Government must take rap for trouble at Aer Lingus

The Aer Lingus management team resigned for one reason, and one reason only - the members understand what it takes to run a business…

The Aer Lingus management team resigned for one reason, and one reason only - the members understand what it takes to run a business and the owner of that business, the Government, hasn't a clue. The airline's managers know how to run their business, but the Government - its owner - does not, writes Liam Meade

Try as they might over the past six months or so, they could not get the attention of this negligent shareholder so they gave up in disgust.

Their most dramatic attention-getting device involved seeking to make a proposal of their own regarding the airline's future ownership structure. It reflected a genuine fear that if something dramatic was not put on the table, nothing would ever get accomplished. This initiative was treated as if it were a schoolboy throwing a rock through the school window.

These gentlemen had developed some precise and demanding timelines involving decisions on fleet acquisition, market development, enterprise culture and product definition. The airline had been taken to a point along this path but to move on meant fundamental decisions by the owner (the Government) regarding methods of future capital formation and, by implication, ownership.

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The request to develop a proposal got distorted out of all recognition by the usual unholy alliance of media, unions and politicians. The old cry of "Rip-off Willie" went up all round and what was submitted to Government as a request to do something became, very quickly, an MBO.

That finished it and the team, recognising this, formally withdrew it - an action that did not stop the Taoiseach asserting in very grave terms, two days after it had been withdrawn, that he was against it in terms that could be neatly paraphrased as "I don't like them MBO tings".

Along the way the politicians and the unions wrung their hands about the strategic value of Aer Lingus as a national asset and worried about the consequences for poor old Ireland if we ceded control of this shamrock-laden bit of the Ould Sod.

It beggars belief that there is still someone in Government with a modicum of intelligence who still thinks that not owning an airline and being able to tell it where to land and take off will in any way detract from the general commercial and economic outcome of that airline's activities.

The market realities will dictate airline schedules and anyone who might be taken in by this "strategic" claptrap can be assured that if it were invoked to copper-fasten continued Government ownership dominance, the predictable outcome would be hugely sub-optimal.

If the current drift continues the danger will not be from ceding control of strategic assets but losing control of that asset's future through a failure to make decisions when they are required.

Willie Walsh and his team are serious players and the world is their oyster as far as future business opportunities are concerned.

It is highly likely, however, that they were gaining considerable personal satisfaction from what they were achieving in Aer Lingus and were probably eagerly looking forward to building further on these through the employment of their considerable pool of talents.

Is it right that those people whom we charge to take care of our interests in Government be allowed to let these executives swing in the breeze for six months and, in the process, inflict stress and frustration on the individuals while materially damaging the enterprise for which they (the Government) are ultimately responsible?

An example of its dereliction of duty has been its failure to appoint a permanent chairman to the company despite the resignation of the previous incumbent several months ago. This failure alone must have contributed significantly to the crisis because the primary role of an effective chairman is to act as a bridge between management and the shareholder. The void caused by this failure manifested itself hugely during the period when the management request to develop a proposal was on the table.

What we are looking at here is populism gone mad. Don't upset the unions, keep the Government shamrock in the air through the next general election, don't rock the boat, don't make any hard decisions, let it slide, they'll find a way to get it done. The author of this piece of corporate governance magic is the same chap who opined during the summer that he would like to see Great Southern Hotels remain as a semi-State company. Now there's a strategic asset! Give me a break.

This Government must be held fully accountable for what has happened. It is nothing short of a failure to govern. Those who have served on boards in either the private or public sector will be keenly aware of the masses of regulation and codes of conduct under which they must operate and who do so under pain of severe legal penalties if they fail.

It would appear that none of this applies to our political managers. They can waste, prevaricate, procrastinate, deny and ignore at will without fear because they have that lethal weapon called "populism" which kills off all those tiresome people who like to see things operate properly and efficiently.

It's time all this changed.

Liam Meade is a former director of Aer Rianta