February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN – Workers at the troubled TEAM aircraft maintenance company are being given a second chance to accept a _54 million deal to buy out letters of comfort that, in effect, guaranteed them a job for life with Aer Lingus.

The airline has dismissed new submissions from the TEAM craft unions, saying they were “a recipe to bankrupt” the company and the final deadline for the workers is now the end of the month.

Last month, only 41 percent of the 1,550 TEAM staff agreed to buyout terms for the letters, which would have given some workers up to _60,000 in cash payments.

The letters were given to staff when TEAM was set up to persuade them to move from the airline to the maintenance subsidiary.

The buyout deal meant workers would retain their jobs in TEAM, which Aer Lingus is planning to sell to the Danish company FLS.

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FLS, which operates maintenance facilities at airports in Britain, suspended negotiations and due diligence investigations when only about 600 TEAM staff returned the original offer forms.

Options for the workforce are narrowing and if the deal is not accepted by the end of the month, it is feared the FLS negotiating team may walk away from the takeover.

In that event, the TEAM board is expected to recommend to the airline that the maintenance operation be wound down and closed.

TEAM has been a financial disaster. It cost about _60 million to set up, received _64 million in 1994 in the form of a non-refundable loan and has accumulated losses of _60 million in the seven years since it was set up, according to Aer Lingus.

Last week, forms of acceptance to buy out the letters of comfort were sent out again to about 930 workers who did not return the original letters.

An accompanying four-page letter from management consultant John Behan says the FLS takeover is the only option for the future of TEAM.

He described union suggestions that a 1994 Labor Court agreement be reversed as “inoperable.”

“Reverting to pre-1994 conditions is akin to burying heads in the sand and attempts to have retrospective pay rises granted is a recipe to bankrupt the company. The effect of increased costs associated with TEAM could ultimately gravely effect the future of the airline and the Group,” according to Behan.

He said the pay increases raised by the union would add _18 million to the TEAM payroll bill and the craft union group submission was “not a credible strategy.”

“Adding these costs to the break-even position we will achieve in 1998 at the top of the market, TEAM would run up additional losses of almost _90 million in the next few years and would have to incur interest on additional borrowings to fund these losses, bringing the total loss to well over _100 million.”

He also warned that notions that a redundancy package back in Aer Lingus for the TEAM staff would be of more benefit was “unfounded” – it would not be better than the buyout deal on offer.

The workers had been hoping for more money, enhanced pensions, and Aer Lingus retaining a 51 percent stake in the ailing TEAM company in a takeover situation.

Behan clarified that workers would retain flight concessions in Aer Lingus and efforts will be made to also secure them with a new strategic partner. He also clarified issues involving seniority and pensions and said FLS hoped to grow the operation and did not forecast any redundancies.

Enterprise Minister Mary O’Rourke made clear there is no more money available and she advised TEAM staff to accept the takeover.

She said there was no one willing to strike a 49:51 joint deal on TEAM with the state airline. “There is no one offering to come in on that basis,” she said.

She also said she knew the unions put the idea forward in good faith.

“I would encourage them to engage in full consultation with management, tease out everything and work toward what I hope will be a satisfactory conclusion,” she said.

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