Lack of flotation proposals worry Aer Rianta managers

Senior managers at Aer Rianta are understood to be increasingly frustrated at the Government's failure to advance its proposals for a stock market flotation.

Aer Rianta's chairman Mr Noel Hanlon is believed to have informed both the Taoiseach Mr Ahern and the Minister for Public Enterprise Ms O'Rourke of this view.

The State-owned company, whose annual results next week are expected to show a decline of more than £15 million in profits reflecting the loss of intra-EU duty-free trade, proposed the flotation of up to 49 per cent of its stock more than a year ago.

This proposal was largely endorsed by consultants appointed by Ms O'Rourke, whose report was published last February. That report, by AIB and London firm Warburg Dillon Read, recommended a partial flotation "as soon as practicable".

But while the Minister is believed to favour the flotation of about 30 per cent of the company, a number of Cabinet members are thought to be against the proposal, for various reasons.

In a speech this week to the Seanad, Ms O'Rourke said she was "continuing to give detailed and careful consideration to the [consultants'] report with a view to formulating my own views".

Yet earlier this year, the Minister said she would bring proposals to Cabinet before Easter. This did not happen.

A spokesman for Ms O'Rourke said yesterday that matters such as the strike by drivers at Dublin Bus had intervened. The Minister had been concentrating on reforming public transport since then, he said.

While accepting that certain Cabinet members appeared to be opposed to the proposals, he argued that divergent views were normal at Cabinet level.

Aer Rianta's chief executive Mr John Burke has suggested the company could be floated by the middle of next year. But Ms O'Rourke's spokesman said yesterday that this was unlikely to happen before 2002.

It was always the intention to float Aer Lingus before Aer Rianta, if that was what the Government decided, he said. Aer Lingus is keen to float this year, although no successor has yet been appointed to replace Mr Garry Cullen, who resigned as chief executive in February.

It is believed that Aer Rianta's management expected guidance from the Government on its future funding in advance of its a.g.m., also next week.

The company has a capital expenditure programme worth some £500 million, which it wants to fund by an initial public offering on the Stock Exchange. It has ruled out additional borrowings, arguing that this would leave it highly leaveraged. The current statutory limit on its borrowings is £250 million.

Company managers believe the Tanaiste, Ms Harney, may be opposed to the plan on the basis that she believes floating Aer Rianta may replace a State-owned monopoly with a privately-owned one.

Aer Rianta figures also believe the Minister for Finance, Mr McCreevy, may be opposed to the flotation plan although attempts yesterday to contact Mr McCreevy's spokeswoman failed. The Minister for Tourism Dr Jim McDaid is believed to oppose the proposal because he fears that a partially quoted company would raise landing fees, damaging tourism. Another suggestion is that the Minister for Arts, Culture, Gaeltacht and the Islands, Ms de Valera, is not convinced about the proposal's merit.