Coalition split on Aer Lingus's future

The departure of the top management team from Aer Lingus has exposed potentially damaging divisions within the Government coalition on the future ownership of the State airline.

The Cabinet subcommittee set up to consider the company's ownership could meet as early as today after the Taoiseach, Mr Ahern, and the Tánaiste, Ms Harney, deliberately stressed different arguments in the debate on the airline's future.

The company, which is set to make a profit this year of some €100 million, has sought an investment of up to €1 billion to replace its transatlantic fleet.

Ms Harney acknowledged "differences of emphasis" between Fianna Fáil and the PDs and said she did not want to see money diverted from essential services to buy planes.

However, both she and the Taoiseach's official spokeswoman rejected suggestions that the parties were split on the issue.

RTÉ's Morning Ireland programme reported early yesterday that a PD official had phoned RTÉ to confirm that the party's transport spokesman, Senator Tom Morrissey, who criticised the Government's approach to Aer Lingus, had been speaking for the PDs.

Mr Ahern chose to promote the position of the Aer Lingus unions and appeared to question the business model developed by Mr Walsh, while Ms Harney made it clear that she favoured private sector investment in the company.

The Taoiseach also claimed to have ruled out Mr Walsh's investment proposal on the day it first emerged, a stance opposed to that of Ms Harney who said at the time that the option should be considered.

The differences emerged when Mr Ahern told the Dáil yesterday morning that the industrial relations situation in the airline had been very difficult. Unions believed "the very people they were dealing with as management wanted to sell out to make themselves extremely rich", he said.

Such assertions were quickly rejected by Mr Walsh, who said nothing could be further from the truth.

Moments before Mr Ahern spoke, Ms Harney told reporters in central Dublin that Mr Walsh and his two senior colleagues had done a "fantastic job" and said their departure was a great loss to the airline.

She did not refer directly to Mr Ahern's stance but said she did not believe there was any difference between her views and those expressed to her by the Minister for Transport, Mr Cullen.

However, she said there "may be issues" around the preferred means of providing new equity for the airline.

While Mr Cullen is said to be moving in favour of floating some 51 per cent of the airline, there is considerable speculation in political and business circles that Mr Ahern has no appetite for any form of privatisation at this time.

Informed sources pointed to Mr Ahern's claim to be socialist while citing his comment in the Dáil that "I will not just click my fingers because some right-wing economists believe we should privatise it."

The Government spokeswoman would not comment on Mr Ahern's preferences, besides stressing that the Government wished to take the best decision for the airline.

Mr Ahern said the unions were not convinced that the cost-cutting and outsourcing business model adopted by Mr Walsh was the best way forward.

Citing concerns about competitiveness in the economy, he said there was "much evidence" of unease in the business community about the reduction in the nature and quality of the connections operated by Aer Lingus.