Transatlantic services at greatest risk if Aer Lingus unions proceed with industrial action

ANALYSIS:The involvement of the Dublin Airport Authority complicates the unions' dispute with Aer Lingus

INDUSTRIAL ACTION at Aer Lingus, which has long been threatened by unions as part of a lengthy row over pensions, is scheduled to begin on Monday, November 19th, with a two-hour work stoppage.

The industrial action could affect thousands of passengers with Aer Lingus transatlantic services expected to be worst hit.

However, the stoppage is nearly three weeks away and there could – and more than likely will – be many further developments before the first pickets are placed.

Aer Lingus last night said it would consider the serving of the notice of industrial action with its legal advisers.

Some sources suggested that one area the company may examine is whether the ballots of workers held by unions some weeks ago covered the planned action.

Some highly placed sources have questioned whether the unions would have to ballot specifically on pension proposals which have been tabled by Aer Lingus in the intervening period.

However, unions contended that the industrial action was covered by the previous ballot.

Minister for Transport Leo Varadkar, while criticising the planned industrial action, last night called on the airline and the unions to “start talking again” on how to deal with the €748 million deficit in the pension scheme.

The immediate impetus for the current action came last week when the Labour Relations Commission adjourned indefinitely a talks process that had been running for many months.The unions want the company to go to the Labour Court on the issue. However, the airline has refused and Varadkar last Friday appeared to be more supportive of the airline stance than the demands of the unions.

He said it “would be unusual for the Labour Court to hear a case related to a pension fund”.

Although a Labour Court hearing would not be binding, the company appears to believe it would face pressure to implement any recommendation that emerged and that it would, in effect, be imposed on its shareholders.The company’s preference is to return to the LRC. Some senior industrial relations experts last night predicted the LRC chairman could call the parties together again in the coming weeks.

One of the complexities in this dispute is the fact that there are two employers involved.

The pension scheme covers workers at Aer Lingus and those at the Dublin Airport Authority, which runs the airports at Dublin, Cork and Shannon.

Highly placed sources said one of the main issues that led to the suspension of talks last week was that the unions maintained the DAA had put a far better offer on the table than that proposed by Aer Lingus. The airport authority has denied that it made an offer along the lines of that claimed by the unions.

The authority is not facing industrial action currently. However, some sources maintained unions were likely to seek clarification from the DAA in the LRC in the next week on whether it was committed to the offer they maintain it made earlier this month.Separately, sources said there could be an intervention by deferred pensioners seeking representation on the pension issue.

PENSION PROBLEMS CASE ADJOURNED

CONTINUING UNCERTAINTY over the future treatment of Aer Lingus's pensioners has led to a further adjournment of the airline's application to release some €500 million from its capital reserves to pay dividends to shareholders.

Mr Justice Roderick Murphy had last July refused to sanction the €500 million reduction sought unless Aer Lingus provided for potential legal claims resulting from a deficit in the pension fund stated in court to be €930 million.

The shortfalls in the general and pilots' pension schemes appeared to constitute a contingent future claim against Aer Lingus, he said. The proposed reduction in the capital reserves from almost €860 million to about €360 million was "substantially below" the level of the funds' shortfall, he noted.

While the Aer Lingus group was entitled to seek a reduction in capital, the matter must be addressed in the context of section 73 of the Companies Act dealing with entitlements of creditors, he said.

He ruled that the trustees of the pension schemes owed duties to the Aer Lingus pensioners and were contingent creditors of Aer Lingus in the circumstances of a shortfall in funding of the schemes.

In those circumstances, the company's application was adjourned to facilitate talks over the dispute.

Talks at the Labour Relations Commission over the deficits in the schemes relating to workers at Aer Lingus and the Dublin Aviation Authority were suspended last week. - MARY CAROLAN