Aer Lingus dispute: Passengers brace for more misery as pilots’ pension pots revealed to be €2m

The figures emerged as Aer Lingus prepares to notify passengers today of further flight cancellations next week as the industrial action continues.

It is understood the executive of the Irish Air Line Pilots’ Association (Ialpa) has requested that the union’s disputes committee meet this morning to consider further strike action.

This comes after fresh talks between ­Ialpa and management ended yesterday without any progress and with no further talks planned.

The union’s executive has recommended the disputes committee consider sanctioning one additional work stoppage, longer in duration than the eight-hours planned for tomorrow.

If agreed, the union will have to give at least seven days’ notice to the airline, meaning a further work stoppage is unlikely before next Friday.

If further strike dates are announced, it would be an extraordinary development and would mean pilots are operating outside of the state mediation and industrial relations process.

The Labour Court had previously strongly urged the parties not to escalate the dispute.

In a statement yesterday, Aer Lingus said: “We note the intention of Ialpa to consider further strike action and to request Forsa’s approval of such action. Aer Lingus believes this would be entirely inappropriate, given the request of the Labour Court this week that the dispute should not be escalated.”

Aer Lingus pilots can retire on a full pension from the age of 60, but can keep working until they are 65 if they choose

Meanwhile, the Irish Independent can reveal the size of the pensions available to retiring pilots. Virtually all them at Aer Lingus will retire with pension pots of more than €2m, and captains with long service will typically have about €90,000 a year after they finally hang up their uniforms.

Their pension fund promises pilots a retirement income of half the salary they were on when they reached a €2m threshold that exists under pension rules.

Pilots are engaged in a strict and indefinite work-to-rule and will strike for eight hours tomorrow, hitting tens of thousands of passengers. The airline has already been forced to cancel 224 flights up to Sunday.

Aer Lingus pilots can retire on a full pension from the age of 60, but can keep working until they are 65 if they choose.

They can also receive a tax-free lump sum equivalent to one-and-a-half times their salary on retirement – the same as with any occupational pension scheme.

Under pension rules, a worker’s pension can amass a total pension fund of up to €2m and still avail of generous tax benefits, including their income on retirement from the fund being taxed at just 20pc. However, if they breach that €2m threshold, the excess is charged at a 40pc rate of tax.

At Aer Lingus, the company pays a 21pc contribution to a pilot’s pension, with the pilot contributing 11pc of their pay.

Pilots who joined Aer Lingus as cad­ets will usually have a pension fund that exceeds €2m by the time they are in their mid-40s.

After that, they cease making the 11pc contribution to their pension, but the airline keeps making a 21pc contribution to the Irish Airline Pilots’ Superannuation Scheme, which has hundreds of retired pilots it already pays pensions to.

A captain’s basic salary by their mid-40s would typically be about €180,000, although they earn significantly more when various allowances and the pension contribution made by the airline is factored in.

But as their pension at retirement is based on half the basic salary they are on when their own pension fund hits the €2m level, they would get half the €180,000, for example, equating to €90,000 a year. A number of sources have confirmed that the vast majority of pilots at Aer Lingus will have hit the €2m pension threshold by the time they retire.

As the financial crisis of more than a decade ago pummelled the Irish economy, Aer Lingus sought to close down all its defined benefit pension schemes and replace them with defined contribution schemes. It succeeded in doing so with all but the pilots, who remain on a lucrative defined benefit scheme.

Leaving the talks yesterday, Ialpa claimed the airline had “escalated this dispute” by threatening to terminate nearly all the union’s collective agreements and preventing pilots from entering Aer Lingus passenger lounges.

The discussions did not progress to a point where a resolution could be reached

The union confirmed in a statement and on a call with investors it is willing to lower its 24pc pay demand. However, it is understood the lower pay demand would still be in the region of 22pc.

Aer Lingus has indicated it is willing to make a joint referral with the union to the Labour Court for its assistance in resolving the dispute.

“The discussions did not progress to a point where a resolution could be reached and they were ended by Ialpa,” said the airline. “Ialpa indicated that it did not have a mandate from its members to discuss productivity and flexibility – matters which are essential in any pay negotiations.”

Ialpa said Aer Lingus management continues to refuse to move beyond a 12.25pc pay increase the airline proposes unless pilots agree to flexibility and productivity changes.

“Ialpa will continue to be available to talk with Aer Lingus in good faith,” the union noted. “However, it is incumbent on the airline to change their position.”

Aer Lingus is part of IAG, which also owns British Airways, Iberia and ­Vueling. It is in the process of trying to buy Spain’s Air Europa.