PILOTS AT Aer Lingus have sought a 4 per cent stake in the company in return for agreeing to generate savings of up to €30 million as part of an overall recovery deal at the airline.
Aer Lingus is seeking to make savings of €97 million by the end of 2011 across a range of activities, and has been in negotiations with unions on the plan for several weeks. The restructuring would see the airline shedding 676 jobs.
However, Aer Lingus has warned that if no agreement is reached on the cost-saving measures by today it will press ahead with measures unilaterally – a move that could see several hundred additional staff being let go.
Aer Lingus has warned that it will ground aircraft and cut both short-haul and transatlantic routes in the absence of a deal. The additional job cuts would be compulsory redundancies.
An “extraordinary” meeting of the Aer Lingus board will be held this evening at its head office at Dublin airport to consider the outcome of the talks with unions.
In a statement released yesterday, Aer Lingus chief executive Christoph Mueller said the board would take “decisions to proceed with alternative means of delivering the savings within the same timeframe as the plan in the absence of [an] agreement”.
It is understood the pilots have offered to generate €30 million in savings through greater productivity. In return, the pilots have sought a 4 per cent stake in the listed airline. Based on yesterday’s closing price of 55.5 cent, this would be worth €11.7 million.
It is understood that Aer Lingus’s management has ruled out this proposal on the basis that it could not favour one group of workers by offering them shares in the business.
In addition, it not clear what mechanism Aer Lingus would use to issue the shares. Its stock is tightly held, with Ryanair owning 29.6 per cent and the Government holding 25 per cent of the stock.
The pilots currently own more than 4.5 per cent of Aer Lingus between their pension fund and an entity called Tailwind Nominees, which bought shares in the the airline at the time of Ryanair’s first bid for its rival.
If the stake sought by the pilots was granted, Aer Lingus staff could end up owning about 23 per cent of the airline when the existing employee share ownership trust (Esot) – which has a 14.4 per cent stake – was taken into account.
Various options have been examined by unions and management in recent weeks to generate the savings sought by the company. Unions are opposed to cuts in pay, while management is disputing whether the level of savings proposed by unions would actually be realised.
Commenting on this yesterday, Mr Mueller said: “We acknowledge that savings have been offered. However, it is critical that savings must be delivered in a full and meaningful way from 2010 and not deferred beyond the timeframe of the plan. This has not been the case so far.”
Aer Lingus has warned that if the overall cost-saving plan is not agreed by today it will introduce measures unilaterally.
The airline and unions spent several hours yesterday at the Labour Relations Commission to try and secure a final deal on the overall cost-reduction plan.
The National Implementation Body, the main trouble-shooting mechanism under social partnership, was also scheduled to consider the reform plan last night.
