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Wednesday 27 August 2014

Aer Lingus warns of wage freeze in row over pensions

John Mulligan

Published 14/02/2013 | 04:00

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AER Lingus staff face a continued freeze on wage increments until a deal is struck to resolve a near €800m deficit at a pension scheme that serves the employees.

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The airline's director of change and engagement, Sean Murphy, wrote to the Irish Congress of Trade Unions (ICTU) informing it of the continuing impasse.

The differences between unions and the airline are thought to be so great that the threat of industrial action during the spring can't be ruled out.

Aer Lingus has been engaged in a long-running effort with unions to thrash out a solution to tackling the huge deficit at the Irish Aviation Superannuation Scheme (IASS).

This scheme serves thousands of current and former employees at Aer Lingus and the Dublin Aviation Authority (DAA).

The Labour Court will now draft its own proposals to finally resolving outstanding issues.

They include so-called cost offsetting measures put forward by Aer Lingus, the pension capital requirement being sought by unions, and the fact that the airline doesn't agree with financial projections drafted by actuaries – who are members of a technical group set up to assist in finding a resolution.

The Labour Court could deliver its proposals as soon as next week. It had hoped to have the pension issue resolved by March.

But it's thought that no matter what suggestions it comes up, the unions and the airline could remain so far apart as for the pension problem to be almost intractable.

Aer Lingus has demanded fresh productivity gains in return for making any contribution to a pension scheme – a major sticking point with unions.

Stabilisation

Under its 'Greenfield' cost-saving plan, introduced in 2009 as the airline faced enormous financial difficulties, Aer Lingus sought to cut about €100m a year from its cost base. It has exceeded that target.

The plan included pay freezes, which were to expire at the end of last December. There had been an expectation among staff that pay increments would resume in April.

But Mr Murphy told unions yesterday that Aer Lingus is seeking "cost moderation and stabilisation" for staff members affected by the pension issue.

"This is necessary to facilitate funding of the pension proposal to the required level. Our proposal seeks to do this through the moderation of pay increases rather than through pay reduction," he said.

Aer Lingus is proposing that for a four-year period, normal incremental pay increases would be replaced by an annual stabilisation payment amounting to €16m over the four years.

It has proposed two methods for calculating what staff would receive under the planned payments.

"Aer Lingus will not make any increases to pay, including increments, pending resolution of this issue," he added.

Irish Independent

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