Dail backs plans for flotation of Aer Lingus

The Dáil has this afternoon voted in favour of the Government's plan to privatise Aer Lingus.

The Dáil has this afternoon voted in favour of the Government's plan to privatise Aer Lingus.

Despite Opposition protests, a majority of TDs backed the proposed IPO of the State airline later this year.

Under the Minister for Transport Martin Cullen's plan the future management of Aer Lingus will not be able to sell the airline's valuable landing slots without approval from the State and other shareholders.

Measures to protect the strategic interests of the State while raising capital to fund the expansion of the airline were earlier unveiled by Mr Cullen in the Dáil.

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The outline proposals include a provision whereby the Articles of Association of Aer Lingus will provide that "sales or transfers" of slots at London Heathrow will be subject to a shareholder's resolution.

"Provision will be made that the resolution will not be passed if opposed by a defined percentage of shareholders. This will enable the State, with the support of other shareholders, to prevent disposal of slots against Ireland's strategic interests."

The initial public offering (IPO) of Aer Lingus will be pitched mainly at the big finacial institutions though allocations for smaller investors, including members of the public, will be decided on the basis of the demand for the shares, Mr Cullen said.

Mr Cullen and the Minister for Finance Brian Cowen will decide on the actual number of shares to be sold at a date much closer to the IPO itself but the State will retain a shareholding of at least 25.1 per cent with a view to protecting key strategic interests.

The exact amount of new equity to be raised by the Company will be decided just before the IPO having regard to its anticipated requirements and market demand for the shares.

Mr Cullen did not specify the minimum investment required, nor did he confirm the flotation would go ahead in the autumn. However, it is widely expected to happen in September. Public enthusiasm may be muted, however, given the fiasco that was the first Eircom flotation.

During the Dáil debate on the sell-off Labour Party transport spokeswoman Roisin Shortall said it was "ill-considered and ill-judged"

"In the years to come today will be seen as a bad day for the country and a bad day for Aer Lingus," Ms Shortall said.

"It is quite possible that as a nation we will lose control of our own air travel services, as Aer Lingus becomes merely a vehicle for profiteering, just like eircom."

Fine Gael's transport spokeswoman Olivia Mitchell said the planned sale of Aer Lingus in the autumn could be open to legal challenge.

"Section 3(5) of the Aer Lingus Act 2004 states that the general principles, published by the Minister, must be approved by the Dáil.

"But the Government Motion does not seek Dáil approval for the principles. It seeks approval for the disposal of the shares in Aer Lingus. It is therefore seriously flawed."

Aer Lingus shares will be listed on the Irish and UK stock exchanges and the deal is expected to be completed by the end of September.

In advance of the sell-off Aer Lingus staff have been offered a package of incentives including €104 million to the pension fund, a lump sum of €4,400 and a 3 per cent pay rise.

Today's announcement coincided with limited industrial action by Siptu because of its concerns over the privatisation plan.

Aer Lingus chief executive Dermot Mannion said this morning the company had been involved in an "active process" for a number of months with all of its union groups.