Government to rethink strategy on Aer Lingus

PRIVATISATION: The Government will re-examine its decision to retain a majority stake in Aer Lingus. The newly appointed Minister for Transport, Mr Brennan, has said the previous Government's decision to sell a minority stake to a strategic investor will be reviewed once the airline's restructuring plan is fully implemented later this year.

The sale of the Government's entire 85.1 per cent has not been ruled out. The other 14.9 per cent has been allocated to airline staff.

The Government's initial priority is to support the airline's management in implementing the survival plan that will return the airline to profit next year, Mr Brennan said in an interview with The Irish Times published today.

"As the months go on and I am satisfied that we have a strong Aer Lingus and that the survival plan is working, I will talk to all the interested parties about the future of the company and what is right for the country and the company.

"But at this point, I am not going to discuss it with anyone," he says.

Last October, the Government approved the part-privatisation of Aer Lingus as part of the restructuring. Mr Brennan's predecessor, Ms Mary O'Rourke, said the State intended to retain a 51 per cent stake for a number of reasons.

These include a clause in the bilateral aviation agreement with the US, which gives Aer Lingus access to US airports on the basis that it is Irish-owned.

The search for an investor was put on hold during the General Election and it appears unlikely to be reactivated for some time.

"Whatever the future of Aer Lingus is, whatever the structure of it is in the future, one thing I am determined about is that it is healthy. At that point, we will decide and discuss what is the best option for Aer Lingus's future. It is premature to do that until you get a strong Aer Lingus," said Mr Brennan.

The full privatisation of Aer Lingus is the preferred option of junior coalition partners, the Progressive Democrats.

But the Programme for Government agreed between the two Government parties only commits them to supporting the Aer Lingus survival plan and to "approach the issue of the most appropriate form of ownership structure for State companies on a case-by-case basis".

Mr Brennan said yesterday that he had no ideological position on privatisation and that his approach would be pragmatic.

"On balance I believe that the State should not be involved in commercial activities that it does not have to be involved in," he said.

The airline's management are understood to favour an end to State ownership.

The company had been due to float on the stock market last year but it was cancelled due to industrial relations issues and a slump in the aviation market.