Aer Lingus seeks changes to reserves

Aer Lingus is seeking permission from shareholders to allow it reduce its non-distributable reserves by as much as €500 million…

Aer Lingus is seeking permission from shareholders to allow it reduce its non-distributable reserves by as much as €500 million.

The company is holding an extraordinary general meeting next month when it will put the proposal to shareholders.

Aer Lingus, which has not made any dividend payment or other form of distribution to shareholders since its initial public offering in 2006, said in a circular to shareholders it was not currently contemplating any such payments.

However, it will seek the changes as its structure prohibits dividend payments owing to accumulated realised losses being four times the 57 million euros in retained earnings earmarked for possible shareholder distribution.

"While the board believes that it is in the best interests of all shareholders to consider a dividend when there is a more durable recovery and consequent earnings visibility, the board has nonetheless reviewed the group's balance sheet with a view to improving flexibility for the future,"the airline said.

Ryanair today called for Aer Lingus chairman Colm Barrington to reply to a letter it sent last month outlining proposals to reverse the decline in the airline's share price over the past few years. Shares in Aer Lingus are currently worth about 63 centfrom more than €3 in 2007.

Ryanair owns a 29.8 per cent stake in Aer Lingus.

"Ryanair believes that Aer Lingus' shareholders are entitled to expect urgent action from the Chairman and Board of Aer Lingus," the airline said in a statement today.

Mr Barrington has already in recent weeks dismissed calls from Ryanair chief executive Michael O'Leary that it should pay shareholders a €110 million dividend.

Mr O'Leary has also pushed for Aer Lingus to give shareholders a copy of the report of the external review of the leave and return redundancy scheme from 2008, which resulted in the airline having to settle a €30 million tax bill with the Revenue Commissioners earlier this year.

Additonal reporting: Reuters