Transport ministers meet on aviation crisis

EU transport ministers will discuss the crisis in the airline industry when they meet in Luxembourg today. The Minister for Public Enterprise, Ms O' Rourke, is expected to tell the meeting of the particular difficulties faced by Aer Lingus as a result of last month's attacks in the US. But she is unlikely to specify the steps the Government wants to take to help the airline which yesterday outlined its survival plan to the Minister.

Ms O'Rourke acknowledged last night that the Council of Transport Ministers was unlikely to back a Government loan guarantee for Aer Lingus. The Minister will meet the Transport Commissioner, Ms Loyola De Palacio, before this morning's meeting and will hold bilateral talks with a number of European ministers.

"We will put forward our case on the basis of exceptional circumstances. It is based on an absolutely sharp, radical restructuring so we don't reach the point Sabena finds itself in," she said.

Sabena, Belgium's national airline, filed for bankruptcy protection before the Belgian government extended the airline one month's bridging finance.

Ms O'Rourke declined to comment on the Aer Lingus restructuring plan but she restated the Government's intention to ensure that the airline survives.

Ms O'Rourke and her colleagues will consider the package of emergency measures announced last week by the Transport Commissioner, Ms Loyola De Palacio.

However, they have no authority to change or extend the measures and they cannot change the EU's strict rules on state aid to airlines.

Aer Lingus has been affected more seriously by the attacks than most European airlines and it is one of half a dozen flag carriers that are struggling to survive. The rescue plan given to Ms O'Rourke yesterday could require up to £200 million in new capital.

The Minister has already begun to canvass support from other member-states facing similar problems, including Belgium which has already saved its national airline, Sabena, from extinction by guaranteeing bridging finance for a month. Portugal's Tap, Italy's Alitalia, Spain's Iberia and Greece's Olympic Airlines are all facing similar crises.

Today's meeting will not produce any decisions but it will provide a useful test of opinion among the 15 member-states about what should be done to save the airlines. Germany and Britain will oppose any move towards loosening EU rules on state aid. The Netherlands does not want to help the airlines with special favours but it is worried about the future of Amsterdam's Schipol Airport.

The Commission has made clear that it is willing to improve on the emergency measures announced last week. They are likely, for example, to extend the period during which governments may assume responsibility for war and terrorism insurance cover.

But in a memo published yesterday, the Commission reaffirmed its determination to stop governments from bailing out struggling airlines with public money.

The Taoiseach, Mr Ahern, is expected to raise the issue of Aer Lingus when he attends a meeting of the Commission in Brussels tomorrow.

Opposition politicians and trade union leaders have warned the Commission that a rigid stand over aid to Aer Lingus could make it more difficult to persuade the Irish people to vote in favour of the Nice Treaty in a second referendum.

If the Taoiseach finds a polite way of conveying the same message to the Commission tomorrow, there may be a chance that Ms De Palacio will soften her opposition to the Government's planned loan guarantee.