Background:By introducing an immediate pay freeze for its 3,700 staff, Aer Lingus is seeking to force the pace dramatically in its bid to overhaul work practices at the airline, which it maintains are seriously out of line with aviation industry norms.
The company first flagged its intention to put in place cost-cutting measures aimed at generating annual savings of €20 million nearly a year ago as part of its defence against a takeover bid by Ryanair. The airline has also told investors recently that these savings, under the plan known as the Programme for Continuous Improvement (PCI), will materialise next year.
However, the problem for the company is that it has not actually got anywhere in implementing the measures despite intensive talks with the trade unions.
Aer Lingus chief executive Dermot Mannion told staff yesterday that no tangible progress had been made over recent months and that the delays had made the introduction of the cost-saving plan even more urgent.
The airline has argued that the rationale for the cost-saving measures has been supported by the various industrial relations machinery in the State, such as the Labour Relations Commission, the Labour Court and the National Implementation Body.
Aer Lingus argues that its staff costs in some areas are completely out of line with those of its competitors. It maintains that its strategy for future growth and the delivery programme for new aircraft are predicated on achieving reductions in its staff cost base.
The airline has previously set out examples of what it says are the effects of its existing work practices on its cost structure.
It has maintained that there are currently more supervisory grades than staff to be supervised in some areas.
It has contended that ground staff in some cases are earning up to €110,000 per annum and that overtime arrangements in some areas resulted in the company paying up to 16 hours' pay for as little as two hours worked.
The company has also claimed that many employees finished up early and did not complete the shift for which they were paid in full and, separately, that part-time staff were receiving full pension entitlements.
Under the PCI reforms, the airline is seeking to achieve greater competitiveness by introducing greater flexibility in working hours, improvement in rostering and changes in annual leave and "lieu" day arrangements in some areas. It is also targeting overtime, where it wants to change the current arrangements of paying 200 per cent of basic rates for minimum periods to 150 per cent for actual hours worked.
The airline has already announced its intention to establish bases outside of the Republic of Ireland, beginning in Belfast, where staff will be paid at local rates rather than existing rates of pay in the Republic.
For the airline yesterday's move represented a high-risk strategy.
Mr Mannion said that he did not want to see a strike at the airline but that, effectively, he had no choice but to try to force the pace on the implementation of the PCI programme.However, the reaction of the trade unions at the airline has been furious.
Siptu president Jack O'Connor accused the company of "industrial blackmail" and warned that it would respond with an intelligent and considered strategy of industrial action.
Impact said that the Aer Lingus announcement represented a deliberately provocative approach. It said that its branch committees would meet as soon as possible to determine the most appropriate response.
It said that it had been fully engaged in the Labour Court process, which was working towards a conclusion to the outstanding issues in relation the PCI plan.
The union said it rejected as "misleading" the airline's statement that all of the various industrial relations avenues had been exhausted.
