Business Irish

Tuesday 22 October 2019

In the 'greater interest' that Aer Lingus invests in aircraft rather than buildings - IAG chief Willie Walsh

Willie Walsh: Gave green light to more expansion for Aer Lingus. Photo: Bloomberg
Willie Walsh: Gave green light to more expansion for Aer Lingus. Photo: Bloomberg
John Mulligan

John Mulligan

IAG chief executive Willie Walsh says it’s in the “greater interest” that Aer Lingus invests in aircraft rather than buildings, as the carrier advances plans to outsource its catering operations.

The carrier’s existing facility at Dublin Airport, which employs about 200 people, is to cease operating. The lease on the building expires soon, and the DAA, which operates Dublin Airport, is planning to remove some existing buildings to make way for its expansion plans for the gateway.

"Clearly, it’s in the greater interest that Aer Lingus continues to invest in aircraft rather than facilities that are not core to the business," said Mr Walsh.

The company began negotiations with trade unions this week.

"The consultation is on-going and will continue," said Mr Walsh. “The Aer Lingus team engaged with the trade unions formally this week. That will go on for some time.

"Future expansion plans at Dublin Airport dictate that a number of Aer Lingus facilities in Dublin Airport can no longer be used for their intended purpose," the airline told catering staff earlier this week following a meeting.

It also pointed out that catering is not a directly-provided service in the vast majority of airlines any more.

"Aer Lingus is one of very few airlines directly operating and managing its inflight catering," it noted.

It added: "In this context, Aer Lingus intends to partner with a dedicated catering provider to develop a new off-site facility that will provide a best-in-class catering solution for our growing operation in Dublin Airport."

The new facility is due to open in summer next year.

Mr Walsh also said that a hard Brexit will influence the pace of growth that IAG will implement out of the UK.

However, he said he does not see the UK falling into recession even if a deal can’t be agreed by October 31.

"It changes the view we would have in terms of the rate of growth that we’re looking at," said Mr Walsh.

IAG owns Aer Lingus, British Airways, Iberia, Vueling and Level.

"The economic modelling suggests that growth will be slower," he said. "We don’t see that there would be a recession – it’s not what we’re factoring in at the moment. But I think growth in the UK economy is lower today than it would have been because of this uncertainty."

He also predicted that a hard Brexit will not result in chaotic scenes in the UK.

"I don’t think it will be chaos," he said. "I think a hard Brexit is almost priced in now and has been for some time. Will there be disruption? There has to be; things will not flow as easily as they did flow. So, there will be disruption. How long that disruption will continue for and who will get most impacted by that disruption is still debatable."

He added: "A hard Brexit, in my opinion, will be more negative to the UK economy than a managed Brexit. Things will get resolved at some point."

He said he does not see a hard Brexit impacting air traffic flows between the UK and Ireland, as the two countries will retain the common travel area agreement.

Aer Lingus has built its hub model at Dublin Airport by feeding passengers into the gateway from cities in the UK and elsewhere in Europe.

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