Aer Lingus's biggest shareholder, Ryanair, claims that the latest proposals to resolve the dispute over a staff pension fund will cost up to €200 million and bring total once-off payments to employees since 2006 to over €630 million.
The claim was made as the airline prepares to meet unions next week to discuss the proposal, which involves paying a €110 million lump sum into a new fund and awarding salary increases due this year followed by a pay freeze.
The Labour Court made the proposals in a recommendation designed to end a long-running dispute over a €780 million deficit in an existing joint fund, the Irish Airlines Superannuation Scheme (IASS), whose beneficiaries include staff at Aer Lingus, Dublin Airport Authority and SR Technics.
The airline announced yesterday that its board backed the plan at a meeting on Thursday, but it has already pledged that it will seek shareholder approval for any proposal to fund a new scheme to replaces the IASS.
Counting cost
Ryanair, which owns 29.8 per cent of the company, said yesterday the final cost of the recommendations could be between €170 million and €200 million. It calculated that this would bring extra payments to workers since flotation in 2006 to between €600 million and €630 million and argued that yesterday's decision was further evidence of the board's "awful" record in protecting shareholders' funds.
Ryanair said that since Aer Lingus floated it has made over €430 million in exceptional payments to staff, beginning in 2006 with a “one-off” payment of €104 million to eliminate a pension scheme deficit.
Chief executive Michael O'Leary said the €104 million payment was "sold to shareholders" at the initial public offering on the basis that Aer Lingus would have no further obligation for future pension deficits.
Further contributions
Ryanair also said Aer Lingus chief executive Christoph Mueller and chief financial officer Andrew Macfarlane had assured shareholders in September 2011 it would not make further contributions to the pension scheme above the current rate of 6.375 per cent of salaries, but it has now agreed to a new rate of 10 per cent.
Ryanair said it would vote against the “unwarranted and unjustified pay-off, but added that it expected to be voted down by the Government and unions. The State has a 25 per cent stake in the airline. Aer Lingus did not comment on Ryanair’s statement.
