Don't suppose you'd shoot
this messenger too, would you? Once again, emphasis is mine...though it were needed!
A group of 66 Aer Lingus pilots are earning almost €20m a year, an average of €300,000 each in salaries and financial perks. They are also entitled to a “gold-plated” pension fund, to which the company is contributing 21% of salary each year.
Last week, Aer Lingus revealed losses of €93m for the first six months of this year and announced its intention to cut salaries. An internal committee of board directors, comprising Colm Barrington, the group’s chairman, businessman Leslie Buckley, and Danuta Gray, the chief executive of O2, have identified long-haul wages, terms and conditions as a key area in which savings can be made.
The high-earning pilots fly on average 600 hours a year. This compares with close to the legal maximum of 900 hours worked by most Ryanair pilots, who earn an average of €150,000 a year.
The former state airline has achieved savings in pay and conditions for short-haul pilots, but has not tackled long-haul operations, where expensive work practices have become embedded.
These include:
All pilots and cabin crew flying transAtlantic are given a €160 a day cash allowance. No receipts are required;
Pilots and cabin crew staying over in American cities are put in luxury hotels. In Chicago, they stay at The Drake, a top hotel which has hosted Princess Diana and Frank Sinatra. In other cities they stay in four-star hotels, including the Hyatt in San Francisco, the Marriott in New York and the Sheraton in Boston;
Long-haul pilots who work more than 590 hours a year are paid a performance premium on top of their salaries;
A seniority list enforced by trade unions ensures that the company cannot switch younger, less expensive pilots onto long-haul routes. The longest-serving pilots are on the best-paid routes;
Rostering practices on long-haul flights make it almost impossible for the airline to require pilots to work for more than 600 hours.
The Aer Lingus cost-cutting review will seek up to 500 redundancies and double-digit wage cuts across the group. It will particularly try to reduce costs among its 590 long- and short-haul pilots.
The company wants to renegotiate the 21% contribution requirement to the pension fund to which pilots themselves are required to put only 9%. For a pilot on a basic salary of €250,000, the pension contribution amounts to another €52,500 per annum.
The airline is also hoping to cut down on other minor costs including a dry-cleaning allowance for pilots’ uniforms.
The Irish Pilots Association, which represents pilots in Aer Lingus, is expected to fight any attempt to cut pay or terms and conditions for long-haul staff.
Last week, a group of four pilots began a High Court action against the airline for failing to pay an increment due earlier this year.
This is worth an extra “couple of hundred euros a month” to the pilots.
Evan Cullen, a pilot and a trade union representative at the airline, said the court case prevented him from commenting about pilot salaries. Aer Lingus also declined to comment.
The company’s cash reserves decreased by €400m over the past 12 months, reducing them to €439m. A new chief executive, Christoph Mueller, starts on Tuesday. He has been given a mandate to reduce costs and reform working practices.
The pilots believe that they concluded a deal in 2008 which meant that, in return for some reforms, they would not be subjected by the company to any further cost-saving initiatives until 2011.
Aer Lingus pilots are nursing heavy losses from a €20m investment they made in the company’s shares shortly after Ryanair made its first hostile takeover approach for the company in 2006. The pilots purchased stock in the airline at up to €3 per share. These are now trading at €0.53, leaving the 500 pilots who bought shares nursing average losses of €40,000 each.
Aer Lingus, which is losing heavily on some long-haul routes, said last week it might scrap its Shannon-New York service if it cannot make the route profitable.