The Taoiseach has shown no appetite for a swift decision on Aer Lingus, writes Arthur Beesley, Political Reporter.
The Taoiseach, Mr Ahern, has ruled out a management buy-out in Aer Lingus, but the Government still faces a tricky dilemma over the airline's future ownership.
While the airline's chief executive, Mr Willie Walsh, and two of his colleagues sought a decision three months ago, it was only yesterday morning that Mr Ahern ruled out the option.
Just hours later, it emerged that Mr Walsh had told the Department of Transport on Monday that he no longer wished to lead a bid.
Whatever information was available to the two men in recent days, a bid by managers is now off the table. With it goes the possibility of Government selling a prized State asset to the public servants who happened to be running it when the "for sale" sign went up.
It may not be without significance that the development comes only days after Mr Seamus Brennan lost the Transport portfolio in Mr Ahern's Cabinet reshuffle. Mr Brennan was in favour of the principle of allowing the Aer Lingus managers take their place in the queue if the Government decided on privatisation.
That is not a road Mr Ahern wished to follow. Such a move would be politically difficult after the Eircom flotation, when small-time investors were the losers in what proved to be a bonanza for certain investment banks. Given Fianna Fáil's new willingness to embrace the likes of Father Seán Healy, it would also present an open goal to the Opposition.
Yet the questions surrounding Aer Lingus and its strategic direction are far from resolved.
As Mr Walsh told the Oireachtas Committee on Transport yesterday, the company needs up to €1 billion in the long term to buy new aircraft. For Mr Ahern, the question is whether the Government should put up the money or whether private money should go into the company.
This is the subject of a report by Goldman Sachs, a final version of which is expected within the next 10 days. The report will be given to a Cabinet sub-committee, which is chaired by Mr Ahern. It will examine the options for a trade sale of the airline and a partial or full stock exchange flotation.
In Mr Brennan's time, with Mr Charlie McCreevy in Finance, the process was moving in the direction of privatisation. But with both men out of the equation, the outcome might well be different.
After all, the new Minister for Finance, Mr Brian Cowen, is much less dogmatic than his predecessor. He is also much more likely to take instruction from the Taoiseach. And Mr John O'Donoghue, another sub-committee member, is not in favour of privatisation.
While the Tánaiste, Ms Harney, insists that all options remain on the table, Mr Ahern has shown no appetite for a swift decision.
For as long as Aer Lingus is not in a financial crisis, the Government can put money into the company without infringing the EU's strict rules that prevent State aid for companies that find themselves in difficulty.
But should Ministers divert money from public services to pay for aircraft for a profitable company instead of public services? One highly informed person summed up this dilemma: "How do you say to people who might be waiting for a hospital bed that they can't get one because the Government is putting money into Aer Lingus so that people can fly to their houses in Spain?"
If that is a reasonable argument, it must be considered that the airline business is notoriously cyclical. Bust inevitably follows boom, as the recent history of Aer Lingus attests. Even if the airline continued to do well in State ownership for years, the Government of the day would be unable to help in the event of a crisis.
It is for this reason that the Government has already opened up the possibility of privatisation in an Act introduced last year by Mr Brennan. While the legislation allows for the sale of the airline, this must be triggered by a Government decision in its own right. Whether a decision will be forthcoming any time soon remains to be seen.
Mr Ahern is said to have been "livid" when he learned that Aer Lingus wanted to stop carrying human remains into Ireland from Britain next year. The decision was rescinded, but it illustrates the lengths to which the company is prepared to go in its drive to reduce costs. An international owner, less sensitive to public and political opinion in Ireland, might well be inclined to push ahead with such a move, regardless of the bad publicity.
In a way, this case sums up Mr Ahern's difficulty. If the loss of thousands of jobs is difficult enough to swallow, it can be justified in a drive to make the airline competitive. But competitiveness can go too far if its result is the withdrawal of a crucial service into an island State.
Similar questions surround the Aer Lingus slots in London's Heathrow Airport. For how long would international investors guarantee to retain the slots for Irish flights? If those investors sold the airline to other owners, would any such guarantees still hold?
If these issues point to continued State ownership, for strategic reasons, there is always the danger of another sudden financial crisis in the airline. After all, the last downturn in Aer Lingus followed the catastrophic events of September 11th, 2001.
While the airline's immediate prospects are good, it will need money for new aircraft within a couple of years. The Taoiseach might just hope for the best and wait until after the next general election. That would be his style.