The airline’s management yesterday backed proposals that could see it make a one-off contribution of €140m to staff pension plans.
The move includes a lump sum of €110m going to a new defined contribution scheme, and €30m covering deferred members of the Irish Airlines Superannuation Scheme (IASS). This scheme also covers former staff at SR Technics and Dublin Airport Authority workers and has a deficit of around €780m.
Aer Lingus chairman Colm Barrington said the proposals are a compromise that contain challenging elements for all parties, but marked “a step forward that balances the various risks and concerns and, for this reason, it should form the basis upon which the parties proceed”.
Agreement still has to be reached, however, with pension scheme trustees, the Irish Congress of Trade Unions, affected members of the IASS, and the airline’s shareholders.
Despite the prospect of it potentially having to cut its near 30% stake in Aer Lingus, Ryanair — which has consistently opposed an Aer Lingus pension scheme pay-out, although it doesn’t have enough voting power to block the proposals — was a vocal critic yesterday.
It accused the Aer Lingus board of acting in a “spineless” manner and suggested the airline has continually claimed not to have any liability towards the scheme.
“How many times are the board of Aer Lingus going to roll over when their staff and unions threaten industrial action unless they get paid off again and again,” Ryanair chief Michael O’Leary said.
Analyst reaction to the progress made has been positive. Stephen Furlong of Davy Stockbrokers said a resolution, and clarity on labour costs, “will provide investors with an increased level of certainty on the company’s obligations”.
Goodbody Stockbrokers — which has a ‘buy’ tag on the Aer Lingus stock — called it “a positive outcome to a very tricky situation for Aer Lingus”.
Donal O’Neill of Goodbody said the ongoing negotiations regarding Aer Lingus’ pilot’s pension scheme should result in a more amicable solution, given that its deficit has already significantly reduced.