Shares in Aer Lingus jump nearly 8pc
Published 27/05/2013 | 11:24
Shares in Aer Lingus jumped nearly 8pc this morning after the Labour Court recommended that it inject €110m into a troubled pension scheme – less than had been feared by investors.
The airline was told on Friday evening that it should put a one-off payment of €110m into the Irish Aviation Superannuation Scheme (IASS), which has an €800m-plus deficit.
The pension scheme serves thousands of former and current workers at the airline and the Dublin Airport Authority (DAA).
The Labour Court has also recommended another three-year pay freeze at the carrier in return for the contribution, giving the airline increased certainty over its wage bill.
Full-time staff who are members of the IASS are also set to receive a ‘stabilisation’ payment of €5,850, however.
Aer Lingus and the DAA have insisted that they have no legal obligation to put fresh funds into the pension scheme. Ryanair, which owns nearly 30pc of its smaller rival, opposes the move.
The government, which owns just over 25pc of Aer Lingus, has seen the value of its stake steadily recover in recent months. The holding is worth €216m based on the current €1.63 share price.
“The recommendation is well within our €200m worst case scenario forecast,” said analyst Donal O’Neill at Goodbody Stockbrokers this morning in relation to the Labour Court recommendation.
He said resolution of the pension issue will “remove a major risk for the company and investors”.