My Speech in Dáil Éireann on the Aer Lingus Share Disposal

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Deputy Willie O’Dea: Any objective observer looking at the events that have transpired in this House and outside it in the past few days would be forced to conclude that there is collusion between IAG, Aer Lingus and the Government to bypass the public and the Oireachtas on this important decision.

The Minister will be aware that his own members and the Labour Party members of the Committee on Transport and Communications insisted that the committee should consider this matter in detail before the final decision was taken. They have renegued on that, however, and there is not a tweet about it.

I cannot understand why at this particular time the Government would decide to hive off its 25.1% shareholding in Aer Lingus, which is well on the way to being one of the most successful small aviation companies in the world, to a foreign multinational. It is certainly an excellent deal from IAG’s point of view. What IAG is getting will exceed by several hundred million euro, perhaps half a billion euro or more, what it is paying. If the Minister does not take my word for it let him look to the ultimate authority, the London stock exchange. IAG shares rose sharply on the London stock market as soon as this deal was announced. The market has taken the view that whatever about Aer Lingus, the Irish taxpayer and connectivity, it is an outstanding deal for the multinational.

The Minister will also be aware that connectivity is of central importance in my region where a high percentage of people are employed by multinationals. The Taoiseach and the Minister have told us repeatedly that this deal, in so far as we know anything about it, protects connectivity more than the deal that was entered into by the previous Government in 2006. In other words, they are essentially saying that the State will now have more influence on what happens in Aer Lingus when it holds a single share and has nobody on the board, than it had when it held 25.1% of the shares and had two directors on the board. That is a totally unsustainable proposition.

I can well remember the events of 2007 when the board of Aer Lingus decided to reallocate the Heathrow slots at Shannon to Belfast. I can recall the battle that went on over that, as well as how the decision was reversed literally within a year. As someone who was centrally involved in the fight to get those slots back, I can state that it was of enormous benefit to us that we had two State directors on that board. Without their presence on the board it probably would not have happened.

In substitution for two directors and a 25.1% shareholding, we are told that the golden share will protect connectivity in a more substantial way. The Minister, Deputy Donohoe, said the golden share gives the Minister for Finance the right to object to or challenge a disposal of the slots. Somebody else said it was a veto, but which is it? In any case it is a moot point. These golden share deals have been found to be illegal under European law in a number of other jurisdictions. In addition, even if the golden share did provide the protection that the Government claims, it expires after seven years. As far as workers and businesses in the mid-west are concerned, there is not a great difference between five and seven years.

As I understand them, these terms which are supposed to keep the question of connectivity within the remit of the Government, will be put into the company’s articles of association. The Minister should be aware that any public company can change its articles of association by special resolution, which is a 75% vote, at any time. This is set out in statute law on all the model articles of association. In addition, there is a great deal of case law surrounding the legislative provisions, beginning in 1903 in the case of Punt v. Symons & Co. Limited, followed by the case of Southern Foundries (1926) v. Shirlaw in 1940. Those cases are cited with approval by the superior courts in Ireland and Britain right to this day.

They have established a simple proposition that if a company wants to change its articles of association, and that change results in breaking a deal on which the present format of the articles of association depend, then there is no right to seek an injunction to prevent the articles of association from being changed. The State can presumably sue for some level of damages, but that is cold comfort for people in my area who are worried about connectivity and whose jobs depend on it. There is therefore no absolute guarantee and, in effect, it does not matter whether disposal includes sale or leasing.

The Minister talked about the protection of employment, but the only guarantee we have of that is the statement by the chief executive that he does not envisage compulsory redundancies or further outsourcing. The registered employment agreements, REAs, are then dragged in to give the illusion that something wonderful is being done. We are told that the REAs are being reintroduced and will be extended to categories of workers not already covered. The fact of the matter, however, is that according to the Government’s own Industrial Relations Bill, which has just been published, REAs only deal with terms and conditions of employment. They will not save one job.

In addition, section 20 of the Industrial Relations Bill 2015 allows the employer, in this case it will be Aer Lingus as owned by IAG, to apply to the court at any time to get out of its commitments under an REA. Therefore the so-called protections and guarantees are illusory rather than real. IAG is not a charity and its primary focus is not the protection of connectivity or jobs in the mid-west or elsewhere – it is to drive shareholder value. All the decisions will be driven by that alone.

At this late stage, I appeal to the Minister to suspend the vote on this matter. As his own Deputies demanded, he should allow the Committee on Transport and Communications to discuss the matter at length next week so that we can at least know what we are getting into. At the moment we are in the same position as someone who gets a phone call from their solicitor saying: “We haven’t got the papers on this and have not got sight of the deal, but I am signing a very important contract on your behalf at 11 o’clock this morning. You can’t see the contracts or the powers, but I’m signing it on your behalf and you’ll have plenty of time to study it afterwards.” Effectively, that is the position we are in.

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