AER LINGUS pilots face a 10 per cent cut in basic pay as well as a number of redundancies under proposals recommended by an independent arbitrator.

Other benefits will be cut and pilots will pay more towards their pension in the package which aims to save €30 million – part of an airline-wide restructuring that has targeted savings of €97 million in its operating costs.

However, the arbitrator, Labour Relations Commission chief executive Kieran Mulvey also said Aer Lingus should establish a fund of between €20 million and €30 million that could be shared among employees of the airline according to their financial commitment to the restructuring. The fund should disburse the fund over the five-year period of the “Greenfield” restructuring plan, but not before Aer Lingus returns to profit.

The former State carrier and the pilots’ representative body Ialpa have been unable to reach agreement on restructuring measures.

Mr Mulvey proposed that 50 “top of scale” pilots be made redundant. He said that a further 26 redundancies are expected to take place among full-time equivalent (FTE) pilots. The overall cost of the redundancy package is estimated at almost €19.5 million.

He noted that Ialpa had received expressions of interest in the severance package from a further 16 FTEs, but said that it had not been proved that a “potential surplus” exists to facilitate this.

Apart from the “across the board” pay cut of 10 per cent, pilots will forgo an increment that was due in 2012 under he plan.

However, Mr Mulvey advised that the current rate of expenses and hotel arrangements be left unchanged.

The arbitrator noted that a number of issues remained to be resolved between pilots and the airline - including new salary arrangements for future pilot hires – but said these should not delay agreement. Similar talks are outstanding on plans to broaden Aer Lingus’s engagement in commercial activities.

In a statement issued last night, Aer Lingus said that it will now consider Mr Mulvey’s findings “fully and thoroughly”.