Analysis: the Aer Lingus issue Selling more than 50 per cent means Government control will be minimal, writes Emmet Oliver
The details remain sketchy and the timings involved vague, but the Government at least provided a certain amount of clarity concerning the future of Aer Lingus last night.
So what do we know for definite? Well, the Minister for Transport Martin Cullen was unambiguous that a "majority sale" of the airline would take place. In other words, at least 50 per cent plus will be sold.
He also said financial advisers would be appointed to advise the Government on the "size, type and timing" of the sale transaction.
However, what he failed to tell reporters gathered in Kildare Street last night is how much the Government is willing to sell, when it will sell and by what method?
These are not fuzzy side issues, but key questions that could have a bearing on the airline's entire future.
Mr Cullen said he was not going to speculate on how much might be sold precisely, instead he would rely on the advice of the financial consultants.
Despite the apparent vagueness of his plans, the Minister has already come under political attack for agreeing to sell a "majority" stake at all.
The unions and the Labour Party last night said selling such a large shareholding into the private sector leaves the airline at the whim of the incoming shareholders, who are at present unknown. There is a certain amount of truth in this.
While Mr Cullen has spoken of retaining "at least 25 per cent", this would only block a takeover of the airline, it would not necessarily prevent other things happening at Aer Lingus. Also the more conditions the Government inserts during the sale process, the lower the valuation for the airline itself.
This is the harsh contradiction at the centre of the whole process. The Government needs to maximise the proceeds of the sale so Aer Lingus has sufficient funds for its new fleet, but at the same time the more conditions it imposes on other potential shareholders, the lower the proceeds become.
If the Government reads the Goldman Sachs report, which it commissioned, it will see that while a minority shareholding can give the Government a significant amount of clout at board level, it does not mean the other shareholders won't get their way.
For example, in an attempt to safeguard the Aer Lingus brand and possibly the landing slots at Heathrow, the Government could insist on certain conditions being met by the airline in future. But for how long would these conditions remain in place.
The Goldman Sachs report points out: "Any agreement is likely to be restricted to a specific time period as the new investors will not want to agree to an indefinite restriction."
But it's not just a timing issue. The consultants say that enforcing the various Government conditions "in changing circumstances" is "likely to be difficult to achieve". The Government's best route to achieving its objectives may be setting the correct landing charges at the airport and making sure that new routes are viable and the airline is able to develop properly.
Nevertheless, the Minister made a strong point in his comments last night when he said there was little sense in new shareholders undertaking actions likely to prove detrimental to the airline.
For example there would be little point in shareholders selling slots at Heathrow when Dublin-Heathrow remains one of the busiest routes in Europe. There would also be little point in watering down the Aer Lingus brand, which has a reasonably high visibility in Britain and America.