Just 18 months ago the talk was of State companies lining up for flotation. How the picture has changed in such a short time. Aer Lingus - previously seen as a prime candidate for early flotation - has confirmed that the national airline is now heavily in losses. The Electricity Supply Board, which also published its annual report yesterday, recorded a surplus for last year, but is facing an era of increased competition. Far from overseeing the sell-off of State companies, the Minister for Public Enterprise, Ms O'Rourke, now faces some difficult decisions.
Nowhere is the changing environment better illustrated than at Aer Lingus. Its 2000 results, published yesterday, showed record profits of £60 million. Yet this year it will record losses of around £20 million. It has been hit by the slowdown in international growth and has other problems closer to home, not least a dreadful industrial relations environment. The controversy surrounding the dismissal of its chief executive, Mr Michael Foley, did the company no good at all. The ESB, meanwhile, recorded a surplus of £31 million last year, incurred after the inclusion of a £236 million charge following agreement with the trade unions on a major restructuring. This time last year the ESB was also seen as a candidate for flotation, but now its chairman says that this will not be considered until 2003.
Ms O'Rourke, as shareholder on behalf of the people, must set the course for both these companies. In the case of Aer Lingus, it is likely that some buyer could be found, if the Minister wanted to sell off all or part of the airline. However this would be the wrong course, as sale now would only be feasible at a knock-down price. A report from consultants to Ms O'Rourke is also likely to also point to flotation as an option, but to say that the timing would have to be correct. Clearly, neither the company's financial position, nor the state of the markets favour an early flotation. The immediate task for Aer Lingus, as outlined by its acting chief executive, Mr John O'Donovan, is to get its house in order and stabilise its financial outlook - and its industrial relations situation.
The ESB board and management also face a daunting task, overseeing the restructuring of the company and a massive investment programme in its network. If the company is to prosper, then the efficiencies planned in its restructuring programme must be achieved. Also, following the vetoing by the Government of its planned investment in Poland, the company needs to agree a clear mandate from the Minister.
Both Aer Lingus and the ESB must now survive against ever-increasing competition. If they are to do this they need clear direction from their Government - which takes account of the non-profit aspects of their services - and management capable of guiding large and complex organisations through difficult changes.