Aer Lingus ‘will be ready for O’Leary at AGM’

AER LINGUS hit back at Ryanair boss Michael O’Leary last night saying it will be ready for him at its upcoming AGM when he proposes massive pay cuts for the state airline’s chairman and executives.

Aer Lingus said it “successfully competes every day against Ryanair” adding that Michael O’Leary “just isn’t believable as any kind of champion of Aer Lingus shareholders”.

Earlier in the day Aer Lingus urged its shareholders to reject Ryanair’s calls for a cut in its chairman and director’s pay saying the fees they earn are “reasonable”. It said its non-executive directors fees are on average 24% lower than 14 of the top ISEC companies.

“Michael is welcome to our AGM, as are all our shareholders, and he can ask anything he likes. We’ll be ready for him,” Aer Lingus said in a statement last night.

Aer Lingus, which has a market value almost 15 times less than Ryanair paid its non-executive directors €45,000 last year, similar to that of Ryanair whose non-executive directors were paid €32,000 to €47,000 in 2008.

The former state airline, which is in the midst of an extensive cost-cutting programme said it believes that the existing non-executive directors’ fees and chairman’s fees are “reasonable having regard to the high level of board activity and the increase in directors’ responsibilities since the IPO”.

Ryanair’s chief executive Michael O’Leary said yesterday that the airline will ask shareholders at the Aer Lingus annual meeting on June 5 to reduce the chairman’s fee to the 2006 level of €35,000 a year from €175,000.

A second resolution would cut fees paid to non-executive directors to €17,500 from €45,000 in 2007.

Mr O’Leary said: “It’s all the same bloody characters who are sitting here lecturing the rest of the world on the need for cost cuts and efficiency, when they have their snouts firmly in the directors’ fees trough.

“These people have presided over a collapse in Aer Lingus’ share price and a collapse in Aer Lingus’ profits.”

Ryanair believes the board of Aer Lingus can’t credibly lead a major cost-cutting plan as board members earned wages of more than €700,000 last year.

Aer Lingus board members volunteered in February to reduce fees by 20% for this year.

Mr O’Leary said yesterday that there is “nobody to buy” Aer Lingus, having said previously that he has no plans to make a third bid for the airline.

Davy analyst Stephen Furlong said: “It’s a bit of frustration and also, I suspect, a comment on what O’Leary believes, rightly or wrongly, is an inefficiently run airline.

“Clearly they are interested in the fortunes of Aer Lingus, they have and will continue to write down their stake.

It’s probably going to be another €140 million writedown in the Ryanair results next week,” he added.

Ryanair is Aer Lingus’s biggest shareholder with a near 30% stake. It has unsuccessfully bid twice for Aer Lingus over the last few years.

Aer Lingus shares increased 2.8% yesterday to 65 cent while Ryanair fell 2% to €3.37.

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