Aer Lingus has made a final offer of £47 million to the TEAM workforce to buy out letters of guarantee and other rights enjoyed by 1,500 employees in its aircraft maintenance subsidiary. The offer is worth more than £40,000 each to long-service TEAM workers.
When provision is made to transfer pension funds from Aer Lingus to a new stand-alone fund for the TEAM employees, the overall value of the offer could be nearly £100 million.
Unions representing the workers are to meet management next week to give their response. In the meantime, union officials and their legal representatives will receive presentations from actuaries on the overall shape of the pension provisions.
The offer is almost double the £25 million opening bid from management when preliminary negotiations began with the unions last autumn. It represents an average of £31,000 for each employee.
The bulk of the compensation will go to the 1,200 long-service employees with letters of guarantee. These promise that Aer Lingus will not sell out its majority shareholding in TEAM and that letter-holders can have their jobs back with Aer Lingus if the company is sold or wound up.
Buying out these rights is essential if Aer Lingus is to sell TEAM to the Danish conglomerate FLS. There was a provisional deadline of February 28th on the closure of the sale, but this has been prolonged indefinitely to allow negotiations with the unions to be finalised.
FLS is continuing the process of due diligence on TEAM, and it is still unclear what the final price will be. However, it is expected to fall well short of the £47 million Aer Lingus must find to finance its latest, and final, offer. With a turnover of £85 million, it is unlikely TEAM will fetch much more than £30 million.
A key element in the transfer of undertakings between Aer Lingus and FLS will be that previous service of employees with TEAM and with Aer Lingus will be recognised. Existing terms of employment will also be preserved. As a result TEAM workers will enjoy terms at least in line with those provided for in the Cahill Plan and potentially better if the fortunes of TEAM improve.
Former TEAM employees will also carry over some important fringe benefits into the new company. They will be allowed, for instance, to retain their Aer Lingus shares for three years. This will ensure the shares can be resold to Aer Lingus on the most tax-efficient basis. They will also retain a diluted version of their travel concessions.
The offer is considerably more generous than the vast majority of redundancy schemes, and TEAM workers are not losing their jobs, simply changing employers.
However, given the past record of industrial relations in the company it is still possible that a significant number of employees will proceed with their threats to pursue the dispute in the courts. About 200 employees, mainly AEEU members, are demanding reinstatement with Aer Lingus rather than transfer to FLS.