Talks focus on freezing staff pension scheme at Aer Lingus
Aer Lingus has confirmed that it's looking at freezing a precariously funded pension scheme or radically altering its investment strategy.
About 15,000 former and current workers with Aer Lingus and the Dublin Airport Authority, as well as former SR Technics workers, are members of the Irish Airlines Superannuation Pension Scheme (IASS).
The scheme is believed to have a deficit of more than €700m.
That needs to be urgently addressed, so unions as well as DAA and Aer Lingus management have been trying to thrash out a solution at the Labour Relations Commission for some weeks.
Aer Lingus said yesterday that the negotiations have included the possibility of freezing the scheme to reduce the risk that the deficit may increase further in the future. Changes to its investment strategy are also being mulled.
That altered investment strategy could see the scheme buying sovereign annuities or similar products to improve the expected return earned by the scheme on its investments and so reduce the deficit, Aer Lingus said yesterday,
"These measures seek to preserve a higher level of pension benefit for IASS members that would be the case if the scheme were wound up, which Aer Lingus believes is inevitable in the absence of corrective action," the airline said.
Discussions have also focused on the provision of viable pension arrangements, and the talks are based on the assumption that all parties will reach agreement that the IASS should be frozen so that no future contributions would be made to the scheme.
"In such circumstances, Aer Lingus and DAA will need to establish new pension arrangements for future services," the airline added.
"Aer Lingus believes that the best interests of all parties will be served by creating separate pension schemes for DAA and Aer Lingus employees for the future."
Confirmation of the talk details sent Aer Lingus shares nearly 10pc higher yesterday. The negotiations are "complex and at an early stage".
Ryanair boss Michael O'Leary -- who previously said he would take legal action if Aer Lingus agreed to inject fresh funds into the IASS -- has recently indicated he would agree to such a move on a limited basis if Aer Lingus secured staff productivity gains in return. Ryanair owns almost 30pc of Aer Lingus.