Aer Lingus and DAA move at different speeds on pension

Aer Lingus and Dublin Airport Authority (DAA) now appear to be moving at different speeds towards a resolution of their joint pension problem. The airline took a critical step closer yesterday when a majority of its staff voted in favour of settlement proposals that have been on the table since the early summer.

However, the airport company's staff have yet to be balloted and it looks like it could be some weeks before there is actually a proposal ready to be put to them. As a consequence, it could now be the new year before there is a result from the DAA staff.

This is a problem with a lot of moving parts. The defined benefit fund, the Irish Airlines Superannuation Scheme (IASS) is in the red to the tune of €750 million. Aer Lingus and the Dublin Airport Authority, who jointly operate it, have for several years been locked in a dispute with their trade unions over this problem.

In broad terms, a resolution requires the freezing and derisking of the existing plan and a reduction in payments to those drawing pensions and in benefits to active and deferred members, who will move to a new defined-contribution plan. Aer Lingus will pay €191 million to seed the new scheme, while DAA has signed up to pay €72 million.

The airline will have to get shareholder approval for this. That seems likely as institutional shareholders believe that getting the pension money off its back is a good thing and the Government will support any settlement at this point.

So it appears to be over the biggest hurdle. The trustees have to get Pensions Board approval for the clawback, benefit cuts and the freeze and derisk. That will determine a lot of what happens next, if the approval is forthcoming it could mean a real end to the dispute. That is, of course, if groups of retired or deferred members, or both, do not go ahead with legal action.