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Aer Lingus to put €140m in employees pensions fund; Ryanair apoplectic
By Finfacts Team
May 31, 2013 - 3:52 PM
Aer Lingus today said its board of directors has
supported a proposal to make a once-off contribution of €140m to employee
pensions as part of a deal to avoid possible strikes at the airline. Ryanair, a
minority shareholder in the former State airline, is apoplectic and it condemned
the "spineless board and management of Aer Lingus which has accepted the latest
crazy Irish Labour Court recommendation."
The Labour Court recommendation includes a
once-off contribution of €110m for existing employees in a new defined
contribution pension scheme for existing workers. It will also make a once-off
contribution of €30m in respect of deferred members of the IASS pilots' scheme.
The UK's competition body on Thursday
said Ryanair should reduce its 29.8% stake in Aer Lingus because it is stifling
competition on routes between the UK and Ireland.
The provisional ruling by the Competition Commission follows Ryanair's 3
attempts to acquire the former State airline.
Ryanair said the claim that its stake reduced competition is "unfounded." It
pointed to a report from European regulators in February that said competition
between the airlines had "intensified" since 2007.
"While Ryanair is one of the UK's largest airlines, Aer Lingus has a tiny
presence in the UK, serving just six routes to the Republic of Ireland, [which
is] a traffic base that has declined over the past three years and now accounts
for less than 1% of all UK air traffic," Ryanair said in a statement.
Ryanair’s Michael O’Leary said today in
respect of the pensions move: “How many times are the board of Aer Lingus going
to roll over when their staff and unions threaten industrial action unless they
get paid off again and again. The original pension pay-off of €104m in 2006 was
sold to shareholders at the IPO on the basis that Aer Lingus would have no
obligation to any future pension deficits. Now despite paying over €400m to its
staff in exceptional payouts over the last 6 years, yet another €170m to €200m
of shareholder funds is to be squandered on paying off a deficit in a D.C.
pension scheme and providing for annual increments which don’t exist in any
other privately run company! We believe this is blatant mismanagement by a Board
which is controlled by, and panders to, Government and unions and does nothing
to protect shareholder funds.
This decision is irreconcilable with the repeated assurances given by Christoph
Mueller CEO and Andrew Macfarlane CFO at previous investor meetings that Aer
Lingus would not make any further one-off contributions to this D.C. pension
scheme. Today’s decision (which could only take place in a company that was
controlled by the Government and trade unions) is yet another example of how
shareholder funds are being squandered to buy off staff again and again. Ryanair
will oppose this latest “daylight robbery” of up to €200m, which brings to over
€600m the cash that the staff of Aer Lingus have grabbed in exceptional payments
Ryanair does not believe that this latest exceptional payout will be the last.
The Aer Lingus unions have repeatedly shown that whenever they threaten, the
board and management will roll over. This will continue while Aer Lingus
remains controlled by a board of directors which was appointed by and is
controlled by the Irish Government and ICTU boss David Beggs (a trade union
leader and Central Bank director for 15 years through boom and bust)
and which has presided over wholesale destruction of Aer Lingus’ share price, a
six year record of cumulative losses, 3 years of declining traffic and now over
€600m in exceptional pay-offs to Aer Lingus’ 3,000 staff or over €200,000 a
head. As a public company, Aer Lingus should be run for the benefit of its
shareholders and not to repeatedly enrich its 3,000 staff.”
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