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Aer Lingus sale puts price over real value


Pascal Donohoe said commitments made by IAG on jobs, routes and lucrative Heathrow landing slots at the Irish flag carrier did not go far enough

Pascal Donohoe said commitments made by IAG on jobs, routes and lucrative Heathrow landing slots at the Irish flag carrier did not go far enough

Pascal Donohoe said commitments made by IAG on jobs, routes and lucrative Heathrow landing slots at the Irish flag carrier did not go far enough

In the debate on the proposed sale of the State's final share in Aer Lingus, a key question has still not been answered, certainly not to a level of satisfaction that convinces: what wrong will be put right by this sale of the national airline?

The bottom line seems to be that the State will realise the princely sum of €325 million by off-loading its final 25pc stake.

When Willie Walsh of IAG writes that cheque he will send it to the Department of Finance and Michael Noonan will endorse the cheque to the European Central Bank c/o Frankfurt.

After that, Aer Lingus will be gone, to form part of an international airline conglomerate and a small reduction will be made in the State's massive debt.

Beyond that, there seems to be no further guarantees, certainly no medium to long-term guarantees that can be taken to the bank, other than Aer Lingus will be sold and the State will have no further control over airline connection to the country.

It seems to me that the entire debate has become entrenched in political ideology, along predictable lines, without due consideration as to what the people want; the people being Aer Lingus customers after all.

Here is a suggestion: when the people vote in May on the same sex marriage referendum, and on a proposal to lower the age of a future President, why not ask them whether Aer Lingus should be sold to IAG or not?

Is this a ludicrous proposition, to also ask the people, by plebiscite, what they want in relation to the future of the national airline? I do not think so.

Under the bailout programme, the last Government undertook, or was forced to undertake to consider the potential for disposing of State assets.

In this Government's Programme for Government a target of up to €2 billion was set for the sale of non-strategic State assets, after adequate regulatory structures were put in place to protect consumers.

The State owns important parts of the economy - ports, airports, electricity generators, and gas and electricity transmission systems.

It also owns a household waste collector, a tour operator, a horticulture business, and a stud farm.

So there is scope for further privatisation.

An estimated €8.3 billion has already been raised through the sale of State assets in steel, sugar refining, banks, telecommunication and, yes, airlines.

And largely as a result, the share of the commercial state sector fell from 8pc of total employment in 1980 to 2pc in 2008. The proposed sale of the State's remaining shareholding in Aer Lingus has centred on the connectivity, employment and, of course, politics.

It is doubtful a final decision will be taken before the General Election.

But why not ask the people what they think?

The Aer Lingus slots at Heathrow are said to be worth up to €925 million.

The airline has net cash of €445 million.

The IAG offer of €1.3 billion, therefore, seems to me to be a poor one indeed.

But beyond that, beyond even the intricacies of the notoriously cyclical airline industry, there is also an emotional issue to consider.

Alongside Guinness, Kerrygold and Waterford Glass, Aer Lingus is one of the strongest brands of Ireland Inc. What value can be put on that?

Guinness is now French-owned; Waterford Glass has been reduced to a tourism theme-park.

IAG has vowed to maintain, for a period of five years, the Heathrow slots, and for an indefinite period, the Aer Lingus brand, the shamrock in the sky.

That vow will be honoured only in so far as it is strategically profitable to be maintained.

When or if it is not, a decade or a generation from now, the State will be left with nothing: no say over who flies in and out, no control over connectivity, and no brand to which the people can relate at an emotional level. Nothing but a cheque stub marked 'Frankfurt'.

After years of painful readjustment, Aer Lingus is profitable.

So what is to be achieved, what problem will be solved by this sale? Surely there is still a role for a profitable regional airline to exist in a globalised world.

Let the people decide. The emotional attachment is theirs, after all, and has been for almost 80 years.

There must still be some value to that attachment; or is it that we have become so inured to the dictates of the new world order that it has now become official: we know the price of everything and the value of nothing.

Sunday Independent