O'Leary blasts 'spineless' Aer Lingus on pension deal
Former flag carrier backs €140m Labour Court solution for staff
RYANAIR dismissed the Aer Lingus board as "spineless" after the former flag carrier indicated it's prepared to obey a Labour Court recommendation to stump up €140m to solve a pension crisis.
Aer Lingus said it accepts the recommendation in principle, which is aimed at addressing a €750m-plus pension deficit at the Irish Airlines Superannuation Scheme (IASS).
The pension scheme serves thousands of current and former workers at Aer Lingus, the Dublin Airport Authority (DAA) and SR Technics.
A failure to address the deficit could lead to substantially reduced pensions.
Aer Lingus said it believed a proposal that will see it inject €110m into a new defined contribution scheme, as well as an additional €30m into the scheme in respect of former employees who are deferred members of the IASS, was in its best interests.
The Aer Lingus board said the recommendation would "address the risks faced by the company arising from the potential for serious operational disruption through industrial action and the potential for protracted litigation in relation to pension matters".
The airline's chairman, Colm Barrington, said the Labour Court recommendation was "clearly a compromise" that contained elements that were "challenging for all parties".
"Notwithstanding these chall- enges, it is our assessment that the recommendation is a step forward that balances the various risks and concerns and, for this reason, it should form the basis upon which the parties proceed," said Mr Barrington.
The Labour Court has also recommended that Aer Lingus makes a staggered "stabilisation payment", totalling €5,850, to each of its employees.
However, in return for the payment to the new pensions scheme staff will also have to agree to a three-year pay freeze.
The airline will now consult with the Irish Congress of Trade Unions, while unions will also have to ballot their members.
Any deal will ultimately have to be sanctioned by Aer Lingus shareholders at a special meeting.
But Ryanair, which owns close to 30pc of Aer Lingus, will oppose it.
Ryanair chief executive Michael O'Leary accused the Aer Lingus board of "rolling over" to unions.
"The Aer Lingus unions have repeatedly shown that whenever they threaten, the board and management will roll over," he claimed.
He insisted that the decision by Aer Lingus to pay the money was "irreconcilable" with previous assurances given by Aer Lingus chief executive Christoph Mueller and the airline's chief financial officer Andrew Macfarlane that the airline would not make any further payments to the scheme.
Ryanair was told this week by the UK's Competition Comm-ission that it exerts "material influence" over Aer Lingus.
The watchdog is almost certain to tell Ryanair to cut its stake in Aer Lingus.