AER LINGUS has rejected a call from Ryanair to pay a dividend of €30 million to shareholders this year.
Citing the difficult economic backdrop and rising fuel prices, chairman Colm Barrington told the airline’s annual meeting in Dublin yesterday that it would be “dangerous to Aer Lingus and our shareholders to pay a dividend at this time”.
Earlier this year, Ryanair was unsuccessful in a legal action aimed at forcing Aer Lingus to pay a dividend.
Aer Lingus has net cash of about €350 million on its balance sheet and Ryanair wants some of this returned to investors.
Mr Barrington also dismissed criticism from Ryanair about the suitability of trade union leader David Begg to serve on the board of Aer Lingus.
Ryanair deputy chief executive Howard Millar raised Mr Begg’s role as a director of the Central Bank of Ireland before the financial crash and his role in the “disastrous” social partnership process in the boom years.
He also claimed that Mr Begg was conflicted in relation to Aer Lingus’s dealings with staff in recent years on industrial relations issues.
Mr Barrington said Mr Begg had made a “valuable contribution” to the board of the airline and was not in any way conflicted when it came to staff negotiations.
Ryanair forced a poll on the election of Mr Begg to the board of Aer Lingus. This resulted in 43 per cent of shareholders voting against Mr Begg’s appointment.
Ryanair was also critical of the handling of the so-called leave and return redundancy scheme at Aer Lingus dating from 2009.
This involved 715 staff being paid redundancy terms before being rehired by Aer Lingus on lesser terms and conditions.
In March Aer Lingus announced it had agreed a €29.5 million settlement with the Revenue Commissioners in relation to this scheme. Mr Barrington said a review of the manner in which this scheme was structured was being carried out but he did not commit to the findings being published. He said the board would take “appropriate action” once it had received the report.
Mr Millar also questioned if Aer Lingus would sue the legal and tax firms who advised on the controversial redundancy scheme.
But Mr Barrington sidestepped the issue by saying it would not be appropriate to comment.
He said the scheme had been “very profitable” for Aer Lingus and contributed to its turnaround.
Ryanair defeated two motions at the agm relating to the allotment of securities and changes to the articles of association.
Mr Barrington reiterated guidance from earlier this week that Aer Lingus’s operating profit this year would be “significantly lower” than in 2010.
It made a loss of €53.7 million in the first quarter of this year.
He also said Aer Lingus would once again look at its cost base, given that demand remains weak and fuel costs have risen of late.
Speaking after the meeting, Aer Lingus chief executive Christoph Mueller said the airline would seek to honour an agreement with staff under the current Greenfield restructuring programme not to seek further labour savings until 2012.
But he said costs were being reviewed, especially airport charges.
Mr Mueller said the sharp rises in charges at Dublin airport over the past two years was “insane” and hampered its ability to sell flights.
He indicated that Aer Lingus would seek to reduce its charges bill in Dublin. “What we can certainly try [to do] is to go back to the DAA . This is the course of action. We will disclose more on this action at the beginning of June.”