The Aer Lingus board may seek legal advice on whether the airline can continue trading after the European Commission opposed further State aid to the company yesterday. The 10 directors of the airline have already been put on notice by chairman Mr Tom Mulcahy that they personally face charges of reckless trading if they allow the airline continue in business without a realistic chance of surviving and it subsequently collapses.
The board, which meets tomorrow, is also expected to confirm the appointment of Mr Willie Walsh, as chief executive. He is currently chief operations officer and was once a pilot with the airline.
It is understood the directors are considering appointing independent legal advisers ahead of tomorrow's board meeting to consider the rescue plan finalised by management over the weekend.
Before signing off on the plan the board will have to decide if the Government's verbal commitment to help the airline is sufficient to allow it continue trading. Without Government aid, the business will run out cash by early next year.
The directors will have to weigh up the Government's position against the European Commission's opposition to state-aid, which was reiterated by the Transport Commissioner, Ms Loyola De Palacio, at a meeting of EU transport ministers in Luxembourg yesterday.
Although appointed by the State, the directors are not indemnified by the Government, according to a company source. The directors will draw comfort from reports that the Government may go ahead and approve a loan next week in hope that it can be cleared with the Commission later. Unions representing 6,300 permanent staff at Aer Lingus will be given details of the plan on Friday.
The business plan, which aims to remove 2,500 jobs and restore Aer Lingus to a break-even position by the middle of next year, makes no provision for any redundancy payments.
Talks are expected to begin in earnest between Aer Lingus management and unions next week, by which time the position on State aid will have become clearer. The airline will need up to £200 million (€254 million) to cover redundancies and a working capital shortfall.
Union sources warned that there must be money available from one source or another to pay redundancies. "There is either money for voluntary redundancies or their isn't. If there is, the process can be managed," said Mr Michael Landers of IMPACT, which along with SIPTU represents most of the 6,300 staff.
If there is no money the unions will probably insists that redundancies on a last in, first out policy. "Which is not what the company wants to achieve," said Mr Landers.
It is against this backdrop that Mr Walsh will be appointed. He did not apply for the position when it became vacant after Mr Michael Foley was sacked this summer when a board subcommittee upheld two sexual harassment complaints against him.
However, he was approached last month after the former Glanbia group managing director Mr Ned Sullivan turned down the post.
