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Thursday Newspaper Review - Irish Business News and International Stories - - April 11, 2013
By Finfacts Team
Apr 11, 2013 - 7:16 AM
The Irish Independent reports
that Aer Lingus still has the fifth-highest costs per employee among European
airlines, despite pay cuts and freezes in the past four years.
A survey by international aviation group CAPA
said the cost per employee at Aer Lingus was €74,818 on average, way above the
average at Ryanair, where the average is €49,182.
The most expensive employees are at the troubled
Scandinavian airline SAS, where the average is €104,342. British Airways is at number nine, at €66,851.
That is lower than Easyjet, where the average is €70,472.
The research is published as airline bosses,
including Willie Walsh, the chief executive of IAG, which owns British Airways
and Iberia, and Aer Lingus boss Christoph Mueller gather at a two-day
international aviation think-in in Co Wicklow, organised by CAPA.
"How much it costs to keep an employee at work is
not just a function of wages, but is also affected by the level of social
charges, the seniority mix of employees and the level of pension contributions –
all areas in which unionisation and history can play a major part," notes CAPA.
When he took over as chief executive of Aer
Lingus in 2009, Mr Mueller embarked on a radical cost-reduction programme that
has shaved more than €100m a year from the airline's cost base.
Labour costs as a percentage of revenue at Aer
Lingus – at 19.2pc – are just over twice as much as they are at Ryanair, where
the figure is 9.5pc. But despite its tight cost controls, Ryanair is ranked the
third-lowest on the scale. The airline with the lowest labour costs as a
percentage of revenue is Wizzair, at 6.5pc, with Spain's Vueling second-best at
Vueling yesterday agreed to accept an offer from
IAG to acquire the 54pc of the company that it doesn't already own.
Speaking at a tourism event in Abu Dhabi
yesterday, Mr Walsh said he had no plans to merge Vueling with Iberia.
IAG is targeting 3,000 job cuts at loss-making
Iberia and wants to slash salaries there in order to return the business to
IAG will use Vueling to increase its short-haul
business and compete more efficiently with low-cost operators, including
Ryanair, which is the biggest carrier in Spain.
Labour costs as a percentage of revenue at
Iberia stand at 30pc, according to CAPA.
The amount of revenue generated for each
employee on the books stands at €520,265 at Ryanair – the fifth-best in CAPA's
survey. The best is Vueling, at €629,566. At Aer Lingus, the figure is €390,634.
The Irish Independent
also reports that Justice Minister Alan Shatter says he is "revolutionising" the
legal system and has accused the legal profession of resisting change.
"We need to sweep the cobwebs out of our legal
system," said Mr Shatter, who has been on a collision course with the judiciary
and parts of the legal profession about a planned overhaul of the legal sector.
Mr Shatter was speaking last night at the launch
of a new Young Fine Gael (YFG) branch at King's Inns – the body that educates
barristers – on planned reforms of the courts and the legal profession.
Reforms planned by the Government include the
Legal Services Regulation Bill, which will lead to independent regulation of the
solicitor and barrister professions.
Mr Shatter said that he was "one of the few
oddities" when, as a solicitor, he exercised his rights to appear in the High
and Supreme Courts.
But the new legal services bill, which he says
will be operational in early 2014, would allow lawyers and other professionals
to work together, a move that would help abolish the distinction between
solicitors and barristers.
The Courts Bill 2013 will also relax the 'in
camera' (privacy) rule on some family cases and raise the monetary jurisdiction
of the civil courts.
The Government is also planning a constitutional
referendum with a view to establishing a new Court of Appeal and specialist
"I believe that for far too long that crucial
reforms to the legal profession have not been implemented," he said.
The Irish Times
reports that German chancellor Angela Merkel is facing political pressure in
Berlin to demand fiscal concessions from Ireland in exchange for granting extra
time to repay crisis loans.
A new troika report has recommended extending maximum average maturities by
seven years as an “important catalyst for the full restoration of market access”
for Ireland and Portugal.
The report, seen by The Irish Times , warns of a “potentially challenging”
situation ahead for Ireland “if market conditions become more adverse again”
and, after presenting five options, proposes a seven-year maximum average
maturity extension on loans as “the best compromise” to ease a return to
Talks with ratings agency Moody’s suggest that an extension of loan maturities
would see it reconsider upgrading its current Ireland rating, which has put off
many potential investorsExtending maturities on loans to Ireland may serve as
catalyst for return to market, according to report
Government to seek ‘maximum leeway’ on loans
The Irish Times takes no responsibility for the content or availability of other
European finance ministers asked the EU-ECB-IMF troika and the European
Financial Stability Facility (EFSF) to examine options for revising loan terms
with a view to reducing Irish and Portuguese refinancing terms in the next 10-15
Finance ministers meeting informally in Dublin
this weekend will discuss the resulting report, which describes Ireland’s
looming borrowing requirements as “demanding . . . but well manageable”.
No binding decision is expected on the report at the Dublin meeting, though
political agreement would mark another step in an incremental process to improve
Ireland’s financial position ahead of a planned return to markets later this
Ireland faces continued challenges, the report’s authors add, citing
non-performing loans as a “key concern” to financial markets, fearing additional
burdens for the sovereign should a capital shortfall arise.
On the other hand, extending loans to Ireland by an average of seven years could
boost the country’s reputation with the influential Moody’s ratings agency. It
told the report’s authors that a maturity extension might prompt it to
reconsider its current Ba1 rating for Ireland – a status that has put off some
While cautiously optimistic about Ireland’s planned programme exit later this
year, the report raises concerns about “limited and opportunistic” market access
for Portugal a year ahead of its own planned programme exit.
“Given the current volatility in the markets, quick implementation is
recommended to maximise benefits in shielding Ireland and Portugal from possible
contagion effects,” the report urges.
After the informal Dublin talks, ministers are
expected to reach formal agreement deal on extending the repayment periods in
April or May.
Berlin has yet to show its hand on the report’s proposal but have already
reminded EU partners that any substantial change to an EU-ECB-IMF programme
require a Bundestag vote. However, opposition lawmakers in Berlin who have seen
the report plan to make their Bundestag support dependent on Portugal and
Ireland adopting measures to improve their own fiscal base.
The SPD complains that the Merkel administration has put the EU financial
transaction tax (FTT) on the political back-burner. The Merkel administration
agreed to push the FTT in exchange for continued opposition backing of rescue
measures in Bundestag votes.
With an eye on the September general election, the SPD has been anxious to
present to voters its FTT demands as a way of forcing financial institutions
help cover the cost of future crises.
Dr Merkel has not needed opposition support in previous votes on euro rescue
programmes. Each successive crisis vote, however, has seen a slow but steady
rise in backbench rebels.
The Irish Times
also reports that the Government should not reduce the size of the packages of
spending cuts and tax increases scheduled for the next two budgets, according to
the Irish Fiscal Advisory Council, the independent watchdog charged with
ensuring better management of the public finances.
Some Government figures have suggested that the savings achieved from the
February deal on the promissory notes could allow a stretching out of the budget
adjustment over a longer period.
However, the chair of the watchdog, Prof John McHale of NUI Galway, said: “The
council’s assessment is that the planned adjustments of €3.1 billion in 2014 and
€2 billion in 2015 should not be reduced.”
The council judges that there is a one-in-three chance that the Government will
not reach its budget deficit target by 2015 and believes that easing the pace of
consolidation would push that already elevated risk even higher.
Echoing recent reports by the European Commission and the IMF, Prof McHale also
stressed that significant uncertainties remain for the Irish economy,
particularly around the prospects for growth and the capacity to meet
challenging expenditure reduction targets in health.
At the launch of the report yesterday, Prof McHale said it might be easier to
avoid a second bailout if there was clarity on a “precautionary” credit line
available after the scheduled exit from the current programme in December.
Although seemingly paradoxical, investors are likely to be more confident in
buying and holding Irish Government debt if they know a second bailout is
available (rather than resorting to writing down some of the debt, as happened
More positively, the margin of safety in budget targets suggested by the council
in its previous report had been “broadly achieved”. As such, the council has not
repeated previous calls for additional budgetary tightening beyond current
“Based on the better than expected Exchequer
out-turn and higher than forecast level of nominal GDP in 2012, it now appears
likely that the 2012 general Government deficit will be significantly below 8
per cent of GDP, which compares with a budget-day estimate of 8.2 per cent of
GDP. This should have some beneficial carry-over effects for future years,” the
It went on to say that “in addition, the promissory note transaction has reduced
the projected 2015 deficit by 0.6 per cent of GDP”.
The council’s new projections put the general Government deficit in 2015 at 2
per cent of GDP. This is below the Government’s forecast of 2.9 per cent.
A return to “State creditworthiness” would be
helped if the Government secured precautionary funding arrangements for the
period after the EU-IMF bailout ends (in December 2013) and if extensions to the
maturities on European bailout loans were to be achieved, the council said.
Commenting on the tendency among economists to be overly optimistic about
recovery, the council noted that “forecasters appear to have underestimated the
severity of the ‘balance sheet recession’ that followed the bursting of
Ireland’s property/credit bubble”.
Along with Prof McHale, the four other council members are: Sebastian Barnes,
Organisation for Economic Co-operation & Development; Prof Alan Barrett,
Economic & Social Research Institute; Dr Donal Donovan, University of Limerick
(formerly International Monetary Fund staff); and Dr Róisín O’Sullivan,
associate professor, Smith College, Massachusetts.
Examiner's Paul Mills writes: Love her or hate her, you have to admit that the
Iron Lady Margaret Thatcher achieved an enormous amount in her 87-year life —
from ambitious and opinionated grocer’s daughter to Britain’s first female prime
minister, and also the longest serving PM of the 20th century.
Her death on Monday has seen a media trawl back through her 11-year term as PM
of our nearest neighbour and trading partner, and, yes, the occupier of all or
part of this island for over 800 years.
Yes, she was divisive, but then who isn’t if the objective is to take on deeply
entrenched vested interests and unelected self-perpetuating cliques.
While she did much of what had to be done at the time in order to pull Britain
by its coattails from being a proverbial industrial wasteland and basket case
into a vibrant and growing economy, she also did much that resulted in
desolation and ruination for many.
If she had been allowed to stay in power longer and had not been backstabbed by
her own party and replaced by the grey and invisible man, John Major, would she
have rebalanced the divide between the haves and the have nots? Would she have
reinstated measures to provide for those unable to help themselves?
Who knows? The truth is we will never know, but it’s a fair bet that she would
However, unlike those now having street parties to celebrate her death, any fair
observer must admit that she achieved an enormous amount and did start the
process of putting Britain back on its feet in a time of dire need.
We are also in dire need and much of it of our own making. That is not to
suggest that we are all tax dodgers, manipulators, usurers, or just plain
It is to say that we elected the people we elected and they behaved exactly as
we wanted them to, not that we will admit that to ourselves or anyone else. We
forgot, however, that old axiom: “Be careful what you ask for, it may not be
what you want.”
In any event, to use a favoured phrase of this and earlier politicians: “We are
where we are.” It was much easier to get into trouble than it is proving to get
out of it.
How much of that is caused by a weak, populist, and vacillating government?
Would having our own Iron Lady or even Iron Man make a difference? Would we be
better off with a coherent and determined plan, as long as it gave us a sense of
direction and a feeling of achievement, a real feeling of light at the end of
The Government came into power with a massive majority on the back of
commitments to resolve our economic problems, do the devil and all, and
undertake vast improvements in the provision of public services and public
sector administration, and also, of course, on the back of one of the most
disastrous governments in our history.
Thus far it has failed to persuade the troika of its mistake in imposing an
ever-worsening austerity programme. It also failed to deal with the vested
interests across the economy.
Government continues to borrow billions to maintain pay levels for many at the
“top”, who have proven time and again that they do not deserve it. It continues
to bestow upon its members a largesse that is unique given our circumstances. It
is, in effect, spending what it apparently sees as free money, as nobody’s money
— aka public money.
However, as Maggie Thatcher said: “There is no such thing as public money, there
is only taxpayers’ money.”
Perhaps if we at least took that message from the Iron Lady we might be less
flaithulach and only spend what we have.
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