Aer Lingus rescue looks more likely

Prospects for the Aer Lingus rescue package have improved significantly following a better-than-expected response to the airline's voluntary severance scheme. More than 1,500 employees are understood to have applied so far and, while this is significantly less than the 2,052 being sought, it makes it less likely that compulsory redundancies will arise.

The Aer Lingus unions have signalled they would not ballot members on the rescue package if compulsory redundancies were part of the agenda.

Yesterday, the company was not commenting officially on the uptake of voluntary severance. A spokesman simply said there was a "good interest" in the voluntary and early retirement packages. It will be a few days before the final figures are known, as applications from Cork, Shannon and overseas divisions have still to come in.

SIPTU national industrial secretary Mr Noel Dowling said yesterday: "In light of the company statement that there has been a strong interest in the voluntary severance package I now expect the controversial issue of compulsory redundancies will no longer be in play. We have still to resolve the issue of the employee share option scheme . I hope we can do that quickly."

The offer of four weeks' pay for each year of service - up to a maximum of two years - and early retirement from 55, is significantly poorer than the Cahill Plan of the mid-1990s.

Nevertheless, the uptake at this stage seems higher than at a similar stage in the Cahill negotiations, indicating that long-service staff feel the poorer working conditions under the survival plan are too onerous and any future severance packages will be even less attractive.

Meanwhile, the National Implementation Body (NIB) told the airline it had no role to play in amending the proposals of the Labour Relations Commission (LRC) on pay. Aer Lingus chief executive Mr Willie Walsh had referred the LRC document to the NIB on Thursday hoping it might overrule a proposal that the pay freeze could be reviewed in 15 months if the company returned to profitability.

It is now expected that the board will accept the LRC package, which accepts the broad thrust of the company's survival plan. As Mr Dowling indicated, the major outstanding issue to be resolved before the unions ballot members on the survival plan is the ESOP. The unions are seeking up to 30 per cent of the company in return for the £100 million (€1.27 million) in savings proposed in the rescue package.

So far, the Government has offered no more than 14.9 per cent. Union leaders meet senior officials at the Department of Public Enterprise on Monday to discuss the issue further.

Even if sufficient progress is made in those talks, it may still be difficult for Aer Lingus to meet its target to conclude negotiations and secure acceptance of the plan by next Friday. The earliest that unions could begin balloting members would be Tuesday.