The Minister for Public Enterprise, Ms O'Rourke, will ask the Cabinet next Tuesday to approve a loan guarantee for Aer Lingus, pending clearance from the European Commission. In Luxembourg after a nine-hour meeting of EU transport ministers, Ms O'Rourke acknowledged that the Commission had not softened its opposition to the Government's plan but she claimed that the mood among member-states was moving in Ireland's direction.
"Things have moved slightly more beneficially than they would have been before the meeting," she said.
The Taoiseach will raise the issue of Aer Lingus when he attends a meeting of the European Commission in Brussels today. Mr Ahern will stress the airline's importance for the Irish economy but he is unlikely to warn the Commission about the political consequences of a rigid approach from Brussels.
Officials from the Department of Public Enterprise will present details of Aer Lingus's restructuring plan to the Commission at a meeting in Brussels on Friday. On Tuesday next, the Cabinet will discuss the issue of a loan guarantee to finance the redundancies envisaged by the plan.
"We have to start the process because all the measures have to be implemented in full. If, in principle, it is approved at Cabinet, talks can begin between the trade unions and management," Ms O'Rourke said.
The Minister urged the unions to take a co-operative approach and warned that rejecting the management's plan could spell the end for Aer Lingus. "The unions have a major role to play. The plan says that all the measures will have to be implemented in full and quickly. Otherwise Aer Lingus has no future," she said. Italian and Greek ministers echoed Ms O'Rourke's call for a more flexible approach by the Commission.
But Britain's Mr Stephen Byers said Europe's airline industry needed to consolidate and that aid to smaller airlines would only delay that process.
Ms O'Rourke told the meeting Ireland did not oppose consolidation but that it should not happen as a result of last month's terrorist attacks. She said that, if airlines were to go out of business as a result of the attacks, the terrorists would have scored a victory.
The Commission will this morning approve Belgium's decision to offer a bridging loan of €125 million to its national airline, Sabena. The Transport Commissioner, Ms Loyola De Palacio, argues that Belgium's case is different from Ireland's because, unlike Aer Lingus, Sabena has sought bankruptcy protection from the courts.
Under the EU's strict guidelines governing state aid to airlines, governments may grant or guarantee a loan to firms in difficulty. But the guidelines offer a narrow definition of what constitutes a firm in difficulty.
In effect, this means that Aer Lingus would have to seek bankruptcy protection before the Government could offer a loan guarantee. Ms O'Rourke told the meeting that a strict application of the rules would turn logic on its head. "It's perverse logic that, if you're bankrupt, you'll be approved but if you're trying to avoid bankruptcy, there's a stay on it," she said.
Ms O'Rourke held private talks with Ms De Palacio, yesterday morning but the Commissioner reaffirmed her determination to place strict limits on aid to airlines following last month's attacks.
"In allowing compensation, the Commission rules must be based on objective data. The only objective data we have is the time during which planes were grounded. If we try to broaden this mechanism, we would be getting into a whole new ball game. Once you open that door, you don't know where it will lead," Ms De Palacio said.
