Court set to decide on Aer Lingus dividend plan despite pension issue
THE High Court will make final orders next week in a bid by Aer Lingus to have €500m released from its capital reserves to pay dividends to shareholders.
Judge Roderick Murphy, in a judgment last July, refused to sanction the €500m reduction sought unless Aer Lingus provided for potential legal claims resulting from a near €1bn deficit in a pension fund that serves Aer Lingus and DAA workers.
The shortfalls in the general and pilots' pension schemes appeared to constitute a contingent future claim against Aer Lingus, the judge said.
The proposed reduction in the capital reserves from almost €860m to about €360m was "substantially below" the level of the funds' shortfall, he also noted.
While the Aer Lingus group was entitled to seek a reduction in capital, the matter must be addressed in the context of Section 73 of the Companies Act dealing with entitlements of creditors, he explained.
The trustees of the pension schemes owed duties to the Aer Lingus pensioners and are contingent creditors of Aer Lingus in the circumstances of a shortfall in funding of the schemes, he ruled. In those circumstances, the company's application was adjourned to facilitate talks over the dispute.
However, yesterday, the judge was asked by the company to make final orders in the action.
Paul Sreenan, a barrister acting for Aer Lingus, said his client was asking the court to make an order allowing the airline to reduce its share capital. However counsel said his client did not want any conditions, which it believes are not necessary, attached to the final orders.
Aer Lingus would rather have the application turned down rather than have any conditions attached, he added. The airline was opposed to further adjournment, as discussions had not borne any fruit by now.
Brian O'Moore, acting for the trustees, said his clients wanted a further adjournment in order to allow talks.
However, if the court did not want to do this, then the trustees were agreeable to orders allowing Aer Lingus reduce its share capital on the condition that the company maintained its non-distributable reserves to a level that will deal with the fund deficit.
Such an order was in line with what the court decided in its judgment, counsel said.
Separately, Aer Lingus said it carried 575,000 passengers in February – 4pc fewer than it did in February 2012 as total capacity fell 6.3pc in the period.