Dispute to cost Aer Lingus €4m
Published 03/08/2014 | 02:30
Aer Lingus has forked out €1.9m in legal and professional fees so far his year to deal with a long-running pension dispute. The bill could hit €4m by the end of the year, sources say.
Speaking to the Sunday Independent last week as Aer Lingus released second-quarter results, chief executive Christoph Mueller confirmed the costs the airline has incurred in trying to find a resolution to the troubled Irish Airlines Superannuation Scheme (IASS).
The IASS scheme has a deficit of close to €800m and serves thousands of current and former employees of Aer Lingus and the Dublin Airport Authority.
Aer Lingus recently agreed to a new plan to provide €190m to establish a new defined contribution pension scheme for staff to replace the IASS. That plan was drafted by a government-backed expert panel.
The DAA agreed to the expert panel's recommendation that it should increase its planned capital contribution for a new defined contribution scheme for staff to €73m.
But just over a week ago, the DAA Siptu pensions committee rejected the expert panel's recommendation, throwing the entire process into uncertainty.
"We have a long list of people who have to make decisions right now," he said. "What are the alternatives? If this last attempt fails, I believe the trustees (of the IASS) will have no other choice than winding up the scheme. Our employees will go home with 20pc of their last pensionable salary, which I believe is not a decision we want to contemplate."
Aer Lingus has consulted with institutional investors regarding the planned €190m capital injection for a new pension scheme. Mr Mueller said some investors want Aer Lingus to pay the money "and get on with life", while others have questioned the cost, which represents about a quarter of the airline's equity.
"There will be a lot of work to be done from our side to convince shareholders that it is worth it to contribute that amount," he said.
He added that it's often difficult for shareholders outside Ireland to understand the complex industrial relations at the company.
Sunday Indo Business