Aer Lingus shares soar after court allows bigger dividends
Aer Lingus shares soared over 5pc at one stage yesterday after it secured court permission to set aside more money that can be used to pay dividends to shareholders.
Following proceedings that have dragged on for months, the High Court granted the airline leeway to reduce its capital reserves by €500m.
It will transfer the funds to its distributable reserves, raising them to €542m. Its capital reserves will drop to about €360m.
The airline has been battling to reduce its capital reserves amid concerns of a €930m deficit at a pension scheme which serves current and former workers at the airline, the Dublin Airport Authority, and former staff of maintenance firm SR Technics.
Last July, Mr Justice Roderick Murphy refused to approve the €500m capital reduction unless Aer Lingus provided for potential legal claims related to the deficit.
Aer Lingus and the DAA have insisted they have no legal requirement to address any financial shortfall at the scheme. The judge previously expressed concerns that the planned reduction in capital reserves would bring them to a level "substantially below" the pension scheme deficit.
The airline recently insisted that it didn't want any conditions attached by the court to the capital reduction. It said it would rather have the application turned down than have conditions attached.
Yesterday, Aer Lingus welcomed the decision of the court to allow it to reduce its capital reserves even though the court did attach a condition to it.
It must inform the trustees of the Irish Airlines Superannuation Scheme and the Irish Airline Pilots' Superannuation Scheme if a proposed distribution to its shareholders would cause the airline's combined distributable and non-distributable reserves to be less than the deficits in the pension schemes.
But the airline said the condition was merely a "notice requirement".
Aer Lingus intends to pay a dividend of about €21.4m to shareholders in May, subject to shareholder approval at its AGM next month.