Proposals from the Minister for Transport, Mr Brennan, to break up Aer Rianta into three different companies is threatened by a continuing reduction in the cash reserves held by the airport authority's international subsidiary.
It is also understood that Shannon Airport could seek voluntary redundancies from its workforce after it is de-merged from Aer Rianta, and that it could ask Dublin Airport to cover the extra cost of this.
The Irish Times learned yesterday that Aer Rianta International (ARI), which operates duty free shops and airports in Europe, the Middle East and the US, is likely to post a loss for 2003, the second year running.
The company lost €1 million in 2002, and continuing difficulties in some of its markets are understood to have forced it into the red once again.
The company's 2002 losses cut the funds in its profit and loss account from €47.1 million to €46.1 million.
Its overall reserves now stand at €54.7 million. The exact amount of ARI's losses for last year are not known, as its accounts are being finalised, but it is understood that they could exceed 2002's losses.
The company's difficulties have implications for Mr Brennan's plan. Aer Rianta is a plc, and the de-merger would effectively amount to a distribution of the company's assets.
But the law forbids the distribution of a company's assets where their value exceeds the amount of its reserves. Aer Rianta's airports are valued at €400 million, while its distributable reserves are valued at half that sum.
To overcome this, consultants hired by the Department of Transport have proposed that ARI pay a dividend to Aer Rianta. This would boost the company's reserves and allow it to begin the de-merger process with the transfer of one airport, Shannon, to an independent company and board. Mr Brennan is hoping to complete this by the end of the year.
The consultants' proposal states, however, that ARI's capacity to finance this should determine its value of the dividend payment. But ARI's capacity to pay the dividend depends in turn on the scale of its reserves.
The issue is further complicated by the fact that Shannon's new board could be forced to seek voluntary redundancies from the 595 workers currently employed there by Aer Rianta. It is not clear how many jobs it would seek to cut, but some estimates put the figure at close to 100.
This would be expensive as many Shannon employees have long service and there are a number of legacy agreements in place with the trade unions there. It is understood that it has been suggested that Dublin Airport ultimately carry the cost of this, possibly through borrowings.
A spokesman for Aer Rianta declined to comment on either issue yesterday. A Department of Transport spokesman said no proposals in relation to the break up of Aer Rianta had been finalised. "There are a number of proposals on the table, but nothing has been decided at this point," he said.
