Aer Lingus clears pension hurdle as 70% of workers back proposals

Barry O’Halloran and Charlie Taylor

Shares in Aer Lingus surged by almost 5 per cent as the airline cleared a key hurdle in resolving the crisis over the €700 million-plus hole in the pension scheme it operates jointly with Dublin Airport Authority.

Unions including Siptu and Impact voted in favour of settlement proposals that will involve moving staff to a new scheme to which Aer Lingus will contribute €191 million in seed funding, raising hopes that the long-drawn-out dispute can soon be ended.

Aer Lingus shares rose 4.9 per cent to €1.595 on the Dublin market after the company confirmed that the Irish Congress of Trade Union had formally told it that a ballot had resulted in a 70 per cent vote in favour of the pension deal.

“Aer Lingus welcomes this clear result and acknowledges employee support for the proposed solution, which while challenging for all parties, nonetheless represents a compromise which is the only viable solution that is capable of acceptance by all sides,” its statement said.

A number of steps remain before the issue is finally resolved, including getting shareholder backing for the €191 million contributionto the new scheme, but sources are optimistic that this can be achieved by the end of the year.

The news came shortly after the airline announced a summer schedule that includes a new Dublin-Washington service and a 19 per cent increase in third quarter operating profit to €112.9 million.

It will launch the Dublin-Washington-Dulles service on May 1st and will fly four times a week during the summer months. Aer Lingus will also increase the frequency on its San Fransisco service once-a-day from five times weekly and will boost capacity on Shannon-Boston by 20 per cent.

Its figures show revenue for the quarter was up 13.9 per cent year-on-year to €531.1 million, which the company attributed to a strong short haul performance and the continued success of Aer Lingus transatlantic capacity expansion.

Short haul revenue was up 5.5 per cent to €274.3 million versus €259.9 million a year earlier. Short haul passenger volumes rose 2.2 per cent and average revenue per seat increased 5.2 per cent.

Long haul revenues rose 34 per cent to €175.9 million from €131.3 million a year earlier.

For the three months ended September 30th, Aer Lingus carried a total of over 3 million passengers, up 4.8 per cent compared to 2013. Long-haul routes recorded a 23.8 per cent increase to 427,000 passengers while short haul passenger numbers were up 2.2 per cent to 2.625 million.

"Aer Lingus' short haul traded strongly in a tough environment, with revenue growth increasing by 5.5 per cent in the quarter. This is a reflection of the inherent strength of our business model and the success of management actions taken to address the effects of industrial disruption in the second quarter of 2014." said chief executive Christoph Mueller.