Aer Lingus has imposed an immediate pay freeze on all staff until a cost-cutting plan has been implemented, provoking an angry reaction from unions.
Even though employees were promised increases totalling 7.5 per cent under the "Towards 2016" pay agreement between employers and unions, the airline said they will not be paid until an agreement is reached on cost-saving measures.
Staff were due a 2.5 per cent increase yesterday and another next April plus a further 2.5 per cent annual increase under "Towards 2016".
The cost cutting plan, known as PCI (Programme for Continuous Improvement), was first signalled a year ago as part of the company's defence against a takeover bid by Ryanair. It aims to generate up to €20 million annually in labour cost savings and possibly €10 to €15 million more in other areas.
It was presented to unions in December 2006 and endorsed by the Labour Court in March 2007.
Aer Lingus chief executive Dermot Mannion said the freeze would stay in place until a new deal was struck with unions.
"Aer Lingus cannot continue to wait indefinitely to achieve essential savings," Mr Mannion said in a statement. "It is within this context that the decision to suspend increases has been taken."
Mr Mannion said there had been a complete breakdown in efforts to get union support for the PCI..
He added that Aer Lingus management would remain open to positive talks with unions at the earliest possible date but only if there "is a real willingness to implement PCI immediately".
Siptu president Jack O'Connor accused Aer Lingus management of "blackmail" saying the pay freeze amounted to a 12 per cent pay cut in real terms and said that the bonus scheme management voted through in July was being paid for by the workers.
"Now we see how this bonus scheme is going to be funded by not paying ordinary workers, many of whom are on average wages or less, the terms of the pay increase . . . which is just about enough to compensate of the consequences of inflation," said Mr O'Connor.
"We recognise that the practices in the aviation industry are increasingly being determined by some of the worst employers in the country and that Aer Lingus has to compete with those; nonetheless, it is not an excuse to abandon all civilised behaviour and practices," he added.
The Impact union said the pay freeze was "completely unacceptable" and that it had been "fully engaged" in the Labour Court process to reach agreement on the airline's cost saving plans.
"The company's announcement of a pay freeze represents a heavy handed and deliberately provocative approach, demonstrating an outrageous disregard for the tried and tested industrial relations machinery of the State," the union said.
Various branch committees of Impact will be meeting in the coming days to formulate a response to the company, Impact added.