State, Aer Lingus and DAA may face €174m suit over pension

Aer Lingus, the Dublin Airport Authority (DAA) and the State could be facing a €174 million legal action resulting from the recent settlement of an insolvent aviation industry pension scheme.

The news came as International Consolidated Airlines Group (IAG) executives met Government officials on Wednesday to renew talks on the group’s proposal to buy Aer Lingus for €1.36 billion.

IAG is understood to have presented a detailed response to questions put forward to it by the officials and their advisers, who have been asked by the Government to assess the bid, focusing on key issues such as the Heathrow slots and future plans for the airline.

Contacts are expected to continue, but Government sources remain sceptical about the likelihood of the Cabinet approving the sale of the State’s 25.1 per cent stake.

Pensioners’ action

Meanwhile, Aer Lingus could be facing a substantial legal action after pensioners drawing incomes from the Irish Airline Staff Superannuation (IASS) retirement plan had their benefits cut in January as part of a deal to tackle the scheme’s €750 million shortfall.

The cut was the first applied under a change to legislation last year that allowed payments to pensioners who are members of insolvent schemes to be clawed back.

The Retired Aviation Staff Association (RASA), which represents former Aer Lingus and DAA workers, has confirmed it plans to challenge the move in the High Court.

While a statement from the organisation indicates its lawsuit could target a number of “potential defendants”, it is understood it is considering taking its claim against the State, the IASS trustees, the DAA and Aer Lingus.

The group has hired Dublin law firm LK Shields and senior counsel John Hennessy to advise it.

A meeting of 200 members decided unanimously this week to go ahead with its legal challenge.

The association’s actuaries calculate the cut to former Aer Lingus workers’ pensions comes to €129 million, while the reduction to DAA staff stands at €45 million, allowing for a total of €174 million.

Its claim against the State is likely to be based on the change to the Pensions Act and legislation establishing the Shannon Group, both of which facilitated the IASS settlement.