Row over Aer Lingus deficit ahead of sale
IRELAND - The Aer Lingus pension deficit could be almost double the originally estimated shortfall, an unpublished report commissioned on behalf of the Irish state airline's unions warns.
Questioning the way consultancy firm Mercer arrived at the original €170m estimate, the nearly two-month old report by consultants Buck Heissmann says the pension hole could top €329m.
The report was commissioned by union advisors. The figure is significant, coming ahead of a planned sale of the airline.
Buck Heissmann declined to comment. It is understood Mercer refutes many of the points made in the Buck Heissmann report.
Fiona Daly, a former Buck Heissmann consultant who now runs her own firm Rubicon, said that a new report was commissioned to "ensure that the valuation that was placed on the liability would be satisfactory to the members of the pension scheme".
"Part of the issue may be that some of the benefits in the Aer Lingus pension scheme are discretionary, for example the scheme has discretionary pension increases, but they've typically always been granted," Daly said.
"I would imagine that it is possible that the unions wanted to have a valuation prepared assuming that the increases would be granted and perhaps the company had it valued without the increases because they are discretionary."
Aer Lingus unions and management negotiated a supplementary pension fund to make up the shortfall based on the estimated €170m, partly funded from the proceeds of the flotation.
However, how much will be needed to plug the pension hole depends on the size of the deficit.
Aer Lingus workers are asking why the report, which is dated August 2, has not been made available earlier.
The Services, Industrial, Professional and Technical Union's national industrial secretary Michael Halpenny denied suggestions that unions had suppressed the report and that members had been short-changed, the Irish public service broadcaster RTE reported.