The Government finally published the long-awaited Goldman Sachs report on Aer Lingus last night with unions demanding an immediate meeting to discuss its contents.
The report said that the status quo was not sustainable as Government policy was that exchequer funds would not be provided to meet the airline's needs. It suggests a flotation (IPO) of Aer Lingus would be the most feasible way for the airline to raise capital. However, it suggests the Government retain a substantial minority stake. This could take the form of a "golden share", where the Government would be able to block a takeover of the company, it suggests.
The report's contents were previously disclosed in The Irish Times, but the Minster for Transport, Mr Cullen, last night decided to make the report available. The Cabinet sub-committee on the issue is expected to meet again shortly. Political sources suggest the Government is moving towards allowing some kind of private investment, but subject to a range of conditions and restrictions. A golden share arrangement may be among these. Some senior ministers are believed to be concerned about losing control over assets like the Heathrow landing slots. There is also concern about the position of Shannon airport.
Last night the Labour Party reiterated its opposition to an IPO of the airline. However, Fine Gael is supporting a partial privatisation.
The national industrial secretary of SIPTU, Mr Michael Halpenny, said he hoped unions could meet the Cabinet sub-committee to discuss the report. He said unions wanted access to all information about the future of Aer Lingus and not just the Goldman Sachs report. He said the SIPTU position remained unchanged - it strongly opposed any privatisation and it believed State investment should not be ruled out.
"Having said that, no business case for a major injection of funds for long-haul fleet renewal has been made to us. The case has not been made. That should not be lost sight of in all of this," he said. He said Aer Lingus was a "vital national asset".
The report does not offer any firm recommendation on what option the Government should choose, but instead outlines the advantages of various options.
It points out that with a private placement of Aer Lingus shares about 15 per cent of the airline's value could be lost.
It says this is because "investors will seek a discount... in order to compensate them for the perceived risks of the investment structure". It says a flotation would also involve a discount on the airline's value, but this discount would be greater with a private placement.
The report is broadly sympathetic to the idea of an IPO (initial public offering) and points to the successful flotations this year of Eircom and C&C. "Aer Lingus has the correct attributes for a successful IPO," it states.
However it warns about the cyclical nature of the aviation business and concerns over oil. It says a flotation would require "a window of opportunity" in the airline sector and the equity markets.
