Ryanair is cutting its seat numbers out of Dublin airport by 3 percent next summer, equivalent to some 1,900 flights. The company says that the Dublin Airport Authority (DAA) is making the airport “uncompetitive” by refusing to guarantee discounts on airline charges.
There is a long history of bad blood between Ryanair and the DAA, but new data just compiled by the NGO Corporate Europe Observatory (CEO) reveals that the two have something surprising in common – they are both getting cheap finance (“quantitative easing”) courtesy of the European Central Bank (ECB).
“Quantitative easing” involves increasing the money supply in order to, supposedly, boost the economy. Until this year, the ECB was doing this in the form of cheap loans to the financial sector and to governments.
But in June, the ECB started making cheap loans to non-financial corporations under the Corporate Securities Purchasing Programme (CSPP). This is a sweetheart deal for companies that are able to avail of subsidised finance that might not, in some cases, have to be paid back for up to 31 years. A whopping €46 billion has so far been extended to the lucky beneficiaries, with much more to come.
There are five Irish companies on the list – the ESB, the Kerry Group and Cement Roadstone Holdings, as well as Ryanair and the DAA. We do not know how much these companies got in total but we do know that each of Ryanair, the DAA and the ESB has already accessed subsidised loans twice.
Ryanair registered profits of €1.24 billion in the year to the end of March 2016, a 43 percent increase on the previous year. It seems an unlikely candidate for public munificence, especially given its labour-rights/">record on labour rights – it is not as if these handouts will be passed on to the company’s employees.
There are other odd entries on the register, not least oil companies like Shell and Total, causing CEO to remark that there is a “distinct smell of fossil fuels” to the list. A maker of enriched uranium, a nuclear-power company and leading car manufacturers – including Daimler, BMW and Volkswagen – also feature prominently.
Equally incongruous is the inclusion of the Thales corporation – maker of missiles and other military hardware; also present are the producers of Moet & Chandon champagne and Luis Vuitton handbags, and the gambling consortium of an Austrian billionaire. The CEO summary is that “the results are disturbing, unless you think oil, fancy cars … champagne, and gambling are good places to put public money”.
Such companies are able to access the CSSP because they have the financial expertise (often in the form of dedicated financial subsidiaries) to negotiate the complexity of the process, whereas small and medium-sized enterprises (SMEs) still rely on simpler bank loans (if they can get them). Hence, as CEO puts it, the programme is “a helping hand to big corporations, not to SMEs”.
The programme is inequitable and is running contrary to the urgent need to combat climate change. It is also economically inefficient in that it is almost certainly adding more to corporate profits than to job creation.
CEO estimates that if that €46 billion had instead been spent on enhancing the energy efficiency of homes, then 66 million houses could have been insulated (reducing global warming) and tens of thousands of jobs created.
Michael O’Leary, chief executive of Ryanair, is renowned for his attacks on the public sector and his calls for liberating the private sector from the shackles of regulation and taxation.
O’Leary recently said that the EU was run by “idiot bureaucrats” and that “if Raidio na Gaeltachta [among other state enterprises] cannot stand on its own two feet then frankly it should not exist”.
But when those “idiot bureaucrats” lavish largesse on his already loaded private company, which seems more than happy to pocket such support rather than stand proudly on its own two feet, we hear that strangest of sounds from O’Leary – a deafening silence.