Aer Lingus has dismissed proposals put forward by the craft unions at TEAM on the airline subsidiary's future, saying they would bankrupt the company and jeopardise the group's future. In a strongly-worded letter to the unions last night, Aer Lingus said the only option was to accept the offer from FLS.
The craft unions made a series of proposals, including one that Aer Lingus should remain as a majority shareholder, and they have also sought backdated pay increases.
It has also emerged that, as part of the deal with Danish company FLS, Aer Lingus agreed a 10-year contract to give FLS its maintenance work. This work is said to be now worth around £28 million a year, but will rise to about £36 million within five years.
Aer Lingus has offered a £54.5 million package to workers in TEAM to surrender their letters of guarantee and transfer to the new company. The letters are held by approximately 1,050 staff, and the lump sums works out at £36,000 on average. However, only 41 per cent of employees voted for the deal and FLS suspended discussions on buying the subsidiary.
Aer Lingus warned the end of this month remained the deadline for acceptance of the deal. "There is not an option of returning to Aer Lingus since Aer Lingus has decided maintenance is noncore," the letter said. It is signed by Mr John Behan, a change management consultant who has been leading the negotiations on behalf of the airline.
Aer Lingus and the TEAM unions met twice this week, on Monday and Wednesday. Aer Lingus had asked for a full list of items requiring clarification and also for the unions' own submissions on TEAM's future. Aer Lingus said the submission by the craft group of unions would "bring immediate bankruptcy to TEAM and threaten the viability of the Aer Lingus group". It said implementing pay elements which the craft group was seeking would add £17 million to the payroll. These are pay rises and bonuses which the unions say they have lost over the past five years.
The letter says the annual payroll bill is £40 million per annum. "Adding these costs to the breakeven position we will achieve in 1998 - at the top end of the market - TEAM would run up additional losses of almost £90 million in the next few years." Aer Lingus dismissed the craft group's submission as "`not a credible strategy", saying employee share option proposals and minority investor proposals were not credible or practical given TEAM's circumstances.
It said the maintenance structure and costs within the Aer Lingus group were above industry benchmarks. The company urged employees to reconsider and accept the offer. It also said it would meet employees in groups and individually to put its case over the coming weeks.
`The transfer to FLS is not just the only viable option but provides every individual with a wellpaid secured job within a company that is committed to the industry and will invest in its future," Mr Behan says in the letter.
"People will transfer with a generous, tax efficient lump sum whilst retaining the same working conditions as today, with a guarantee of return to normal pay increases from November 1st next and the guarantee that their pension scheme will mirror the one they are currently in," the letter adds.
Last night union sources said the letter had only been received at 5 p.m. The unions will meet next week to discuss the letter.
