Aer Lingus dispute may be nearing an end, but the airline could be facing further industrial unrest

It may not have been the smoothest of landings, but Aer Lingus pilots suspended their work to rule at the airline on Wednesday night, ending weeks of uncertainty for passengers. At least for now, as they will begin voting later next week on a Labour Court deal offering them 17.75 per cent pay rises up to July 2026. Only their acceptance of the offer will finally end a dispute that has hit almost 86,000 travellers so far.

Executive members of their union, the Irish Airline Pilots’ Association (Ialpa), have recommended the deal. That makes it seem likely that the near-800 pilots who are Ialpa members at Aer Lingus will vote for it. Pilots have so far overwhelmingly backed their union leadership’s recommendations in ballots through this dispute, which has its roots in a pay claim lodged almost two years ago.

That support looks to have paid off. The Labour Court proposal goes a fair distance towards meeting their original claim, which came to 23.88 per cent or 27 per cent, depending on whether the company or union was doing the calculating. Ialpa, part of trade union Fórsa, moderated its stance in talks with the company, but largely stuck with its position that members had to be compensated for the impact of inflation since 2019.

Capt Mark Tighe, Ialpa president, dubbed the Labour Court offer a “significant win” for pilots. On Thursday, he noted that it would leave members 19.2 per cent better off after two years, bringing them close to closing the gap with cost-of-living increases.

The proposal is more than the 12.25 per cent that the company was willing to give without getting extra productivity – a polite way of saying more work – from pilots. It surprised some industry figures when it emerged on Monday. As the court weighed both sides’ cases over the weekend, some sources suggested that it had greeted the pilots’ argument with scepticism.

Even so, union leaders’ endorsement of the deal never looked definite until they confirmed it on Wednesday night. Ialpa’s executive originally met to discuss the proposal on Tuesday, when they decided to get the court to clarify some of its provisions.

Along with pay rises, the court proposed replacing Aer Lingus pilots’ two pay scales with one and increasing some allowances. Union leaders wanted the court to confirm that their interpretation of how this would affect different members was correct before proceeding. The court, chaired by Kevin Foley, provided that by lunchtime on Wednesday.

A second issue emerged, though. Officials had concerns about the company’s conduct during the dispute. That included a letter written in June, which among other things, changed sick leave terms. They also highlighted that Aer Lingus had decided that some pilots who were observing the terms of the union’s work to rule were failing to show for work, or “failure to join” as it is known.

At that point, Ialpa’s executive was willing to recommend the Labour Court deal and stand down the industrial action, but wanted the company to first clarify these issues. This prompted further contacts between the airline and union during the day, raising the possibility of a further delay.

Officials adjourned their meeting on Wednesday night while they waited for assurances on those issues, which arrived shortly before 10pm, when the executive reconvened its meeting. Not long afterwards officials confirmed that they would recommend the Labour Court offer and immediately suspend industrial action.

The deal itself proposes that Aer Lingus increase pilots’ pay by 17.75 per cent over more than three years, beginning with 2 per cent backdated to January 2023 and concluding with a final 1 per cent hike to kick in on July 1st, 2026.

There are eight payments in all, four backdated, which will give them 10.75 per cent by the end of this year, with the remaining 7 per cent paid between January 2025 and July 2026.

Along with that, it boosts pilots’ overnight allowances by 10 per cent once the union accepts the deal and then by 5 per cent more from October 1st next year. It replaces two pay scales with one, broken down between captains and first officers.

The airline’s pay scales are complicated, with 26 different points, including long-service and other increments. They begin at about €60,000 for a co-pilot and end with a maximum pensionable salary of €207,000 for a senior captain and almost €145,000 for a co-pilot. Ialpa points out that a cadet starts at €36,000, rising to €42,000 over three years (against an average industrial wage of €50,400).

The deal also writes off a “debt” due from the pilots to the company for extra summer leave agreed in 2019. That was calculated at 3.75 per cent of pay. According to the company, Ialpa originally agreed that the cost of this, which required the airline to hire more pilots, would be factored into a future pay deal.

That resulted in an internal pay tribunal offering the union an 8.5 per cent increase late last year, while it awarded 12.25 per cent to cabin and ground crews. Pilots rejected this offer. This was one of the sticking points between the sides. The Labour Court recommendation makes it clear that neither could agree on different elements of this and says these provisions should just be terminated.

Aer Lingus said it would accept the Labour Court recommendation shortly after it received the document on Monday. However, the airline added that it would “have to consider the longer-term implications of implementing the recommendation and of this dispute which has been enormously damaging both financially and reputationally”.

On Thursday it looked as if the company had yet to tot up the total cost of the dispute. On the basis that it operates 220 flights a day at this time of year, carrying about 44,000 people daily, it lost one in eight of its services and about two days’ worth of traffic over three weeks from the point at which pilots began industrial action.

That action involved pilots refusing overtime, out-of-hours work and changes to published rosters while the work to rule was under way. Aer Lingus needs that kind of flexibility from pilots to ensure it can operate its busy and profitable summer schedule. Its advance cancellations were meant to counter the worst impact of this and preserve as many services as possible.

Had the airline not done so, it risked daily chaos with multiple last-minute cancellations and delays. It avoided that, but the 80,000-plus people whose flights were cancelled had to be refunded or reaccommodated – an option most of them took – all of which cost money.

It faces other bills also. Old rival Ryanair provided two aircraft and crews to cover 12 flights this weekend, while Aer Lingus hired Spanish-based Privilege Style Airlines to cover some Dublin-Chicago flights, and Danish Air Transport to get passengers to popular sunspots in Europe.

Its reputation suffered too. Even news reports focused on pilots’ pay failed to divert blame from the airline to the union. Inconvenienced passengers who talked to the press as the industrial action began seemed evenly split over who was responsible.

There are other long-term implications. Aer Lingus constantly said that it could only contemplate paying pilots increases bigger than 12.25 per cent if they agreed to work harder, or to “fund” that through increased productivity.

The airline focused on this because awarding pilots increases higher than that figure could trigger claims from cabin and ground crew. Their agreements, for 12.25 per cent increases into next year, allow them to revisit those deals should Aer Lingus award any other group of workers more than this without demanding extra productivity in return.

Sources say the Labour Court deal “opens the door” to the possibility that other groups within Aer Lingus will decide to revisit their existing agreements. Fórsa also represents cabin crew while Siptu has about 1,300 members in ground operations. Both groups watched the pilots’ dispute closely.

Aer Lingus may be able to argue that the partial abandonment of the holiday leave agreement is extra productivity. However, Capt Tighe was adamant on Thursday that his union “sold no working conditions” as part of the deal. Either way, if other workers do decide they have grounds for further pay claims, the airline will have to deal with that through its industrial relations procedures.

As it is, Aer Lingus now faces increased pilots’ wage bills over the next two years. Donal Moriarty, the company’s chief corporate affairs officer, said that the full cost of Ialpa’s claim was about €40 million to €45 million. The proposal on which the union’s members will vote probably costs less than this, but it still boosts the airline’s expenses.

Aer Lingus made €225 million profit last year. That trails the €300 million it made in 2018, while it lost €900 million during the pandemic. Nevertheless, as Enda Corneille, an aviation industry consultant and former Aer Lingus executive, pointed out recently, its operating margins, essentially the difference between the cost of doing business and what it makes, are healthy by air travel standards at 9.9 per cent.

However, they are the lowest of the carriers in International Airlines’ Group (IAG), of which Aer Lingus is a part. Spanish business, Iberia, has margins around 15 per cent. Management says that leaves the Irish operator at a disadvantage when it is seeking investment from its parent, which wants the best return for its investors.

IAG has already allocated two new Airbus jets previously earmarked for Aer Lingus to other airlines within the group. That was a blow, as the Irish carrier was going to be the first to fly the particular model, the A321XLR (standing for extra-long range), which promises to cut the cost of transatlantic flying, a key part of its business and its growth plans.

There are four more due to Aer Lingus at this point. Part of IAG’s logic for moving those planes elsewhere was that the pay dispute created uncertainty. The Labour Court deal at least looks like it will end that.

At this point, the pilots are the final arbiters of that deal. Ialpa’s officials will begin meeting with them in coming days to discuss it. They will begin voting on Thursday, July 18th, finishing the following Tuesday, after which a result should emerge pretty quickly. All parties hope the ballot will end what has been a long dispute, however, none of them are unfastening their seat belts just yet.