Aer Lingus board to discuss €110 million pension plan

The Aer Lingus board will meet later this week to consider Labour Court proposals that it pump €110 million in cash into a new staff pension plan.

Last week, the Labour Court recommended that the airline put €110 million into a new staff retirement plan in a ruling designed to resolve the dispute over a €780 million deficit in an existing joint fund, the Irish Airlines Superannuation Scheme (IASS).

The company made no comment on the proposals themselves when the court published them on Friday, but it is understood that its board is due to meet this week to discuss the recommendations and take a view on them.

Aer Lingus has said that it would ultimately put any recommendation requiring it to put cash into a replacement scheme for the IASS to its shareholders, who include the State and rival Ryanair.

However, its unions and pension trustees will also have to decided on whether or not they favour the proposals before the issue can ultimately be resolved.

The Labour Court recommendation issued on Friday related to all staff, except pilots, for whom another solution is being formulated.

The IASS is a joint scheme involving Aer Lingus, Dublin Airport Authority and SR Technics.

Investors reacted positively to the news, driving an increase in the airline’s share price, which closed 3.9 per cent up at €1.611 in Dublin yesterday.

Analysts said the Labour Court recommendation imposed a far lower burden on the company than originally feared.

Donal O’Neill of Goodbody Stockbrokers, who rated the stock as a buy, said the proposal was well within the firm’s €200 million forecast worst-case scenario.

Along with the lump sum, the Labour Court also called for staff to be paid a number of increases due to them this year, but said that pay should be frozen thereafter.

Aer Lingus has enough cash to meet the lump sum payment, with over €900 million on its balance sheet.

Yesterday's news came as the company launched a High Court challenge to a recent Irish Takeover Panel that left it open to Ryanair to relaunch another bid to take control of Aer Lingus this year.

In February, the EU Commission blocked Ryanair’s €690 million bid to buy the 70 per cent-plus shares in Aer Lingus that it does not own on competition grounds.

Ryanair, which had previously made two earlier offers for Aer Lingus, put forward its latest bid in July of last year.