Aer Lingus executives yesterday put a dramatic proposal to pursue a management buyout of the airline to the Minister for Transport, Mr Brennan, write Colm Keena & Arthur Beesley.
The Government will be briefed on the development by Mr Brennan over the coming days. Such a sale would be unprecedented in the State sector.
Last night, the Tánaiste, Ms Harney, left open the possibility that the Government would back the proposal. She said she was very impressed with the turnaround of the company by its workers and management and believed that, for its continuing success, it would need access to private capital.
She said all proposals for the airline "should be considered in a fair and objective way".
SIPTU reacted negatively, with its president, Mr Jack O'Connor, saying the union remained opposed to the privatisation of Aer Lingus.
The proposal is likely to force the Government finally to make a decision on the issue of privatisation, something it has been shying away from for some time.
Aer Lingus is considered the jewel in the crown of the commercial semi-State sector. Market sources say the airline is worth in the region of €500 million. Legislation is in place for the sale and an employee share option trust would be likely to be offered a 14.9 per cent stake. Such a stake would be worth around €75 million.
The airline's chief executive, Mr Willie Walsh, along with chief financial officer, Mr Brian Dunne, and chief operations officer, Mr Seamus Kearney, yesterday wrote to Mr Brennan, seeking his consent to develop an investment proposal for the company.
They advised the Aer Lingus board earlier yesterday of their intention to seek the consent. It is understood Mr Brennan was aware for the past number of days that Mr Walsh was considering such a move. Sources close to the three Aer Lingus executives said there were no agreed backers behind the proposal.
Last year, Aer Lingus made an operating profit of €83 million, up from €63.8 million the previous year. The average number of employees last year was 4,281, compared to 6,108 in 2001. However, the airline needs substantial investment in the future, particularly for fleet replacement.
Mr Walsh is known to believe that now is a good time to seek private investment in the airline. He is concerned that a delay of a few years could see another economic downturn create a fresh crisis for Aer Lingus.
There are also EU restrictions on aid for State companies.
Mr Brennan pointed out last night that the Government had made no decision to sell Aer Lingus. "Therefore this request is a matter for the Government to consider in the context of its ongoing deliberations on the future of the airline, the need for openness and transparency, the avoidance of conflicts of interest, and consultation with stakeholders."
The Government was presented with a discussion paper on the future of Aer Lingus some months ago, but no decision was made on the matter. Possible options are a flotation, or a partial or full sale to private investors.
A Government source said the move by Mr Walsh prior to any Government decision "has come as a surprise".
It is expected that any consent from Mr Brennan would lead to a number of proposals being made to the airline. A process would have to be put in place to manage a sale while the airline was still being run by figures linked to one of the bids. Mr Walsh and his partners would be seeking a stake in a privatised Aer Lingus.
The airline was close to going bankrupt a few years ago and is one of the few European flag carriers to have bounced back from the crisis caused by the September 11th attacks and the growth of low-cost airlines.
SIPTU said it was seriously concerned by the development. "Contrary to misconceptions promoted by some vested interests, there is no prohibition in EU law on the Government investing in Aer Lingus as a commercial venture," said Mr Michael Halpenny, national industrial secretary.
He said the union had very serious concerns about the airline, which he said was essential to the development of the economy, being delivered into private hands, especially should control pass to interests outside the State or should it come under the control of another airline.