Intervention would be “inappropriate”

The latest on the Aer Lingus Shannon [no] Show comes via the Irish Times breaking news – The Irish Government has said it is “inappropriate” for it to intervene in the decision-making process of Aer Lingus and that to do so would “ultimately be damaging to the company and its customers” – That’s apparently an official statement.. delivered on behalf of the government by.. the Education Minister Mary Hanafin.. [Where’s Willie? – Ed] Adds Official statement here

“As a listed plc, Aer Lingus has to take it own decisions. It is inappropriate for the Government to intervene in the decision making of a private company. To do so would ultimately be damaging to the company and its customers.”

More RTÉ report

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  • There is only one way the Government can enforce this. Acquire a company with an Air Operators Certificate and rename it “Government of Ireland Air Services Limited” and transfer the ministerial jets to the civil register.

    Offer Aer Lingus a market-rate sale and leaseback arrangement for the slots [the problem being that the slots are probably EI’s best asset] – if this is refused by the board, sack it. Subsequent sale of the 25pc stake would fund some if not all of the purchase price.

    The Air Corps would go ape at losing their fastest planes, but that’s hardly the most important issue. They should be decentralised to Shannon (fixed wing) and the Curragh (rotary) anyway as an easy way to help it financially, and Baldonnel sold.

  • [note – the reason the govt needs an AOC is you have to have one to be a slotholder]

  • It was Sammy Mc Nally what done it

    “As a listed plc, Aer Lingus has to take it own decisions”.

    If govt. and Ryanair are 2 biggest shareholders surely they can help Aer Lingus make their own decisions as suits the shareholders.

    Although I personally hope the Belfast switch goes ahead the enjoyable thing about this fiasco
    is listening to the blustering Will O’Dea tryng to face, whilst sporting his ridiculous mustache, in 2 directions simultaneously.

  • It was Sammy Mc Nally what done it

    Nothing to do with Aer Fungus or the ridiculous Willie O’dea but some Limerick men to be proud of – match details from Bayonne

    http://www.irfu.ie/283_8578.php

  • smcgiff

    ‘”As a listed plc, Aer Lingus has to take it own decisions”.

    What a load of bollix.

    You only need 10% to call an EGM, and with Ryanair (the national airline) having 25% and the Employees some 12.5% this is a cert. You would then need the Gov to actively vote against keeping the slots in Shannon. Not a pleasant prospect even if there’s five years to the next election.

    I think Belfast is counting its chickens too soon.

    As for this being something to do with Northern Ireland – Again Bollix. If the slots had been proposed to move elsewhere, say, Dublin or Cork, there would have been equal outcry. Don’t flatter yourselves!

  • slug

    Me thinks the govt should sell its 25% pretty quickly.

  • It was Sammy Mc Nally what done it

    “Me thinks the govt should sell its 25% pretty quickly”

    Perhaps McGuiness & Paisley of Non Iron Ltd should buy it

  • páid

    smcgiff,

    what makes you think the workers, through esot, will back o’leary?

    Aer Lingus workers, most of them Nortside Dubs, regard O’Leary like MaryLou regards John Prescott.

    Cunning Lingus fucked up with the timing of the announcement.

    Ah, August, everyone on holiday.

    Forgetting….

    Ah, August, no competing news.

  • The Dubliner

    “Me thinks the govt should sell its 25% pretty quickly” – Slug

    They should sell it not just because of any future shenanigans that may arise from either public or the self-serving clowns like Willie O’Dea (and only the risk to a FF seat in Limerick is preventing him from being sent to the backbenches in the next reshuffle after his embarrassing intervention, allowing himself to be caught by the balls by Michael O’Leary and dragged around the media, before being dumped as odd-man-out in government) not grasping that former state companies, now privatised, are not subject to the whims of government intervention, even where the government remains as a minority shareholder.

    The decision not to intervene (or play O’Leary’s silly PR games) is a victory for the free market – and those within government who support it without qualification.

  • The Dubliner

    Slightly off topic, but swimming with sharks with the sharp teeth, cunning and ruthlessness of Michael O’Leary is a very good reason why companies are best run by other sharks and not by civil servants.

  • DK

    If Aer Lingus are prevented somehow from moving to Belfast, well there is obviously a business case for an additional carrier flying from Belfast to London, so some other airline will take it up. The choices are simple:

    1. Aer Lingus is forced to stay in shannon and becomes a weaker business; while some other carrier gets the Belfast route.
    2. Aer Lingus gets the Belfast route and improves as a business.

    From Belfast’s point of view, we win no matter what, as someone will take the capacity. Aer Lingus though are in a win/lose situation.

  • Comrade Stalin

    What a load of bollix.

    smcgiff, I don’t think you’re looking at it the right way. If the government sends out a signal that it is willing to intervene to overturn what appears to be a sound business decision for political reasons, what signal would that send out to the markets/investors/etc ?

  • Juan Carr

    S McGiff,

    Agree with the first part of your earlier post (I posted something very similar but much more long-winded on the 2 most recent threads about this). However I think anyone who thinks this is anything but part of the economic sweeteners thrown into the Belfast Agreement at the last minute is absolutely deluding themselves. Of course it has to do with the North. There are far too many clues, for instance why is Dermot Ahern out front and centre defending this while Willie O’ Dea is screaming blue murder over it.

    Dermot was obviously in the loop far earlier than O’Dea ( during the Belfast Agreement, perhaps?).

    In fact I believe most of the cabinet were oblivious to this happening until quite recently and I think there will be considerable political fallout from this if the government fails to contain the rapidly growing suspicion that, as a female caller to the office where I work said last week, “all the money’s going to vanish up the north now for the foreseeable future”.

    FF should also bear in mind that they could be made to pay a very heavy price for this electorally. If the last 10-15 years of this country have shown anything it’s that you can walk all over people’s so-called principles, but keep your hands off their wallets. People in the Republic would sooner see their parents and grandparents dying in pools of their own faeces and urine and pretend to be angry about it than actually elect a govt that will actually do anything about it because they know it would cost money that they’d rather spent on property portfolios and fancy weddings. One of the biggest jokes I ever saw was that big angry rant Brendan Gleeson went on last year on the Late Late Show. After lambasting the govt for making such a basket case of our health service and saying, “anyone who votes for this govt next time out may as well go and shoot themselves” he covered his arse nicely by saying a couple of seconds later by saying “well in fairness the other crowd are no better than them”. This from a man who has probably lived in America for most of the last 10 years, of which only “one crowd” has been in power, effectively the same crowd that have been in power almost uninterrupted since 1922 I might add.

  • Tom

    Explain to me again why exactly the Irish government kept shares in Aer Lingus??

    If they are unable to have any influence with the company then they might as well sell those shares.

  • smcgiff

    Juan,

    I agree with you when you say its a sweetie for the North (Hence Bertie being incommunicado until the next supermarket needs opening) – However, when Donaldson said that those in the Republic didn’t want a United Ireland because they objected to these slots moving to NI then that is rubbish. We don’t care MORE about the people of NI than ourselves. There’s a difference.

    However, FF knows that the general populace have a very short term memory – and 5 years is a very long time. Willie had enough of a quota to elect another FF easily, and is therefore safe. And I don’t think FF will collapse in the West – you give people too much credit.

    Comrade,

    It is NOT a good business decision. Nowhere else on the island has a set up like Shannon with the critical mass of industry it has. It could take very little for a domino effect to greatly damage the balance of industry that is out there (Porters five forces). Don’t underestimate the importance of foreign execs being able to access this hugely important Western cluster of businesses. Not only is it likely that current jobs would be lost it would greatly hamper any future company coming in. I would really advise people to go visit Shannon and see exactly what is at stake.

    Also, the economic argument has not been fully accepted. Okay there’s a greater hinterland in Belfast. But what about the quality of the customer within the region? Shannon has an extremely active local international business profile that need to fly a lot and there’s no Heathrow competition flying from Shannon. At the very least it’s not clear cut.

    If the government cannot intervene in this case then they should abdicate any responsibility for anything to do with business such as transport, electricity & power and even admin duties and make Thatcher look like a raving socialist.

    ‘while some other carrier gets the Belfast route.’

    Assuming it can get the slots and there isn’t a more profitable route then sure.

  • Juan Carr

    The pro-business argument for the move to Shannon is almost a circular argument, people keep reminding those that are against it that AL is now a privatised company and that it’s all about the free market blah blah blah, and that it’s not AL’s responsibility to look after the midwest region’s viability as a business location.

    But then if they are to take that attitude, why should any Irish person care about the viability of Aer Lingus as a privatised company? I honestly think AL is making a big mistake here if it doesn’t make at least some kind of compromise – otherwise whatever gain they make on the new routes from Belfast will be wiped out by people refusing to travel with them.

    I don’t expect a nationwide boycott or anything like it, again, Irish people have simply become too selfish to give a toss about what happens in one region if they’re from a different region, but a lot of people in the west will simply abandon AL as much as they can when booking flights in the future and I really don’t think it will take that many to cancel out the profits they make from the new routes.

    I personally paid through the f*cking nose for european flights this year with Aer Lingus, and then got shafted again when I tried to re-schedule my fligth dates, and I can tell you I have little interest in travelling with them again anytime soon. And Mannion himself is nothing but a glorified civil servant, doing whatever the govt tells him to do.

  • smcgiff

    Also, the economic argument has not been fully accepted. Okay there’s a greater hinterland in Belfast. But what about the quality of the customer within the region? Shannon has an extremely active local international business profile that need to fly a lot and there’s no Heathrow competition flying from Shannon. At the very least it’s not clear cut.

    You’re forgetting the NI-UK civil service traffic – no doubt that was the point in having the Doc at the announcement. Industries fail and move to Estonia – civil servants never fade away 🙂

  • eleanorbull

    “But what about the quality of the customer within the region? Shannon has an extremely active local international business profile that need to fly a lot and there’s no Heathrow competition flying from Shannon. At the very least it’s not clear cut. ”

    QUALITY of the CUSTOMER?????

    When did an airline ever care about that?

    It’s all about QUANTITY. Bums on seats.

    The ‘international’ profile at Shannon is only propped up by the special ‘stopover’ status. The EC are trying to kill that. They will.

    After that, Continental, American, Delta or anyone else will go straight to Dublin. Bye-bye Shannon!

    The day after AL cease their Heathrow route out of Shannon, they’ll use the same slots for a BFS flight, initially.

    I suspect the BFS-LHR route with AL won’t last long, though. Belfast’s already served by Midland, out of George Best City, and it probably won’t sustain two flights. George Best is probably more convenient for the business community than Aldergrove, so AL will need to pitch prices below Midland in order to do the business.

  • smcgiff

    ‘QUALITY of the CUSTOMER?????’

    Can only imagine you misunderstood me on purpose?

    The Shannon Stop over will go by 2008 – However, The Shannon Heathrow route was profitable. Nothing to do with the stop over, and I’m guessing Shannon Heathrow is considered international?!?

  • eleanorbull

    QUALITY of the CUSTOMER?????

    When did an airline ever care about that?

    It’s all about QUANTITY. Bums on seats

    You clearly have no idea what the difference is between load factor and yield as it pertains to transportation. It’s easy to fill a plane if you charge half nothing for the fare but you can’t cover your costs that way. That’s why the last few seats on a ryanair flight cost hundreds of euro.

  • Comrade Stalin

    smcgiff:

    It is NOT a good business decision.

    That is for Aer Lingus’ shareholders to decide. Not the State.

    If there is a profit in a Shannon-Heathrow route, then why do you think Aer Lingus closed it ? There’s nothing that says that they can’t operate both.

    Nowhere else on the island has a set up like Shannon with the critical mass of industry it has.

    Perhaps I am ignorant, but I am not sure of the relevance of this. Aer Lingus claimed that the majority of the passengers on the Heathrow flight were people transferring to trans-atlantic flights.

    Juan:

    otherwise whatever gain they make on the new routes from Belfast will be wiped out by people refusing to travel with them.

    The truth is that consumers and particularly airline passengers are seldom that principled. If they were, British Airways would have been out of business long ago.

  • smcgiff

    ‘That is for Aer Lingus’ shareholders to decide. Not the State.’

    The government represents the state. The government holds 25% of voting rights, ergo…

    Are you considering changing your name to Comrade Thatcher, per chance?

    ‘There’s nothing that says that they can’t operate both.’

    Mannion/Aer Lingus has said the route is profitable. The operation of routes is down to the availability of Heathrow slots.

    ‘but I am not sure of the relevance of this.’

    The huge and varied industry/commercial enterprises based in Shannon is of strategic importance to the West of Ireland and the Republic as a whole. As a 25% stakeholder with other shareholders (making a majority) predisposed to stopping this travesty it is incumbent of the state to protect Shannon’s industrial base.

    It is madness for the Irish government to allow the weakening of the most successful regionalisation to have taken place in Ireland.

    ‘Aer Lingus claimed that the majority of the passengers on the Heathrow flight were people transferring to trans-atlantic flights.’

    Including US execs from the companies in Shannon.

  • eleanorbull

    “You clearly have no idea what the difference is between load factor and yield as it pertains to transportation. ”

    Me, Willie O’Dea and Eamonn O’Cuiv, all, apparently.

    If THEY understood it, they could explain it to the people in the hinterland of Shannon.

    Or they could simply tell them that s*** happens.