Aer Lingus sale plan generates considerable political heat

Enda Kenny and Joan Burton have shown optimism in taking a punt on Willie Walsh and IAG and their promises in relation to the use of Dublin Airport, in particular, as a base for future expansion. Time will tell whether they will be shown up as naifs, opting for a few trinkets aimed at the natives, or whether they will be seen to have displayed great foresight.

The money will surely come in handy, not to to mention taxpayers’ money saved on the re-equipping of air fleets, but this is, above all, about positioning Ireland as a magnet for air traffic, tapping into the resources of IAG to open up new routes across North America.

And, here, one must surely doff a cap to the skilful people, diplomats and politicians, who managed to persuade the Americans to grant Dublin Airport the unique privilege of pre-clearance for people seeking to enter the US, thereby opening up a gold mine in the form of transit traffic.

The Government, in acting as it has, stirred up a political hornet’s nest, one which could well be still buzzing, come the next election. Labour TDs like Brendan Ryan in Dublin North, or Sean Kenny, in Dublin Bay North, must be feeling the heat and not the love, what with Socialist TD Clare Daly in near unstoppable form. Already, Clare TD Michael McNamara has pressed the ejector button, departing Labour’s parliamentary party.

If the deal turns out well, it could be some years before this becomes apparent. Somehow, wise long-term decisions rarely seem to secure awards from the electorate. It is curious how there seems to be so much more fuss now than there was back in 2006 when the airline was actually privatised. But now, it seems, we are finally closing the door on the past.

The Aer Lingus brand will still be with us for the foreseeable future, but the airline, so much a part of our history, will like Guinness Group before it, cease to be Irish-owned. In Ireland, over the years, we have traditionally been much more suspecting of Britain than we have of the US, our benevolent big brother. The TCD academic, Frank Barry, in his study of 20th century Irish economic history, has contrasted the welcome shown to Henry Ford when he set up his car factory in Cork in 1919, with the restrictions from the 1930s placed on so-called ‘tariff jumping’ British firms (when businesses sought to buy into Irish firms to gain access to our markets).

After the IDA was founded by a Fine Gael-led Government, the US was targeted for investment. Sean Lemass changed his view and became a backer of the new strategy of export-led growth from 1957. Lemass, however, had a particular interest in aviation and he drove the establishment of the Shannon Free Airport Zone in 1959, a move which fitted well with that Government’s focus on the regions.

During the boom years, FF-led governments were enthusiastic ‘privateers’. Our leaders were keen to throw off the millstone of a company with articulate, occasionally militant, employees (Clare Daly included ) in cockpit constituencies across the country. It might be tempting to grow misty-eyed about Aer Lingus. The trade unions must surely not have forgotten about the swingeing cutbacks forced on them by management at the airline. Back around 2008, former CEO, Dermot Mannion, caused a stir when he moved routes out of Shannon, relocating them to Belfast. He may not have waved a union jack, but he knew how to swing the axe.

And let’s never forget the inimitable Bernie Cahill, taken before his time, but not before he had presided over some of the deepest cuts ever seen at an Irish public company. Mannion’s predecessor, Willie Walsh, a one-time union man, come to think of it, knew how to squeeze cost out of a payroll.

Go back 30 years and Aer Lingus was, indeed, a great place in which to work, what with the free travel and the sports facilities. The trade unions must realise that those days will not return.

They are quite right to try and lever the best possible deal, in terms of job security, for their members and are entitled to voice scepticism about the undertakings secured by Transport Minister Paschal Donohoe.

Management at IAG must also be aware that if they mishandle the situation, if they show bad faith, it will do little for relations between the two countries which have been so positive in recent times.

It would be a pity to allow commercial considerations at their crudest to impact on this friendship.

IAG management would do well to realise that while they are answerable to their shareholders, its flagship airlines are much more than mere profit centres. They continue to fulfil vital public functions. The opponents of the deal, equally, must not fall into the trap of being sentimental about the past. At times, Aer Lingus operated as something of a price gouger, though it did develop a remarkable cadre of managers, people who generated many spin-off businesses, the most enduring being Ireland’s burgeoning aircraft leasing sector.

If worst comes to worst, it would, of course, be possible to re-create a national Atlantic airline (Ryanair fulfills the short haul role, here ).

New Zealand is in many respects comparable to Ireland. It is a strong producer of primary foodstuff products, having overcome the near disaster of the loss of its main customer, the UK, in 1973.

The Auckland-based Fonterra Co-op, with 10,500 farmer shareholders, is the world’s biggest dairy exporter, accounting for one quarter of total exports. Fonterra distributed Nz$13.5bn (€8.6bn) to its farmer owners last year, while generating group revenues of Nz$22.3bn. Almost 70% of its people are at work, though there are fears that a property bubble, under way since the early noughties, could soon burst.

The country’s Government privatised the national airline, Air New Zealand in 1989. Its new owners teamed up with an Australian airline, Ansett, which eventually went bust in 2001. The government renationalised the airline, spending Nz$885m on a 76% stake. In 2013,the current right of centre, National Party government cut that stake to 53%. So who knows? Maybe, we will all be back owning Aer Lingus, or a version of it, a few years down the line...