Getting Aer Lingus back on course

The aviation pensions row is complex, but there may be light on the horizon, says Stephen Rogers.

A SIMPLE example of the bewildering complexity of the aviation pensions dispute is that Aer Lingus staff may have to be balloted both as workers and as shareholders on whether they accept an expert panel-proposed solution to the impasse.

Many workers are shareholders through the involvement they had in employee share ownership trust. Therefore they, along with major shareholders such as the Government and Ryanair, will have to cast a vote on whether they agree the airline should pay in excess of €150m to a defined contribution scheme to replace the Irish Aviation Superannuation Scheme, which is over €750m in deficit.

The same workers will be balloted by unions on whether they accept the workplace efficiencies upon which the company’s cash injection is contingent, among them a pay freeze up to the end of 2016. That vote will be heavily influenced by the way in which union leaders portray the contents of the panel’s recommendation.

After the industrial relations maelstrom that accompanied thedispute over rosters, one would have been excused for thinking that the pensions debacle, which has been rumbling on for more than four years, could have descended rapidly into strikes and recriminations very quickly after the expert panel’s final report was published.

After all, as one informed source said: “This is one of the most serious issues one can contemplate as a worker. It affects the entire workforce and the money they will have to finance 20 years of their lives after retirement.”

Given that importance, it is unlikely the panel has arrived at a solution that will leave either side “happy”. The best that can be hoped for is that they are not unhappy enough to throw the process into chaos once more.

The source admitted there appeared to be a genuine desire on all sides to bring the matter to a conclusion.

For the company, a huge degree of financial uncertainty accompanies such a prolonged period of industrial unrest. Both the airline and the Dublin Airport Authority have a huge liability on their balance sheets as a result of the IASS debacle. Until the scheme is resolved, the Government could not sell its share in the airline, nor could Aer Lingus seek to enter any strategic alliances which might develop the business.

The board will meet in the coming days to decide on a position to put to shareholders. It will take a hard sell, particularly to the likes of Ryanair, to convince them of the merits of stumping up even more than the monies recommended by the Labour Court in 2013 when there appears to have been little increase in the work efficiencies required from the staff.

From the point of view of those whose future entitlements hang in the balance, the price of a continued failure to address the issue could, at worst, be a retirement with significantly less money than they had anticipated.

A paragraph in the expert panel’s report summarises the consequences workers will face if they do not take this “final opportunity” for a resolution.

“It is the panel’s view that if this final opportunity to resolve this very protracted and divisive dispute is not grasped now, the situation facing members of the IASS will deteriorate further and that any current expectation of any optimum level of future pension provision will not be realised,” it said.

“The Panel also recognises that if this ‘final’ initiative fails, the trustee[of IASS] will immediately proceed with the submission of a Section 50 application [together with the funding proposal] to the Pensions Authority which will involve freezing the IASS for future service, no future accrual, no future revaluation, removal of unco-ordination and a 20% cut in accrued benefits.”

Key areas of the process have not been answered by the expert panel. They include the amount of money which should be paid to the deferred members of the scheme. The Labour Court had previously recommended a figure of €30m but all the expert panel would say is that the IASS trustee should meet with the employers to decide upon a once-off payment.

Crucially, the active, deferred, and already retired pensioners have not been told how much their pots will shrink by if the plan is implemented. After four years of talks, recriminations and threats of strikes, one document was never going to resolve the dispute overnight. But it may, at least have finally provided the routemap to the end of a tunnel at which a light can shine more brightly.


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