the Labour Party into turmoil.

A Government steering group is still considering all aspects of the sale, but it is unclear when it will bring a report before Cabinet.

Mr Rabbitte said he is now in favour of the sale, after hearing more about the proposal from Mr Walsh.

"The Government is right to get back to routine decision making and avoid errors. However, this is not the same as avoiding making a hard decision where the balance seems weighted in the national interest," Mr Rabbitte said.

However, Dublin North TD Brendan Ryan said his Labour colleague's opinion holds no more weight than his, now that Mr Rabbitte is a backbench party member.

"Pat's no longer a minister so his view is no stronger to mine or Joe Costello, John Lyons or any of the Labour people working on this," Mr Ryan said.

Mr Ryan is a member of the so-called 'Aer Lingus Seven' - a group of Labour members who have voiced strong opposition to the sale.

Meath East TD Dominic Hannigan, who is also a member of the group, said he still thinks the company is being undervalued.

Unconvinced

He said that the Government should not accept a bid for its stake if it's not far in excess of the suggested €340m price tag.

A spokesman for party leader Ms Burton also said the Labour leadership remains unconvinced that the sale is the best deal for the country.

There are concerns about job losses and landing slots in Heathrow Airport, he said.

The IAG boss recently went before an Oireachtas Transport Committee to set out his proposals over the potential takeover. Mr Walsh said he could offer a "cast iron guarantee" on Heathrow slots - but admitted there was potential for job losses from the sale, especially in administration.

However, he envisaged up to 500 additional jobs being created in Dublin for engineers, pilots and flight staff.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business