5.5% pay rise proposed by Aer Lingus arbitrator


PAY RISES of 5.5 per cent have been recommended for Aer Lingus's 5,000 employees in return for agreement on a new industrial relations framework and a commitment to achieve the company's commercial targets "in a spirit of partnership". These are the main findings of an independent arbitrator on a long running pay dispute at the national airline.

The framework also provides for the company and its main union, SIPTU, to agree an industrial peace clause. The arbitrator, Mr Phil Flynn, who is chairman of ICC Bank and a former president of ICTU, presented his findings to SIPTU and the company earlier this week.

While accepting that the 5,000 employees represented by the union have exercised considerable pay restraint under the Cahill Plan which rescued the company "from the brink of disaster", Mr Flynn says that Aer Lingus still faces major financial problems.

An NCB Corporate Finance study he commissioned to justify a moderate pay award states that there are early signals of a group in financial difficulty". It adds: "There are declining operating margins, the likely onset of an industry downturn and the need to begin to address fleet replacement ... The group cannot afford a cost structure which puts it at a serious competitive disadvantage."

Mr Flynn concedes that every pound spent in pay increases above the terms of the Cahill Plan will have to be recovered by the company. "While clearly the financial viability of the company must be the major concern, I am conscious of the significance of staff morale, particularly in a service company such as Aer Lingus", he says.

Given the extent of the changes staff had had to cope with, Mr Flynn concludes that "morale would be adversely affected if a pay increase was refused".

He proposes that staff receive a 2 per cent increase backdated to April 1st, 1996, another 2 per cent from April 1st, 1997 and a final 1.5 per cent from September 1st, 1997.

The award would cost Aer Lingus more than £5 million a year and be worth an average of £1,000 a year to workers.

Mr Paul O'Sullivan, SIPTU branch secretary, welcomed the findings, saying it was the first time since the early 1980s that a payment above national agreements had been recommended.

Aer Lingus is also understood to be reasonably happy with the proposals. A spokesman said yesterday that the company was studying them closely.