AER LINGUS chairman Colm Barrington yesterday dismissed a suggestion by Ryanair chief executive Michael O’Leary that it should pay shareholders a €110 million dividend.
Mr Barrington also rejected a call from Mr O’Leary for Aer Lingus to furnish shareholders with a copy of the report of the external review of the leave and return redundancy scheme from 2008, which resulted in the airline having to settle a €30 million tax bill with the Revenue Commissioners earlier this year.
Mr Barrington’s comments were made in a letter to Mr O’Leary published yesterday. It was in response to a letter from the Ryanair boss dated September 13th.
In relation to a dividend payment, Mr Barrington said the board of Aer Lingus believed it was in the best interests of all shareholders to consider such a move “when there is a more durable recovery and consequent earnings visibility”.
“This remains our position,” he added.
Mr Barrington also rebuffed Ryanair’s claim that shareholders should receive a copy of the review of the leave and return scheme, which was produced by Deloitte and McCann FitzGerald.
“The board has received the findings of this review, has considered its recommendations and has acted on them,” he said. “It would be in contravention of our own board policies and our legal advice to release the findings of the review to any third party.”
In addition, Mr Barrington took issue with Ryanair’s “categorisation” of Aer Lingus’s decision last December to buy out the interests of the employee share ownership trust (Esot) as a “gift”. He described this as “grossly misleading”.
Mr Barrington said the requirement to pay part of its profits to the Esot through to April 2023 would have been a “continuing cause of uncertainty and a drain on our profits”.
He said the annual interest rate on the Esot loan, payable by Aer Lingus, was approaching 10 per cent. “This was a significant multiple of what the company earns on its free cash and so use of a small part of that free cash to extinguish that obligation made sound financial sense.”
Mr Barrington said the move also improved the free float of Aer Lingus from about 30 per cent to 42 per cent.
He said the decision to buy out Aer Lingus’s obligations under the 2006 profitsharing arrangement made “financial sense” and was in the “best interests of our shareholders”.
Mr Barrington revealed that on foot of a complaint from Ryanair, the matter was examined by the Office of the Director of Corporate Enforcement. “The ODCE found that no breach of the Companies Acts had taken place.”
