Aer Lingus 'reluctantly' accepts additional €51m pension payment
Irish flag carrier Aer Lingus is to pay nearly €191m towards a new defined contribution (DC) scheme for part of its staff, as the airline seeks to settle the protracted dispute surrounding the underfunded €1.4bn Irish Airlines Superannuation Scheme (IASS).
The company said it would accept the findings of an expert panel, convened by the Irish government and social partners, in what was seen as the final opportunity to end the “protracted and divisive dispute” over a €715m deficit in the multi-employer fund.
In an announcement to the Irish Stock Exchange, Aer Lingus chief executive Christoph Mueller noted that a recommended €146.7m payment was a significant increase over a previous Labour Court ruling that urged a €110m investment into a new DC scheme to compensate active members for the benefits cuts they would incur due to the restructuring of the IASS.
“Aer Lingus and the company reluctantly accept the recommendations of the expert panel as the only solution that is capable of acceptance by all the parties,” Mueller said.
He said implementing the “very complex” solution would require continued effort by everyone involved in the dispute, which has lasted several years, partially due to the reluctance of former major shareholder Ryanair to consent to any payment.
Mueller added: “A significantly improved industrial relations environment is also a key requirement, and a functioning internal dispute resolution mechanism must be established for this purpose. We strongly encourage all parties to work collaboratively to achieve these goals.”
Additionally, the company said it would offer the trustee of the IASS a further €14m to compensate deferred members for part of their benefits cuts, raising its offer to €44m.
It said it was now engaging with the trustee and had received “initial conformation” that the fund would proceed with a proposed de-risking strategy, as outlined in a recent funding proposal.
Under the 25-year funding proposal, the scheme has allocated heavily to euro-zone government bonds, with an aim of achieving a €28m surplus by 2039.
It is also reducing member benefits by up to 20%, cutting the current deficit to €197m.
If both payments are accepted by the trustee, then Air Lingus would end up contributing €190.7m to a new DC fund, a nearly €51m increase from the €140m payment previously recommended by a Labour Court settlement.
The company will now seek final approval for all payments from all stakeholders, then convene an extraordinary general meeting to gain shareholder approval, with the aim of completing all payments by the end of 2016.
The announcement comes a day after Irish minister Leo Varadkar, whose Department of Transport, Tourism and Sport was one of the government departments involved in convening the expert panel, told the Dáil that he urged all parties to seize the opportunity and “bring this issue to a final and fair conclusion”.
He added that he had spoken with both the chairman of Aer Lingus, Colm Barrington, and at least one of the board members representing the interests of the state.
Varadkar also said he had not yet had an opportunity to discuss the matter with the board of the Dublin Airport Authority, the other scheme sponsor involved in the dispute, which was also urged by the expert panel to contribute towards the funding of a new DC scheme.
A spokesman for DAA referred back the company’s previous statement on the expert panel report, which noted that it would review the recommendations.