An Irish woman's social, political and domestic commentary
Wednesday, November 17, 2004
I feel a few words to substantiate my position on this issue are merited, particularly as I appear to find myself on the same side of the house as the Taoiseach.
Firstly, one hears many smug business journalists and analysts outrageously demand why the government wants to fly planes. We are an island nation and therefore air travel in and out of the country is of crucial national interest. For the same reason that we have a National Theatre, we must have a national airline - quality. Except of course in the case of an airline there are vital economic and social issues at stake. Aer Lingus has slots at Heathrow which if liquidated by a new private owner in favour of cheaper slots elsewhere would adversely affect our access to the rest of the world. We cannot be left to the mercy of private enterprise.
Secondly, we actually own the airline right now. Even if privatisation was on the agenda we as taxpayers and consumers, have to make sure that apart from our longer terms interests being protected, we don't lose out in the short term. The obvious reference is Eircom where we, fools that we were, bought a company that we already owned when telco shares were at the top of the market. We were forced to sell at the bottom of the market. The workers and Tony O'Reilly made fortunes. Then they recapitalised so they could take further profit from the company and refused to invest properly in a broadband network. The result was that any short term cash the government made, they themselves had to spend in building an alternative broadband network: this is currently under construction. We lost on every scale.
The Taoiseach is quite right to be pissed off with Walsh etc. They did propose an MBO which would have enriched themselves. The unions are right to suspect that their plans are over the top and their (Walsh etc) hidden agenda is not particularly hidden at all. By whatever means private investment comes into Aer Lingus, MBO or IPO the management will make money. And they have been hired as public servants to run the company, not become millionaires.
Aer Lingus does need capital to buy extra planes. Some analysts would have us believe that the only possible source for the this cash is private equity and that we had better flog the company now when it is profitable as it will inevitably lose money in the future. In the first place, under EU law the government is perfectly entitled to invest money in Aer Lingus now precisely as it is profitable. What they are not allowed do is invest when the company is losing money or what some call "bailing out an uncompetitive asset". In the second place, if the company is destined to lose money in the future, then why would it be attractive to private investment now? And if it is attractive to a private investor then that can only be because they could strip it assets and therefore harm the consumer OR it can remain profitable. In either case these are reasons for the government to hold onto it.
Finally, I can understand if Walsh is simply annoyed that the government rather than simply rejecting his MBO offer just refuses to make any decision regarding capital investment and you will be relieved to note that I can criticise the Taoiseach in this respect. If the government is to invest it must do so now and it seems they are reluctant to spend a pile of money on the airline. To what extent Mary Harney is dictating this aspect of government non-policy is uncertain. I say, give Walsh the money for the new planes, stop messing around pretending to privatise electricity supply, let VHI management know they can forget about windfalls for themselves and make the trains run on time. That's what governments are for!! posted by Sarah | 20:48 1 comments
sarah, sarah, sarah.Post a Comment
I think pregnancy is affecting your reasoning.
Just because it is very important that we have airlines does not mean we need a state airline. It is very important that we have bread. Does this mean we need a national bakery. It is very important that we have access to cars. Does this mean we need, as many countries have, a national car maker.
We have a national theatre because commercial theatre's might not use Irish playwrights. It is nothing to do with quality. In fact the quality in many of the other theatres is often better than in the Abbey (Let's leave the Peacock out of this). I think Aer Lingus will continue to allow Irish passengers no matter who owns it.
The slots at heathrow are very valuable and important. Under existing rules AL has to be 51% owned by Irish interests. You do not explain why you think a private buyer(s) would want to liquidate those slots.
"The mercy of private enterpise". Really Sarah. what is wrong with private enterprise. This notion that the profit motive is evil should be beyond you. I'm glad I've been left to the mercy of private enterprise. It means I can get to the UK by plane for a tenner instead of paying a grand to Aer Lingus. And private enterprise tends to operate in a competitive environment. When was the last time you said "My electricity bill is too high. I think I'll move to an alternative supplier." You are on the same side of the house as the taoiseach, but only because you both had Damascene conversions to socialism. Oh, and before we get off the notion of the mercy of private enterprise remember that this is a regulated industry and so it is the government which can decide how it is run. Of course the government could take a more direct role by keeping a golden share.
"Even if privatisation WERE on the agenda". (As in "If I were a rich man...."
The mass public greed which was the principal factor at Eircom is unlikely to be repeated.
You were not forced to sell at the bottom of the market. You could have sold at at time from the flotation to the take private and had at least two opportunities to get out at a price above the flotation price.
Walsh never proposed an MBO.
The idea that in an MBO or IPO scenario the management will definitely make money is ludicrous. Usually whether they make money is depandent on share price.
I give up. Sarah, I love your mind, but your analysis has to ris eabove the level of Fine Gael clap-trap