State sold Aer Lingus stake for €335m - where did the money go?

Ever wonder what became of the €335 million that the State received for its shareholding in Aer Lingus on the sale of the airline in 2015 to IAG?

Fianna Fáil TD Dara Calleary asked just that question of Minister for Finance Michael Noonan last week.

The Minister reminded the Mayo deputy that the Government had decided to allocate the money to a connectivity fund, which would operate as a subsidiary of the Ireland Strategic Investment Fund (ISIF).

To date, some €57 million has been invested in two projects. A €22 million equity investment was made in Aqua Comms, the operator of Ireland’s first dedicated subsea fibre-optic network.

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The ISIF also contributed €35 million to a bond issuance by the DAA, which operates Dublin and Cork airports. The new bond runs to 2028 and carries a coupon of 1.554 per cent. It’s a part refinancing of a bond due to mature in 2018, which carried a much healthier 6.587 per cent coupon.

As for the remaining €278 million, the Minister said other opportunities are being assessed by the ISIF, with a view to delivering both a commercial return and some economic impact for the State. These include potential investments in energy, air, sea and “further data connectivity projects and businesses seeking to expand and enhance Ireland’s international links”.

How about buying some shares in Ryanair?

It was the clearest of signals that the era of defined benefit, or final salary pension schemes are a thing of the past – at least outside the public sector. Intel, the US computer chip giant for so long synonymous with the munificence of foreign direct investment pulled the plug on its DB pension scheme citing rapidly increasing costs.

It follows Pfizer and others. That poses a question. If the private sector has determined that DB schemes funamentally undermine competitiveness, how long can it be before taxpayers query why they should fund precisely such arrangements in the public sector?