Aer Lingus has told the trustees of its staff pension scheme that it will not make an additional financial contribution to tackle a deficit of nearly €800 million.
Last summer the company told the markets a proposal put forward by the Labour Court that would have involved it investing about €140 million, could form the basis of an agreement for dealing with the estimated €780 million deficit in the Irish Airlines (General Employees) Superannuation Scheme (IASS). However, the Pensions Board subsequently raised concerns about the Labour Court proposal.
Earlier this month the trustees of the pension scheme, which covers employees of Aer Lingus and the Dublin Airport Authority (DAA), presented revised proposals to staff and management. These included staff working for extra years; cuts in benefits of between 11 per cent and 25 per cent; and transferring to a defined contribution pension scheme for future service. The trustees asked all parties to respond with their observations on the proposals by yesterday.
Unions want Aer Lingus to inject a larger amount of money to underpin the restructuring of the pension scheme.
However, in its response to the trustees, Aer Lingus ruled out any additional injection beyond the €140 million.
Aer Lingus also urged the pension fund trustees to meet with the Pensions Board as soon as possible and to put their proposals to it.
The airline’s response to the trustees effectively echoed comments it made in a statement to the markets about the pension scheme last week.
At that stage it said: “The company’s assessment, based on careful consideration of the IASS trustee proposal and advice received, is that the recommended company contribution can accommodate a degree of reduction in co-ordinated IASS benefits and still achieve the target levels of pension benefit proposed by the Labour Court in its recommendations dated January 2nd, 2013, and May 24th, 2013.
In particular, the company’s proposed once-off funding of €110 million to a new defined- contribution scheme remains adequate to support the achievement of the targets in the Labour Court recommendations.”
