The Government's unwillingness to take a decision about the future of Aer Lingus is now threatening the remarkable turnaround of the airline that has been achieved by its current management team, writes Garret FitzGerald.
Aer Lingus has been in trouble at least since the mid-1980s. At the end of 1986 I discussed the problem with its chairman, but my government was defeated before we could proceed with the matter, and I understand that my successor in office did not favour the approach I had discussed with the chairman.
As I pointed out in this column in the early 1990s, the airline's board - including the trade union representatives as well as the largely political appointees - totally failed to check a disastrous rise in the airline's cost level. This soon led to a series of crises. Later the EU Competition Directorate allowed an expensive bail-out of the company by the Government, but only under tight conditions that for a period inhibited the airline's growth.
Unfortunately the steps then taken proved quite insufficient to make Aer Lingus viable in the face of competition from Ryanair, and it was only when the present management took over in a crisis several years ago that the company was finally turned around; a very large loss being converted within a brief period into this year's expected profit of up to €100 million.
The national airline is now competing successfully with Ryanair on its European routes, but it rightly sees its future growth as lying mainly elsewhere, on the Atlantic route, and perhaps also with other long-haul services.
For several decades a major and potentially profitable development of the airline's Atlantic operations was hamstrung by the fixation of all our political parties with winning a single marginal Dáil seat in Clare, leading to political obsession with the compulsory stop at Shannon. As a backbencher in 1991-92 I challenged this unsuccessfully within the Fine Gael parliamentary party.
The Shannon stop requirement prevented Aer Lingus from building up its trans-Atlantic service at that time by offering one-stop access between many British cities and the US through a Dublin hub. But this problem, which still survives in a modified but still damaging form to the great disadvantage both of Aer Lingus and our country's tourist trade, is now about to be solved for us by the imminent Europeanisation of trans-Atlantic air-traffic rights negotiations.
This will free Aer Lingus at last to develop many new profitable routes from the United States to Ireland, which it has not hitherto been able to do because of our Government's concern to maintain the Shannon stop provision in the 60-year-old bilateral air agreement with the United States.
As many as three out of every eight Americans visiting Ireland currently come here through Britain, in many cases simply because the present bilateral air agreement prevents Aer Lingus from serving more than five of the 25 US cities from which American visitors can fly to London.
But to develop these new US routes, as well as its European network, Aer Lingus will have to invest about €1 billion in new aircraft. While some of this money could, of course, be borrowed, the company's financial stability requires that a significant proportion of it be provided by shareholders. And it is the Government's failure to address this issue that has eventually driven the successful management team to resign as from May next.
The final straw must have been the fact that, six weeks after receiving the Goldman Sachs report, the Taoiseach had not even got around to calling a meeting of the relevant Cabinet committee to consider the options set out in that report.
As I wrote in this column in July, the Government has to choose between Aer Lingus remaining a State airline - which would require from the Government (and, for long-term viability, perhaps also from the opposition), a firm Exchequer commitment to provide the airline with the hundreds of millions of euro that will be needed now and in future for its successful expansion - or else to arrange for this expansion to be financed wholly or partly by private interests.
During the course of the Government's consideration of these issues a spur to action, and a possible alternative, was provided by an offer from the management team to organise the required investment themselves. Given that this team have been the only management of the company in recent times to have shown that they know how to make a success of the airline, one would have expected the Government to have pursued this proposal actively and positively.
This would have involved the Government exploring with them at least several issues, including, of course, whether the team would be prepared to limit to a reasonable figure the amount they might personally gain from such a move. (In that connection we have since heard from Willie Walsh that "there is absolutely no truth . . . whatsoever" in the trade union allegation, of which the Taoiseach has made so much, that he and his colleagues "wanted to sell out to make themselves rich").
Given the remarkable achievement of the management team and staff in already agreeing a very large volume of redundancies, one has to ask whether the Taoiseach did in fact probe this personal enrichment issue (which clearly bothers him hugely) in the course of his discussions with the chief executive. If he did do so in his discussions with Willie Walsh, what was the outcome? And if he didn't, why did he fail to do so?
The Taoiseach owes it both to himself and to the management team to clarify this key point, for as things stand he is open to the charge of acting quite frivolously and petulantly in relation to an issue of huge national importance. The Oireachtas and the electorate are entitled to have this issue clarified, on this occasion in a manner free of any ambiguity.
It would be an absolute tragedy if at this stage Aer Lingus were to be allowed through the loss of its management team to fall back into the crisis-ridden state in which it found itself until they took over - simply because the Government is afraid of what look like very petty trade-union reactions. There may yet be time to retrieve this unhappy situation.
As someone who worked in Aer Lingus for the first 12 years of my working life, I desperately hope that reason will prevail in this matter.