Rumour has it that they wasted €15m on hire ins during the cabin crew dispute.
I believe the figure is even closer to EUR 20 million which factoring in lost contribution/revenues. However, the company won't acknowledge this in the Q1 results. Instead, a significant amount of the lost contribution will be attributed to the 'difficult environment' - papering over the erroneous actions by some members of Management during late January and early February.
We'll see these costs wash through on the next interm Management update.
Can I ask a question on the revenue issue. Why is the airline paying this?
Surely it should be the people who got the redundancy that should be paying this? Genuine question.
If there is a tax deduction to be made in relations to these redundancies surely its the person who received it that is liable. Even if the airline chooses to pay this out of goodwill or whatever, then essentially the employees are getting money tax free. Or have I got the wrong end of the stick somewhere.?
You are quite correct - if this were an
ordinary scenario. However, at the time, the employees in quesiton were entitled to tax relief because their redundancy payments were judged to be bona fide redundancy payments - the employees also acted in good faith in accordance with the instructions of the company - which essentially stated that they should avail of this plan and re-apply for the same positions, that contained different 'details' in the relevant contracts and lower pay/conditions.
Having subsequently been judged as invalid by the Revenue Commissioners, the employees would in essence be subject to a significant tax liability for the amount of relief that they received in relation to their redundancy payments, ie. for the portion that they received which would normally be taxed as income, plus additional conventional interest and penalties.
However - the employees were acting upon the instruction of the company and therefore it is only equitable that the company picks up the tab for giving misguided advice to it's employees. There would indeed be quite likely legal implications for the company were to it have sought to have the employees singularly repay their individual liabilities as a result of the Revenue ruling.
In a normal redundancy situation, a
statutory redundancy payment is tax free. Statutory being - two weeks per year of employment served with the addition of one bonus week. It is amounts in excess of this which are subject to tax, generally at the marginal rate, depending upon a person's income.
The EI outlook is justifiably cautionary in nature, considering that Q4 in particular saw a notable decline in both the operating performance and financial position. The share price was rocked by the cautious outlook today. With 62% of the fuel requirement for fiscal '11 hedged, we are likely to see the effects of price inflation adversely affecting the operational cost base of the company from H2 onwards.
EI Premier