AER LINGUS is seeking pay restraint for a four-year period from staff in return for providing a once-off financial contribution to help address the substantial deficit that exists in a pension scheme for its general workers.
It also warned that current workers and deferred members of the scheme, which it operates jointly with the Dublin Airport Authority, would have received just 4 per cent of their entitlement had it been wound up on the basis of the €748 million deficit in the scheme that existed on May 31st.
Those already drawing a pension would be unaffected as they would get priority in the event of a wind up of the scheme.
“Aer Lingus believes that such an outcome would be extremely damaging for the group, its employees and shareholders,” the company said yesterday.
The airline issued a stock exchange announcement late last night partly outlining its position in relation to the talks that have been taking place with trade unions under the auspices of the Labour Relations Commission.
These talks have been under way since last year with unions threatening industrial action recently due to their frustration at what they believe is a lack of meaningful engagement by the employers.
Aer Lingus said the LRC had not issued a “finalised recommendation” in relation to the Irish Airlines (General Employees) Superannuation Scheme (IASS).
Aer Lingus said there are three key elements to its proposals.
The IASS would be closed to new members and benefit accrual for current members would cease.
The scheme would invest in bonds – or sovereign annuities – whose cash flows broadly match the IASS obligations.
Aer Lingus would make no financial contribution to the IASS.
It would establish new defined contribution arrangements on “competitive terms in respect of future service” for its staff.
The airline is “prepared to put in place arrangements to improve the likely future pensions of affected IASS members provided the balance between costs and benefits is in the interests of all parties including shareholders”.
“In particular, Aer Lingus is seeking employment cost stability over the coming years,” it said.
The airline said there was “no certainty” that an agreement will be reached between the parties.
