Saturday, February 04, 2012
Ryanair has warned that it intends to take legal action to prevent Aer Lingus from making additional contributions to its employee pension scheme.
In an open letter to all Aer Lingus shareholders, Ryanair — Aer Lingus’s largest shareholder, with a stake of almost 30% — said it was "deeply worried" by the airline’s stock exchange statement earlier this week.
Aer Lingus said on Monday that it was in talks with unions over how to fill a shortfall of at least €400m in its pension scheme.
The statement said even though it had no legal obligation to make extra contributions, the airline believed it was "in the best interests of Aer Lingus, its shareholders and employees to constructively engage with the above named parties [the unions] in order to address the issues represented by the funding shortfall".
Ryanair has interpreted this statement as indicating that Aer Lingus might, after all, make a contribution to the pension scheme, a move the budget airline opposes on the grounds that it would diminish shareholder funds.
In the open letter, signed by CEO Michael O’Leary, Ryanair said it had repeatedly written to Aer Lingus requesting an EGM so that all Aer Lingus shareholders could have the opportunity to discuss the matter and offer an opinion.
Ryanair said it had also attempted to requisition an EGM resolution that Aer Lingus shareholders request that the company’s board of directors confirm it would not consider making any additional payments to its defined contribution pension schemes without prior shareholder approval.
Mr O’Leary said Ryanair feared that shareholder funds would be "frittered away by Aer Lingus" and referred to the company’s leave-and-return redundancy scheme of 2008, which resulted in the airline having to settle a €30m tax bill with the Revenue Commissioners last year.
Ryanair’s letter said it intended to start legal proceedings: "Since Aer Lingus has refused to facilitate Ryanair’s EGM requisition, and since Ryanair has failed to elicit any statement from the board of Aer Lingus that no further contributions will be made over and above its current fixed contribution rate of 6.375%, Ryanair intends to initiate legal proceedings to prevent the company agreeing to, or making, any such additional contributions without prior shareholder approval."
Ryanair did not specify the exact nature of the legal proceedings contemplated.
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