Aer Rianta has said it expects the Minister for Public Enterprise, Ms O'Rourke, to bring proposals on its future ownership to the Cabinet before the end of June. The State-owned airports company, which yesterday reported a 19 per cent drop in pre-tax profits to £42.2 million (€53.6 million) last year from £52.3 million, wants to float up to 49 per cent of its shares on the stock market.
Aer Rianta's after-tax profit fell by 35 per cent to £31 million (€39.4 million) in 1999, reflecting the loss of intra-EU duty-free trade in the second half of the year, which cost £16.7 million. Aer Rianta also paid £8.5 million corporation tax, its first such payment. This arose because Ms O'Rourke transferred her ownership of its assets to the company itself in 1999, with the State as sole shareholder. Turnover rose by 10 per cent to £292.9 million (€372 million) last year and new business generated an additional £12.3 million profits, Aer Rianta said.
While Ms O'Rourke was expected to recommend a partial flotation in 2002 to the Cabinet before Easter, this did not happen because several ministers are believed to oppose the plan. These are thought to include the Minister for Finance, Mr McCreevy, and the Minister for Tourism and Sport, Dr McDaid.
Politicians in Cork and Clare have also expressed fears that Aer Rianta's airports in Cork and Shannon would be separated from the company if it was floated, although its chairman, Mr Noel Hanlon, said yesterday this would not happen. Ms O'Rourke is also opposed to the break-up of the three airports, arguing that the Government should retain a controlling interest in Aer Rianta after an initial public offering.
When asked at yesterday's a.g.m. whether the company was disappointed that a flotation proposal had yet to be put to the Government, Mr Hanlon said: "We're not unhappy. We would like a Government decision as soon as possible."
Yet it is understood that many senior management figures in Aer Rianta regard the present situation as unsatisfactory because the company is seeking stock market finance to fund its capital investment programme. This is worth some £500 million and it has already sought to increase its maximum level of debt permitted by statute to £350 million from £250 million.
Consultants Lehman Brothers and IBI Corporate Finance first proposed a part-flotation a year ago in a report commissioned by Aer Rianta. This was largely endorsed by the Minister's own consultants, AIB Capital Markets and Warburg Dillon Read, in another report last February.
While both reports also advised that Aer Rianta sell the Great Southern Hotels group, Mr Hanlon said it was "an open secret" that the company would retain the hotel chain, which generated an after-tax profit of £3.6 million last year. The sale of the hotel group has also been opposed by local interests, notably the independent TD Mr Jackie Healy-Rae in Co Kerry, where three of the nine hotels are based.
"We feel it's not our core business, but we have no difficulty in keeping them on," said Mr Hanlon of the hotels. The construction of a hotel at Cork airport was under way and Aer Rianta was also considering extending its hotel at Dublin airport by 60 bedrooms, he said.
Mr Hanlon confirmed the company wanted to buy up to 2 per cent of Hamburg Airport with an option on a further 8 per cent in partnership with Hochtief, a German firm with whom it already co-owns Dusseldorf Airport. He added that the company was also considering an additional 4 per cent stake in Birmingham airport, of which it already owns 50 per cent.
Aer Rianta also wanted a rail link to Dublin Airport, Mr Hanlon said.
Passenger numbers rose by 11.5 per cent to 16.5 million last year. Some 4.75 million passengers used Aer Rianta airports in the first four months of the year, 9 per cent more than in the same period last year.
