The company pension fund has been a running controversy at the Irish flag carrier for several years, with the company making a series of financial injections to help remedy a fund deficit now estimated to be roughly €750 million.
These repeated infusions of cash have caused fury with one of its major shareholders, Ryanair, which has accused Aer Lingus management of being “spineless” in the face of threats of industrial action from staff.
The latest episode occurred last year, when Ireland’s Labour Court recommended Aer Lingus make a €110 million payment to the pension fund (which includes many staff, but not pilots), plus a further €30 million for former employees who have not yet reached retirement age.
Aer Lingus accepted this, but could not reach an agreement with the trade unions over the Labour Court’s recommendations, which were not mandatory.
The airline has faced several strike threats as a result of the impasse, which have hit bookings.
In a bid to break the deadlock, in March the Irish government, the Irish Business & Employers’ Confederation and the Irish Congress of Trade Unions sponsored the creation of a panel of experts to find a way out of the morass.
The panel recommended that the €110 million payment should be increased to €146 million, while the €30 million payment should also be increased, but by a yet-to-be-determined amount. Aer Lingus has now calculated that the latter figure will have to be increased by another €14 million.
In a statement, Aer Lingus CEO Christoph Mueller said the expert panel’s recommendations means a “significant increase in payments from the company,” which “reluctantly” accepted this as “the only solution that is capable of acceptance by all the parties.”
Implementation of the solution, he cautioned, “will be very complex” and there are several stages to be completed—including a ballot of trade union members—before the measure could be put to an extraordinary general meeting (EGM) of shareholders.
The company added that an improvement in the industrial relations atmosphere is required; it has agreed in principle with trade unions representing staff other than pilots to establish an internal dispute resolution mechanism.
Complicating the matter further, there is also a deficit in the separate pilots’ pension fund (€167 million at Dec. 31, 2013), which is being considered by another tribunal.
In a statement, Ryanair said: “We will consider any EGM motion on its merits should we receive one.” Its position on the pension issue continues to be a series of “staff grabs” and supposedly final contributions to the pension fund has merely increased Aer Lingus’s cost base, with no benefit to shareholders.