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Ireland firm on airline stake

February 16, 2011

By Staff Reporter

By Andrew Bushe

The Irish government has told Aer Lingus unions that it will not move beyond the 14.9 percent shareholding in the company already on offer in return for more than 2,000 layoffs and sweeping changes in work practices, the Irish Times has recorded.

However, the unions have been offered a 10 percent profit-sharing plan that could be capitalized in the event of privatization and a _5 million loan to give the employee share option plan an initial boost.

The secretary-general to the government, Dermot McCarthy, is expected to write to the unions this morning outlining the parameters of the offer. If it is along the lines indicated at a meeting of union leaders with the minister for finance, Charles McCreevy, and the minister for public enterprise, Mary O’Rourke, in Government Buildings last week, the unions are expected to begin polling members on the overall Aer Lingus package this week.

According to informed sources, the unions were told the government could not meet their demand for a shareholding larger than 14.9 percent because of the knock-on effect across the semi-state sector.

The unions said that, in view of sacrifices required from Aer Lingus workers over a short period, extra recognition had to be shown on top of the _40 million buyout package on offer.

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In response, the government made a number of proposals. One was that the union side could be lent up to _5 million to buy out the existing 4.7 percent shareholding in Aer Lingus already held by company employees on an individual basis.

It was also proposed that Aer Lingus workforce would not have to pay for the extra 10 percent of the company on offer. The job cuts and acceptance of changes in work practices, worth an estimated _100 million in operational savings over three years, would suffice to finance this.

Finally, a 10 percent profit-sharing plan would be introduced immediately if workers accepted the company survival plan. A cap of _20 million is likely to be put on the amount that could be paid out under the plan.

In the event of Aer Lingus being sold, or partially privatized, the profit-sharing program would have to continue or staff would have to be compensated either in the form of money or shares.

While the proposals are vague they do offer the prospect of a larger shareholding for staff down the road, plus strong incentives to return the airline to profitability.

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