Tuesday 23 December 2014

Aer Lingus to pay €191m under plan to fix pension row

Published 28/06/2014 | 02:30

Aer Lingus chief executive Christoph Mueller
Aer Lingus chief executive Christoph Mueller

AER Lingus chief executive Christoph Mueller has called for a "significantly improved" industrial relations environment at the airline after it agreed to a fresh €191m plan to resolve a long-running pension dispute.

Mr Mueller said that Aer Lingus had "reluctantly" agreed to a proposal by a government-backed expert panel that urged the carrier to stump up an additional €51m to help finalise a revamp of the Irish Airlines Superannuation Scheme (IASS).

It brings to €190.7m the total Aer Lingus will commit to helping establish a new defined contribution pension scheme.

The IASS serves thousands of current and former staff at both Aer Lingus and the Dublin Airport Authority (DAA). But it has a huge deficit, approaching €800m, and trustees have been attempting to come up with a long-term solution to avoid it being wound up.

In March, Siptu was blocked by the High Court from initiating strike action at the DAA over the pension issue, and the union then called off action at Aer Lingus. The airline has been hit by separate strike action over rosters in recent weeks.

Contribution

The DAA, whose current and past employees account for about 30pc of the total IASS membership, had originally agreed, under a Labour Court ruling, to provide €48.9m to establish a new defined contribution pension scheme.

The expert panel – whose recommendations aren't binding on either Aer Lingus or the DAA – said the DAA's capital contribution should be raised to €57.3m in respect of active members of the IASS. The panel also said the amount it should contribute in respect of so-called deferred IASS members – people who have left the company but are not yet retired – should also be raised.

The DAA said yesterday that it has calculated that amount to be around €15.5m, bringing its total contribution to €72.8m.

"While the panel's recommendations involve a significant increase in the capital sum to be paid by DAA, the company believes it represents the basis for a final and complete resolution of pension arrangements," the DAA said.

Aer Lingus is due to start talks with the Irish Congress of Trade Unions in order to secure a formal agreement. The deal also has to be approved by IASS trustee, IASS members and, ultimately, the Aer Lingus board and the airline's shareholders at an extraordinary general meeting (EGM).

Ryanair, which owns just under 30pc of Aer Lingus, has previously objected to Aer Lingus providing any funds to address the pension problem.

A spokesman declined to say whether the airline would vote against any proposals at the EGM.

Irish Independent

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