New proposals may allow the Minister for Transport, Mr Brennan, to move ahead with his plan to split up Aer Rianta and have the State's three main airports run independently of each other. Barry O'Halloran reports
The proposals, which are being studied by Mr Brennan, are designed to get around legal obstacles to his plan.
They would involve shelving plans to sell the authority's Great Southern Hotel group pending a review, and dividing up Aer Rianta International (ARI) between Dublin and Shannon airports. They also suggest that the Dublin Airport Authority fund part of the development of Cork's new €60 million terminal.
Consultants PricewaterhouseCoopers and solicitors, Matheson Ormsby Prentice (MOP) drew up the proposals and submitted them to the Department of Transport in a confidential document seen by The Irish Times.
The Department hired them when Mr Brennan's plan to break up Aer Rianta into three separate airport authorities for Cork, Dublin and Shannon, hit unforeseen legal obstacles related to Aer Rianta's status as a public limited company (plc).
The law forbids the distribution of a company's assets when the amount exceeds its reserves. Aer Rianta has €200 million in accumulated profits on its balance sheet, but the value of the assets to be distributed comes to €400 million.
Under the proposals the break-up, due to happen before the end of the year, would be triggered by the payment of a dividend from Aer Rianta International - a subsidiary company which has a profitable business running international airports - to Aer Rianta.
This would help to boost Aer Rianta reserves. Then the document states that the "first airport", understood to be Shannon, should be transferred to its independent authority.
Aer Rianta, which at that point will become the Dublin Airport Authority, will continue to own and operate a "second" airport, Cork, for an unspecified period. During this time, Cork's authority will have an advisory role in its operation.
The document states that once Cork is passed into the control of its authority, Dublin Airport Authority/Aer Rianta should pay for the development of Cork's new terminal. Cork would then repay this by renting it from Dublin as part of a finance lease.
Building work on the terminal is already under way, and it is due to be completed at the end of 2005 at an estimated cost of €60 million. The document states that Cork can only be handed over once Dublin Airport/Aer Rianta, has enough cash reserves to allow this to happen. In order to build up these reserves, it indicates that a steering committee established to oversee the break-up should look at the possibility of selling some assets.
"In this regard the steering committee should investigate the potential for realisation of capital assets in order to provide the necessary reserves," the document says.
The Minister is known to have considered the sale of both Great Southern Hotels and ARI in order to realise the cash needed for the plan. However, the consultants say that Dublin Airport Authority/Aer Rianta, should keep the hotel chain "pending a strategic review of its funding and asset ownership requirements".
It states that Dublin and Shannon should get joint ownership of ARI's duty free shops, which it operates in a number of centres, including Moscow Airport.
It says that its airport business - it owns stakes in Birmingham, Dusseldorf and Hamburg airports - should remain with Dublin Airport Authority/Aer Rianta.
The consultants also propose that landing and handling charges at Cork and Shannon airports should not be regulated by the Commission for Aviation Regulation (CAR).
Currently, the CAR determines what all Aer Rianta airports should charge. If the Minister decides to accept these proposals, then the speed at which the break-up goes ahead will depend on how quickly the necessary legislation is passed. Neither the Department nor Aer Rianta would comment on the proposals last night.