Unions face new class of competition with this chief

WHEN he addressed reporters on his drastic cost-cutting plans for the airline, new Aer Lingus chief executive Christoph Mueller used the type of efficient terminology that is the hallmark of his native Germany.

“We would like to avoid compulsory redundancies under all circumstances. But if we cannot reach an agreement on the cost level proposed, the following circle of events will impact. We will be forced to take out further production. Most will be long haul but I cannot exclude short haul aircraft will be affected.”

The message to staff was simple. Sign up or we start dropping more aircraft. Given that up to 90 people lose their jobs for every long haul flight stopped, the implied threat was clear. The most skilled trade union activists who have fought and, many would say, won successive battles with management at the former national airline in recent years are facing a whole new class of competition with Herr Mueller.

However, there is a difference between those previous skirmishes and the debate which will take place between unions and management over the next six weeks.

Previously, the impression among unions and staff was that management were needlessly trying to reduce pay and conditions in a form of capitalist greed. Now, they realise, that without some concession, they may have no jobs to go to. Yesterday, the job and pay cuts were not the only frightening figures released by Aer Lingus. It also revealed that its long-haul passenger numbers for September had slumped 20.4% compared to the same month last year.

At a time when airlines are dropping from the skies like flies and when it is being predicted in some quarters that all but the biggest five could fold, it is inconceivable that Aer Lingus can continue to sustain operating costs which are significantly higher than its competitors Ryanair and EasyJet.

Therefore, even though the airline has made a considerable amount of effort to weed out inefficiency, it now needs to play its full hand and remove any aspect of the business which cannot pull its weight financially. Many were surprised that yesterday’s announcement did not include a significant outsourcing of, in particular, ground operations. Negotiations had even been initiated with the likes of Servisair in an earlier purge. However, that did not emerge, though airline sources said that was not to say it might not be a feature at a later date. Instead the airline appears to be trying to outsource the biggest burden hanging around its neck – the almost €500 million deficit in the pension scheme it shares with the Dublin Airport Authority and SR Technics.

It is widely anticipated that while job cuts and pay will make the headlines, pensions will be the area where management will face the biggest fight with unions. The workers may be able to live with the thought of a pay cut now when they are still able to work. But the thousands who enjoy the benefits of the more secure defined benefit pension scheme will fight tooth and nail against being moved to the defined contribution scheme, which, by the nature of its risk, could leave them with next to nothing in retirement.