U-turn on €3m payoffs
Aer Lingus bosses, Sean Coyle, chief financial officer (left) and Dermot Mannion, chief executive officer, have scrapped the airline's controversial severance deals
Senior executives at Aer Lingus last night bowed to growing pressure and sacrificed controversial severance deals which would have guaranteed them millions if the loss- making airline is sold.
Chief executive Dermot Mannion and finance head Sean Coyle agreed to give up the so-called 'failure fees 'at an end-of-week board meeting, narrowly avoiding a damaging internal row.
Earlier, Congress chief and Aer Lingus board member David Begg described the pay-off packages, worth more than €3m, as a betrayal.
Both Mr Mannion and Mr Coyle claimed they wanted to ensure the payoff deal did not become a "needless distraction" as Aer Lingus executives continue to battle Ryanair's €748m takeover challenge.
"We have no hesitation in terminating this condition with immediate effect in order to focus our attention on defeating the unsolicited bid from Ryanair which fundamentally undervalues Aer Lingus and is incapable of completion," Mr Mannion said.
It was feared the airline's management was facing a bitter boardroom row over the controversial €2.8m payoff to Mr Mannion if the airline is sold and a further payment to Mr Coyle.
Congress chief Mr Begg angrily claimed he was unaware of the deal and declared: "I feel personally betrayed by this."
Some 3,500 Aer Lingus workers and former staff, who hold 15pc of the company in the Employee Share Ownership Trust (Esot), were also furious over the payment and wrote to Mr Mannion questioning it.
EGM
Earlier this week Ryanair boss Michael O'Leary, one of Aer Lingus's major shareholders, demanded an EGM to discuss the deal and called on stock exchange regulators, the Irish Takeover Panel, to look into the windfall arrangement.
The payoff was reportedly twice Mr Mannion's annual salary.
Mr Begg has been heavily involved in protecting jobs at the airline as it strives to secure around €20m in savings in the face of estimated losses of €100m for this year.
It is understood the deal was based on Mr Mannion standing by his word to tender his resignation and walk away from Aer Lingus if Ryanair is successful in its bold bid for the airline.
Meanwhile, it emerged last night the Government has no power to prevent multi-million euro pay packets at Aer Lingus despite owning a quarter of the former national carrier.
Sources confirmed that despite Transport Minister Noel Dempsey's reported "outrage" at the deal, the Government would be powerless to prevent further multi-million euro packages since the Government has no role in setting executive pay at the airline.
The situation is in stark contrast to the Government's ability to restrain fat cat packages at the three banks the State has recently taken substantial stakes in.
At those banks, pay packets for leading executives must be approved by the Government's 'Covered Institution Remuneration Oversight Committee'.
But over at Aer Lingus, executives' deals must only be approved by the airline's own 'Remuneration Committee' made up of board members.
The 'golden parachute' deals were agreed last September by that committee.
- Laura Noonan and Senan Molony
