Sunday 24 March 2019

Two sides go to war but outsider may be winner

Eoghan Curry

THERE was no good news from the Aer Lingus talks yesterday. But then, none was expected. Yesterday was a renewed attempt to work out of the rules of the new industrial relations game at our former national airline.

Aer Lingus is still in many ways a bastion of Stateism, perhaps the last bastion of the days when airlines were immune to the normal rules of economics.

The airline has since been privatised and the plane carrying the Celtic Tiger has crash-landed, although nobody has yet worked out what the new rules of the game are at the airline.

These new rules will be of great importance to everybody in the public sector, and the taxpayers who are likely to be asked to fund any changes in the state sector. Which is why the unions are so jumpy about the small print in the proposals put before them yesterday.

Not that there is anything much original or creative about Aer Lingus's cost-cutting proposals, leaked early and often since a list of options was placed before the airline's board a month ago.

They are much the same as those that are found around the planet in the aviation industry, the terms and conditions sought by the American airlines as they lurched through bankruptcy after 2001, by Alitalia and Olympic in their rescue packages and by Willie Walsh at BA.

If we are familiar with them, it is because we hear Michael O'Leary praising them on a weekly basis. Ryanair already has them in place.

Ryanair now flies 51 million passengers a year, compared with Aer Lingus's 8 million, for more or less the same number of employees.

They would happily strangle the former national airline or take it over, which might be the same thing. Aer Lingus options put before the board and the workforce included some classic meltdown proposals like closing their base in Shannon and using US-based cabin crew.

These are the spoilers. The real prize the airline has in sight is outsourcing, keeping front-of-house jobs within the airline and contracting out areas like catering, cargo, cleaning and loading.

It is on the outsourcing question that the next battle for Aer Lingus will be won and lost.

There is a carrot for the workforce. Aer Lingus's last redundancy scheme was over-subscribed. This one is likely to be as well.

Decent redundancy payments are going to be put on the table for those who leave. Those who stay will have more contract-based employment than heretofore.

The next step will be some megaphone trading of insults. Trade unions will scream about a race to the bottom, rampant Thatcherism, and the end of civilisation as we know it. Behind closed doors more realistic discussions will begin over complicated pension issues.

But before it all ends, a few problems will have to be thrashed out.

While Aer Lingus saved itself from bankruptcy in 2001 by reducing its workforce from a bloated 6,000 to around 4,000 today, the rescue package left some infamous existing work practices in place.

Aer Lingus set about trying to win back ground it had conceded over years of state ownership and weakened negotiating positions.

It expected to win, in its new guise as a newly-privatised airline with shareholders of its own. It lost heavily.

The battle took 18 months of negotiations and ultimate defeat for the airline. Even the compromises that the airline had won from the principle trade union, SIPTU, failed to make it past a suspicious membership.

Much, though not all, of the action took place in the bag-gage hall.

Airlines don't do baggage-handling any more. It is one those legacies from the 1950s that don't make sense in a modern airline.

Don't stop flying Aer Lingus because of the slanging match that has just broken out. Yesterday's fight will get a lot messier before it reaches its climax in February and March next year.

Flights may be disrupted, but it is more likely that threats will be used to win concessions without any strike taking place. Management and unions alike have been rehearsing these arguments of the past two years in print and on the airwaves.

Both realise they are in uncertain territory. Aer Lingus could never have attempted to outsource 1,500 jobs in the old days, when every industrial dispute ended in a phone call from Merrion Street and a request to give way to union demands.

The trade unions, too, know that they have a new advantage. They don't have to take strike action any more. Even the threat of an imminent strike can have such an impact on forward internet bookings that it can cause immense damage to the airline.

A threatened strike in August 2007 cost Aer Lingus €3.5m without happening at all. The threat of a strike in February of last year cost BA €120m.

SIPTU can also make life difficult for the Government by closing down the airport, calling out Dublin Airport Authority employees in key areas. There is nothing to hurt a vulnerable national economy like closing the main airport. Brian Cowen will know that too well.

These are the weapons that will be under the table when the serious talking begins about whether Aer Lingus can cut its workforce back to Ryanair proportions.

The man with all the cards won't be at the table at all. He will be in Mullingar, taking stock of it all.

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