Aer Lingus and DAA staff to ballot for strike over pension crisis
Trade unions at Dublin Airport are to ballot for industrial action up to and including a full withdrawal of labour over the ongoing pension crisis at Aer Lingus and Dublin Airport Authority.
The pensions committee of the Irish Congress of Trade Unions decided at a meeting this afternoon that they would ask staff members of both companies to vote on whether to take industrial action, which could also impact upon Shannon and Cork airports.
Talks on the issue are scheduled to continue this week and both the employer and the trade union side denied last Friday that the process has broken down. Union sources said today that they had not pulled out of the talks despite the decision to ballot for industrial action.
But following further detailed analysis of a proposal from the two companies that was tabled last week, union officials are understood to be angry that the employers’ plan appears to "de-risk" the pension issue for the two companies. The plan would mean that neither company would pay towards any resolution of a deficit in the pension fund that could be as much as E700 million but pension entitlements would be badly hit, sources told the Daily Business Post.
There was also concern on the union side over a bid by Aer Lingus in the High Court on Monday to seek approval for a €500m share capital reduction. Mr Justice Peter Kelly referred the issue to the Commercial Court after concerns arose over the impact of such a move on the pension issue and contingency for any possible industrial action.
Union sources said there is a serious concern that while at the moment Aer Lingus has a large net cash position on its balance sheet that any re-distribution of reserves could negatively impact upon the airline’s ability to tackle the pension crisis. Aer Lingus has long argued that it is not liable for any part of the deficit in the scheme it shares with Dublin Airport Authority.
As part of its reaction to the new proposal, the union side has questioned if the trustees of the scheme believe that the employers are responsible for the deficit in the scheme. There is a view that the current proposal is an attempt by the employers to walk away from the scheme and its problems, said one source.
There were heated exchanges at the talks in the Labour Relations Commission on Thursday last over a number of elements of the proposal from Aer Lingus and Dublin Airport Authority that would see the airport pension fund replaced with an NTMA-issued bond. But, following reports that the process had collapsed, both sides in the talks confirmed that the process will continue after an adjournment and may re-convene later this week.
The union side is understood to have sought clarifications on a range of issues that have arisen from the companies’ proposal. One of the key issues raised regards the fact that the new NTMA backed scheme will only pay fixed benefits and it will not be possible for scheme members to transfer out of the scheme in the future.
The proposal said the trustee of the scheme “may wish to give active and deferred members a once-off option to transfer their benefits out of the IASS to another approved arrangement.” But union sources say they have so far been unable to obtain details of this or what the value of these transfer benefit payments could be.
Under the proposal, the pension scheme would be frozen and its entire assets, estimated to be about €1.4 billion, would be used by the NTMA to issue a bond. The proposal is based on a yield for this bond of 6 per cent. It would be used to create an “insurance wrapper” for the scheme and buy in a form of individual sovereign annuity bond to cover the past service of each member of the scheme.
Other issues that the union side has sought clarification on include the possible loss of ill-health benefits to scheme members, the situation for Shannon airport workers as that airport is separated from DAA and the situation for deferred members of the scheme who worked for SR Techniks.
The scheme is particularly complex because of multi employer status and is as much as €700 million in deficit. It is seen as the key barrier to the government selling its 25 per cent share in Aer Lingus.