EU commissioner refuses state aid to airlines

EU transport commissioner Ms Loyola de Palcio has reaffirmed her commitment not to allow state aid to airlines.

At a meeting of EU transport ministers in Brussels today, Ms de Palcio said aid would not be permitted beyond the extra insurance guarantees and compensation for losses caused by the four-day closure of US airspace. Ms de Palcio said the four days are the only concrete yardstick for permissible aid.

To talk of allowing a longer period for state aid would be to open a "Pandora's box" of other loopholes, she added.

Ireland, Italy and France are understood to have lobbied the EU Commission to relax its restrictions on state aid.

The government is attepmting to secure aid for Aer Lingus

Minister for Public Enterprise, Mrs O'Rourke, was due to step up pressure today for European Union permission to give financial aid to Aer Lingus in the wake of the September 11th attacks in the US.

According to Reuterssource the European Commission is set to approve a €125 million bridge loan for Belgian national airline Sabena when it meets tomorrow.

The chiefs of staffs of the 20 EU commissioners approved the bridge loan yesterday, the source said, adding that the decision would go through tomorrow without discussion.

It is uncertain how this will effect the Government’s position in relation to Aer Lingus.

Mrs O’Rourke was briefed on the crisis confronting Aer Lingus by recently-appointed chairman Mr Tom Mulcahy, amid reports that the previously reported 2,500 job cuts - nearly 40 per cent of the workforce - might have to be exceeded.

The Minister pledged last week that every effort would be made to break down EU resistance to exchequer cash being handed to Europe's struggling airlines.

Additional reporting PA