Cabinet agrees to sell State’s 25% stake in Aer Lingus

Aer Lingus ‘does not foresee’ redundancies or outsourcing in IAG deal

An Taoiseach Enda Kenny is questioned by Micheál Martin and Gerry Adams on the proposed sale of Aerlingus to IAG.


The Cabinet has agreed to sell the State’s 25 per cent stake in Aer Lingus at a meeting on Tuesday evening.

It is understood the Dáil will vote on the deal on Wednesday.

Aer Lingus chief executive Stephen Kavanagh has told the Minister for Transport he does not foresee compulsory redundancies or outsourcing of jobs in the event of IAG buying the Government’s 25 per cent stake in the company.

In a letter sent to Paschal Donohoe, seen by The Irish Times, Mr Kavanagh moved to reassure the Government as it decided on whether to approve the sale.

In the letter, Mr Kavanagh said Aer Lingus believed collective agreements currently in place provide “flexibility and mobility across our workforce without unduly restricting other possible approaches”.

He added that the company had committed to “expanding the scope of these registered agreements where appropriate to include staff groups not covered by the current agreements.”

“The IAG model is that all employment and union relations issues are strictly the responsibility of the operating companies within the IAG group. As such Aer Lingus will engage in a process of consultation governed by agreed structures with out staff and their representatives when any restructuring is required and we do not foresee a likelihood of either compulsory redundancy or non-direct employment”.

He concluded his letter by saying the IAG approach brings a “significant opportunity for growth” that is in the interest of Aer Lingus and its staff.

Earlier trade unions representing staff at Aer Lingus were briefed by Mr Donohoe on the proposals for selling the Government’s stake while the issue was discussed at Cabinet this morning. That discussion will resume later on Tuesday with a possible announcement later.

Following the briefing with the Minister, Siptu said it would “vigorously oppose” the sale in the airline does not rule out compulsory redundancies or outsourcing.

Labour TD Joe Costello also saida group of party backbenchers with concerns about the sale of the stake would be “loath” to vote for it in the Dáil unless their concerns are met.

The Cabinet discussed the IAG proposals at a meeting on Tuesday morning but the talks have been adjourned until later in the day.

In the Dáil Taoiseach Enda Kenny said the Government would make a decision on Tuesday evening on the IAG offer. Responding to questions from Fianna Fáil leader Micheál Martin and Sinn Féin leader Gerry Adams, Mr Kenny said Mr Donohoe had made a presentation to the Cabinet today on all the issues related to the sale.

He said the decision would be in the “best interests of our country”.

Mr Martin, whose party opposes the sale, criticised the Taoiseach for his response and said the media had been extensively briefed, as had the unions and the Labour party. “And the last place to be briefed is Dáil Éireann.”

The Fianna Fáil leader asked “What do you believe in, Taoiseach?”

He asked what cast iron guarantees the Government could give on connectivity for the island and for the regional airports.

Mr Kenny insisted it would be “quite wrong to speak on the issue when we have not made our decision”. He said that when AIG made its first approach it was “not acceptable to the Government”. He added that Mr Donohoe had said the offer could not be considered “unless there were cast iron guarantees”.

Mr Adams said his party opposed the original sell-off of Aer Lingus by the Fianna Fáil government and they would oppose this sale.

It is understood as part of the proposals the Government would have a veto on any sale of the existing Aer Lingus slots at Heathrow airport in London. There would also be a seven-year guarantee on the use of these slots for connectivity with Irish airports.

Informed sources said the proposed deal IAG would involve assurances that 650 additional staff would be recruited in Aer Lingus and an additional eight transatlantic aircraft would be based in Ireland.

Siptu organiser Owen Reidy said the concerns of members in relation to the sale were again presented to the Minister at the meeting.

“We have been clear from the start of this process that unless clear guarantees can be secured around a number of issues including job security, the protection of conditions of employment as well as connectivity and the maintenance of the Heathrow slots, the sale of the Government shares should not be considered,” he said.

“Siptu members are concerned that, as the proposals currently stand, the management of Aer Lingus has failed to give clear commitments that it will not impose the outsourcing of jobs or compulsory redundancies.”

He said if the proposals did provide security of employment and sustain Aer Lingus to the extent that its executives had stated “then there should be no problem providing the guarantees needed by the workers who have made the airline the success it is”.

“Without these commitments, Siptu members will vigorously oppose the sale of the Government stake in the company.”

An expert group report commissioned by Mr Donohoe is understood to be strongly supportive of the deal. Included in it is an assessment of the value of the Heathrow slots by advisers IBI Corporate Finance and Credit Suisse.

It concludes that the price offered by IAG for Aer Lingus reflects a fair one for these assets.

The proceeds of the sale of the State’s stake in Aer Lingus are to be used for investment in other transport projects, as well as in areas such as broadband.

The deal being considered by the Cabinet would see the establishment of a so-called “connectivity fund”, which would be administered by the Strategic Investment Fund.

The sale of the 25 per cent stake will yield about €400 million for the State, but any investment will be in the form of public-private partnerships. Private investors will have to match the amount put in by the State, sources said.

The Dáil is expected to vote on the sale on Wednesday, as well as on the so-called connectivity fund.

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