The pay and conditions of Aer Lingus staff employed before the date of the airline's initial public offering (IPO) have been guaranteed for the future in a new set of proposals tabled by the company.
In an attempt to counter union claims that Aer Lingus could end up in a "race to the bottom" in the future, the airline has agreed that no action should be taken to reduce the pay and conditions of staff who are employed immediately before the date of the IPO.
The company has also agreed to put in place a profit-sharing scheme for all workers. The purpose of the scheme is to allow staff to buy additional shares and retain their 14.9 per cent shareholding.
However the company has made it clear that staff joining after the IPO will have some different conditions. For example, staff joining post-IPO period be part of a defined contribution pension scheme, rather than the defined benefit scheme that current staff avail of.
It is understood a document has been circulated to union representatives setting out the company's proposals for the future. The Aer Lingus chief executive, Dermot Mannion, is anxious to get agreement from unions on how the company will operate in a post-flotation era.
On the question of the airline's pension deficit, the following elements have been offered:
l A supplementary fund will be set up to address the deficit. Some €70 million will be put into this fund from the proceeds of the IPO.
l Employer and employee contributions will be increased by an additional 3 per cent, and this money will also be put into the fund.
l These elements will be regarded as a settlement of all outstanding pension claims.
The airline has pledged not to implement any compulsory redundancies in future, except if a significant change affects a certain area. This might include the withdrawal of a certain route or service. The company makes it clear it will endeavour to redeploy staff if possible.
The company's proposals on trade union recognition are broadly predictable - for example, it recognises the right of employees to belong to a union. However, the company says its "aspiration" is that in future each employee group will be represented by just one union. At present there are a number of different unions, including Siptu, Impact and various craft unions.
The company's proposals which are being studied by Siptu and Impact, require employees to be flexible and mobile in the future and also ask employees to respond positively to changing working patterns.
The company says it wants good attendance rates among employees and any proven abuse of the sick benefit scheme will be treated as gross misconduct.
It is understood the detailed elements of the privatisation process have yet to be broached with unions.
The Government has yet to say whether the privatisation process will happen in June or September, but June is looking increasingly unlikely.
However, senior sources have not ruled out a sale taking place in July or August. "It would not be ideal, but it may not be necessary to wait until September." If the sale does not happen in June, Aer Lingus will have to produce a new set of half-yearly accounts.
Advisers and senior airline executives believe the recent postponement of the Air Berlin IPO is not fatal to the Aer Lingus sale.
The key issues of the price of the shares and the Government's golden share have yet to be decided. The price will be set at the very last moment, said one corporate adviser yesterday. The airline requires a minimum of €400 million from the sale to buy new long-haul aircraft.
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