hkskyline
May 19th, 2005, 03:57 AM
Ireland To Sell Majority Of Aer Lingus, Build New Terminal
18 May 2005
DUBLIN, Ireland (AP)--Overcoming years of division, the government decided Wednesday night to sell most of Ireland's state-owned airline, Aer Lingus (AEL.YY), and to build at least one new terminal at crowded Dublin Airport.
Both issues had defied resolution for the past three years in Prime Minister Bertie Ahern's coalition government. The junior party, the Progressive Democrats of Deputy Prime Minister Mary Harney, favored handing both the airline and the second terminal to private companies, while Ahern's own Fianna Fail party sympathized with labor unions' demands to keep state control of both projects.
In a compromise agreement announced following a Cabinet meeting, the government said it would sell a majority stake in Aer Lingus but retain a minimum 25% stake. This would allow the government to block any decisions by a majority owner.
And it said the state-run Dublin Airport Authority would oversee the building of a second terminal, while the actual running of the facility might be offered to a private company.
Transport Minister Martin Cullen said the government wasn't yet ready to specify details of the sale, such as whether it would be offered to corporate bidders or floated on the stock market.
But he said either course would be necessary for Aer Lingus to raise sufficient capital to compete with private international airlines. He said the government's plan to retain at least a quarter of company shares would represent "a blocking stake" that would safeguard Ireland's national interests.
Since 2001, Aer Lingus has become one of the world's few examples of a profitable state-owned airline. It has slashed staff a third to under 4,000, trimmed fares and opened dozens of new European routes in competition with no-frills Irish airline Ryanair (RYA.DB).
But Aer Lingus' desire to invest in new aircraft, particularly long-distance jets from Boeing or Airbus, has been hampered by European Union restrictions on state subsidies of airlines.
Cullen said with the purchase of long-haul aircraft, Aer Lingus could introduce routes to up to more than a dozen U.S. cities, to South Africa, Asia and Australia. The airline currently flies to four U.S. cities but operates no other routes outside Europe.
"We don't want them to have to compete with one arm tied behind their back," he said.
He said the government hoped to have a second terminal operating beside Dublin's existing lone terminal by 2009. In an apparent nod to the Progressive Democrats' views, he said building a third terminal through a private company on the other side of the airport also would be studied, with possible development about 2014.
Opposition lawmakers blasted the decision as bad for travelers and tourism in Dublin, home to a third of Ireland's 4 million people. They cited increasing overcrowding at the airport, where security checks can take hours to clear and people picking up passengers by car must park in airport garages.
"After all the reports, all the debate, all the advisers, and all the delay, the government has decided to let a monopoly control the airport terminals, on a site that is too small, in a location that is inherently inefficient," said Olivia Mitchell, transport spokeswoman for the main opposition Fine Gael.
Roisin Shortall, transport spokeswoman for the left-of-center Labour Party, said the government should have authorized one larger new terminal immediately. "Those using Dublin Airport want something done to ease the pressure now, not pie-in-the-sky plans about what might be done in nine years' time," she said.
18 May 2005
DUBLIN, Ireland (AP)--Overcoming years of division, the government decided Wednesday night to sell most of Ireland's state-owned airline, Aer Lingus (AEL.YY), and to build at least one new terminal at crowded Dublin Airport.
Both issues had defied resolution for the past three years in Prime Minister Bertie Ahern's coalition government. The junior party, the Progressive Democrats of Deputy Prime Minister Mary Harney, favored handing both the airline and the second terminal to private companies, while Ahern's own Fianna Fail party sympathized with labor unions' demands to keep state control of both projects.
In a compromise agreement announced following a Cabinet meeting, the government said it would sell a majority stake in Aer Lingus but retain a minimum 25% stake. This would allow the government to block any decisions by a majority owner.
And it said the state-run Dublin Airport Authority would oversee the building of a second terminal, while the actual running of the facility might be offered to a private company.
Transport Minister Martin Cullen said the government wasn't yet ready to specify details of the sale, such as whether it would be offered to corporate bidders or floated on the stock market.
But he said either course would be necessary for Aer Lingus to raise sufficient capital to compete with private international airlines. He said the government's plan to retain at least a quarter of company shares would represent "a blocking stake" that would safeguard Ireland's national interests.
Since 2001, Aer Lingus has become one of the world's few examples of a profitable state-owned airline. It has slashed staff a third to under 4,000, trimmed fares and opened dozens of new European routes in competition with no-frills Irish airline Ryanair (RYA.DB).
But Aer Lingus' desire to invest in new aircraft, particularly long-distance jets from Boeing or Airbus, has been hampered by European Union restrictions on state subsidies of airlines.
Cullen said with the purchase of long-haul aircraft, Aer Lingus could introduce routes to up to more than a dozen U.S. cities, to South Africa, Asia and Australia. The airline currently flies to four U.S. cities but operates no other routes outside Europe.
"We don't want them to have to compete with one arm tied behind their back," he said.
He said the government hoped to have a second terminal operating beside Dublin's existing lone terminal by 2009. In an apparent nod to the Progressive Democrats' views, he said building a third terminal through a private company on the other side of the airport also would be studied, with possible development about 2014.
Opposition lawmakers blasted the decision as bad for travelers and tourism in Dublin, home to a third of Ireland's 4 million people. They cited increasing overcrowding at the airport, where security checks can take hours to clear and people picking up passengers by car must park in airport garages.
"After all the reports, all the debate, all the advisers, and all the delay, the government has decided to let a monopoly control the airport terminals, on a site that is too small, in a location that is inherently inefficient," said Olivia Mitchell, transport spokeswoman for the main opposition Fine Gael.
Roisin Shortall, transport spokeswoman for the left-of-center Labour Party, said the government should have authorized one larger new terminal immediately. "Those using Dublin Airport want something done to ease the pressure now, not pie-in-the-sky plans about what might be done in nine years' time," she said.