Business Opinion: What on earth was Willie Walsh playing at? Did he and his two colleagues - Brian Dunne and Seamus Kearney - think for a minute that the Government was going to let them go off and try and organise a management buyout (MBO) of Aer Lingus, writes John McManus

One can only presume they didn't or else you would have to question both their judgment and the extent to which they should be given the credit for the turnaround at the airline.

But, if they didn't really expect to be given the go-ahead, what were they doing? The obvious, and most plausible, answer is that they were just trying to bring the issue of the airline's future ownership to a head.

There are many good reasons for doing this and it is in the interests of both the company and the three men. Aer Lingus needs a capital injection and, broadly speaking, it has to come either from the existing shareholder - the Government - or new investors. Regardless of which route you go down, now is the time to do it because the company is currently doing well.

When things stop going well - and the consensus is that this is inevitable given the cyclical nature of the airline business - it will be harder to get new investors in, and any cash from the Government will start looking like State aid, which is not allowed.

Timing is also important from the point of view of Mr Walsh and his colleagues. The story they have to tell to potential new investors - and, more specifically, the backers of their mooted MBO - is a very good one. But it may not look so good in six months or a year and thus their ability to get the deal that they want would diminish.

In fact, one might well ask if their decision to try and flush the Government out does not indicate that senior management has taken a look into the future and decided that the peak - in terms of the company's performance - is close approaching, or may even have passed.

Assuming that the Aer Lingus executives' strategy really was just to try and force the issue of the company's future ownership, have they succeeded? Well, yes and no. They did get the Cabinet to talk about the issue, something it has steadfastly avoided. But the upshot of the discussion was to kick the issue on to a Cabinet sub-committee.

The good news is that the committee is being chaired by the Taoiseach, which indicates that the matter will get some attention. But, the bad news is that it is being chaired by the Taoiseach, who clearly believes that whole issue of semi-state companies is part and parcel of the social partnership debate. If the Aer Rianta debacle is anything to go by, he will happily forgo the chance to exit Aer Lingus in an orderly and responsible fashion if it is going to upset David Begg and ICTU

And the opponents of a sale of Aer Lingus can make a very strong case, as articulated by Proinsias De Rossa MEP in this paper last week. Mr De Rossa's most useful contribution was to nail the canard that the State cannot invest in Aer Lingus. As he said, it can, but it must be on commercial terms.

His other - and more important point - was that the Telecom Éireann/Eircom experience has shown that it is folly to expect private enterprise to act in the strategic interests of the State, when those interests diverge from the short-term financial interests of their shareholders.

This leads on to the core issue, and hopefully one about which there will be a meaningful debate. What strategic function does Aer Lingus currently fulfil and what strategic function could it perform in the future? If the answer is none, there is no reason for the State to continue to own the airline.

What Aer Lingus does - provide scheduled air services between Ireland and the US and Europe - is economically important but it is not strategic. The company has commercial freedom and - to the best of my knowledge - the Government does not dictate where and when in flies in order to achieve some strategic objectives. It does not order the company to fly loss-making routes, or carry old-age pensioners for free, as part of some wider strategic brief.

But, at the same time the Government still has the right, should it feel the need, to direct operations at Aer Lingus.

The reality is that insofar as the Government has a strategic aviation policy, it is implemented by Aer Arran which has the lion's share of the contracts to fly subsidised regional routes. Aer Lingus, frankly, is not even interested in these routes.

There are a number of potentially significant issues that might arise from ceding control of Aer Lingus. These include the company's landing rights at Heathrow in London and JFK in New York. A new owner of the airline might decide to use these slots for something other than direct flights to Dublin, which is not something that would be in the national interest. But neither is it an insurmountable obstacle.

There is also the issue of air cargo, which low-cost carriers are not very interested in .

There are risks involved in selling Aer Lingus, but it is worth noting that the State is quite happy to leave the equally strategic issue of providing shipping connections between Ireland and the rest of the world to the private sector, having exited B&I and allowed Irish Shipping go under.

Interestingly - as Seamus Brennan no doubt remembers - B&I was sold to Irish Continental after a failed management buyout.

jmcmanus@irish-times.ie