Look back, it’s Aer Lingus: Why can’t we hold on to what we create?

It’s easy to be nostalgic about Aer Lingus being ours. It is one of the most Irish of brands; the green uniforms, the shamrock on the fin, the planes named after saints, the opportunity to order a full Irish on board. Oh well.

The State previously owned 85 per cent of Aer Lingus, before it was floated on the London and Dublin stock exchanges in 2006. Now, 25 per cent is still owned by the State, and Ryanair owns 29 per cent, the latter having bid three times to take over the airline.

Ryanair has had a brand personality transplant since then, swapping its “computer says no” attitude for a more cuddly outlook. Within the space of just over a month between December of last year and January of this year, International Airlines Group launched three takeover bids, rising in a few hundred million euro to where we’re at now, with €1.4 billion on the table. IAG is expecting to make €2.2 billion of an operating profit this year. There’s talk of job creation and North American expansion if IAG seals the deal.

The nice idea of Aer Lingus as an Irish airline is pretty much an illusion at this stage.

Feelings don’t come into billion-dollar deals. Just one-quarter of it remains in our hands. But there is something sad about the prospect of it flying the nest.

Economic arguments

I don’t have a particularly compelling economic argument for a chunk of Aer Lingus remaining a State asset. And unfortunately, every single thing this Government does lives or dies by economic arguments. But what is also important is national pride in indigenous industry. And the hope that Irish companies can be successful without being subsumed into larger international ones. But those things don’t matter when there’s cash to gain.

The public is constantly sold pups about privatisation. You can’t fault capitalism for its rabid pursuit of profit, that’s its modus operandi. But the idea that companies are always more efficient, more successful, and simply better when they’re out of the hands of the pesky collective isn’t true.

This idea also always ignores one large consequence: the human cost.

When a larger company takes over a smaller one, it’s generally not to employ more people, but to trim the fat.

Since IAG came into being in 2011 as a merger between British Airways and Iberia, the number of job cuts at Iberia has risen to 4,600. When IAG targeted the airline British Midlands International, up to 1,200 job losses were forecast. It’s curious, then, that IAG is talking about creating jobs in Aer Lingus if its takeover bid is successful. Willie Walsh, the chief executive, mentioned an exact figure: 635 new jobs by 2020. Let’s see how that pans out.

Willie Walsh knows Aer Lingus inside out, and nobody is better-positioned than he to get a deal over the line. While the unions are coming to terms with what’s going on, slots in Heathrow are being debated, and Aer Lingus staff look nervously at their pension schemes, Walsh is to the fore. Contemporary Aer Lingus is arguably his baby, since he moulded it into a low-cost airline, amid union battles in the early 2000s.

IAG wants Aer Lingus now, and governments overseeing the selling off of State-owned or partially owned companies aren’t overly inclined to think about the long term. The long term, in their eyes, is their term. What can they achieve right now to ensure the retention of power? Quick wins tend to make the victor look good in the now, but sit at the blackjack table for long enough, and you’re bound to go bust. Government needs fast bucks, the type of deals that provide the immediate PR injection and see them gather in a cluster grinning like maniacs from the canvas of a Graham Knuttel painting while clutching their magic beans.

What’s odd about the mooted Aer Lingus deal is that this isn’t exactly a company in dire straits that needs to be got rid of before it does us any more damage.

The airline’s revenue rose 9 per cent last year, and its operating profit increased 18 per cent. Last year saw a massive 28.4 per cent increase in long-haul passenger revenue.

Is it worth mentioning an emotional, or even nostalgic attachment to an Irish company? Yes it is, although the lads in suits will laugh you out of it. Companies don’t do feelings. Scratch the surface of an established brand these days, and it’s probably owned by some faceless international corporation with a name that sounds like something you take for indigestion, like Diageo or Mondelez.

National brands

Many Irish brands we think we can claim as our own are also illusions. Lyons Tea is packaged in England and owned by Unilever. Siúcra is imported into Ireland by Nordzucker. The Cully & Sully brand is owned by US company, Hain Celestial.

Aer Lingus might keep its shamrock, but there is a feeling of loss about a great Irish company potentially no longer being Irish. Why can’t we hold on to what we create?

Pride in our industry is important, and while selling things off might seem like a smart business decision, like all sale items, when they’re gone, they’re gone.