Aer Lingus needs to get back on course

Cantillon: Mueller needs to act decisively after difficult months for airline

Aer Lingus chief executive Christoph Mueller:  seen to be feathering his own nest while workers have been let to sweat for more than three years in talks to resolve their pension issues. Photograph: Dave Meehan

Aer Lingus chief executive Christoph Mueller: seen to be feathering his own nest while workers have been let to sweat for more than three years in talks to resolve their pension issues. Photograph: Dave Meehan

 

It has been a difficult couple of months for Aer Lingus and its German chief executive Christoph Mueller (above).

At the start of May, a row erupted over the generous increase in Mueller’s pension payment last year from 25 per cent of his basic salary to 40 per cent. This was at a time when workers were being asked to stomach large cuts in the benefits from their pension scheme.

He was seen to be feathering his own nest while workers have been let to sweat for more than three years in talks to resolve their pension issues.

Minister for Transport Leo Varadkar took the unprecedented step of voting the State’s 25 per cent stake in the airline against the remuneration report at Aer Lingus’s agm last month. This was a so-called “say on pay” resolution that the board voluntarily put to shareholders.

Mueller and the board only managed to squeek through a yes vote with the support of arch rival Ryanair, its biggest shareholder. Given the closeness of the vote and the negative publicity it generated, you might have thought the Aer Lingus board, which includes union chief David Begg, would have bowed to the obvious unease over Mueller’s generous pension payment. Instead, there hasn’t been a peep from them.

Since then, there has been a damaging one-day strike by cabin crew over rostering issues, which the company claims cost it €10 million.

Staff and their unions might have been pushing the envelope on this matter, but it should not have been beyond the wit of management to devise an earlier solution to the rostering problem.

And there’s another key issue for Mueller and Aer Lingus.

Ryanair has a lot of new aircraft to fill and its recent detente with the Dublin Airport Authority, added to its new customer-friendly attitude, means it is once again aggressively targeting expansion out of Ireland. This is bad news for Aer Lingus.

Talk of strike action only helped to direct customers into the welcoming arms of Ryanair.

Aer Lingus has steered badly off course this year. Mueller and the board need to act decisively to get it back on track.

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