Aer Lingus looks to claw back excess staff holidays
AER Lingus has carried out a review to identify staff who have taken too many holidays since April, and is preparing to deal with the situation.
The airline cut pay and hours to 30pc in recent months, reducing leave entitlement. The review of annual leave taken since April 1 “against the reduced hours that employees have been working” had “identified a number of employees which have exceeded their annual leave entitlement,” the head of Dublin Airport operations told staff in a memo.
“We will now start to make contact with these individuals to discuss the issue and put in place a plan going forward to address the issue,” said the memo.
A spokeswoman for the airline, which has paid over €700m in dividends since its acquisition by IAG in 2015 according to a report last week, said annual leave is booked in March and April.
Where it was already booked “it was honoured to ensure minimum disruption to their personal time. This may have resulted in a small number of staff inadvertently exceeding their pro-rated entitlement, in light of their reduced hours”, she said. Local management teams were “working through this with staff ” to come to “a mutually agreeable outcome”, she said.
IT is always a source of pride that Ireland is home to two of Europe’s most successful airlines. But last week taught us that when the wolf is howling at the door — as it most definitely is for those who depend on a livelihood from the sector — well, such a boast doesn’t really count for all that much after all.
Workers who either work in aviation or depend upon it in the south and midwest were dealt a hammer blow when Ryanair announced that Shannon and
Cork airports were two of the three bases across its vast European network that are to shut for the winter. Passenger numbers had been minuscule and the airline blames what it says are overzealous Government restrictions.
Ryanair does not do home-town favouritism.
Aer Lingus too is continuing its review of its Shannon operation with no visibility yet as to what that will mean for the airport (although it has crucially committed to transatlantic services from the airport next summer).
Executives from both airlines take every opportunity they can to loudly criticise the Government’s ongoing policy of restriction on aviation. But at the same time, neither airline has been shy about benefiting from a Government scheme that proved to be a huge help in covering their wage bills in recent months.
An examination of payslips reveals that the airlines themselves — at least in terms of staff costs — have enjoyed a sizeable public sector cushion from some of the pain in the industry. Indeed, staff costs are a huge part of what keeps the financial controller at any airline awake at night.
All summer, Aer Lingus and Ryanair operated the Temporary Wage Subsidy Scheme (TWSS) to their greatest possible advantage. Both carriers had cut staff pay to 50pc the week before the Government announced the scheme. This proved to be a real boon.
An analysis of wage slips of workers at both airlines shows that because both airlines had cut hours to 50pc, they effectively ended up not having to pay anything towards the wages of averagepaid workers.
This is because any workers who had typically earned a pre-pandemic gross wage of between €30,000 and €37,475 — just below the average industrial wage — were paid a TWSS subsidy by Revenue on a sliding scale between €350 and €410 per week.
So, take as an example an airline worker who ordinarily earned €36,000. A cut of 50pc in hours for that worker, including statutory deductions, would see them paid €16,800 per annum. That would amount to €323 per week.
But, under the TWSS scheme, such a worker was paid a direct subsidy into their pay packet from Revenue of €375 per week, based on the sliding scale mentioned above. In other words, Ryanair or Aer Lingus (or, for that matter, any other company who operated in this manner) did not need to pay a penny towards the 20 hours work that such a worker was now rostered for each week. The Revenue subsidy more than covered what they were owed.
Because of the way the TWSS was set up, the subsidy payment for staff who ordinarily earned more than €37,475 fell back to €350 per week. That meant the airlines would have paid an increasing percentage of their wages the more they earned. But even for these staff, the Government was carrying the heavy load on airline wages.
The Government’s wage cushion made it easier for the airlines to staff their limited schedules to carry cargo and a small number of passengers. An added benefit, of course, was that passengers who did not travel on these flights were not owed a refund, potentially saving the airlines huge amounts of cash.
Whether this was the spirit of what Revenue had planned when it introduced the TWSS is something only it can answer. But it is fair to say that neither Ryanair nor Aer Lingus did anything in any way wrong or incorrect in their operation of the scheme. They followed the rules as they were laid out.
But for airline staff who worked 20 hours a week all summer through a pandemic, life on the TWSS was far less benign. Future tax bills mounted and, at Aer Lingus, pension contributions went unpaid, credit union and health insurance payments ate up the subsidy before it hit their bank accounts and there was anguish about the lack of clarity on social welfare entitlements.
The pandemic undoubtedly has been massively disruptive to the two Irish-based airlines. There will be casualties in the aviation industry but both Ryanair and
Aer Lingus are financially strong enough that they will be two of the European airlines left standing in a post-pandemic landscape. Potentially huge opportunities will await as the public learns to travel again.
Indeed, a report in last Thursday’s
Irish Independent underlined the colossal financial strength of Aer Lingus and how, right up until the pandemic, it had proven to be an incredibly good-value purchase for IAG.
That report outlined how Aer Lingus had paid total dividends of €710m since the acquisition for a price of €1.36bn in 2015. €285m in dividends were paid last year alone.
With that type of financial return it is perhaps not surprising that Sean Doyle,
Aer Lingus CEO since January 2019, would have been drafted in to fill the top job at the airline’s troubled big sister, BA.
Those Aer Lingus dividends, of course, are the rewards of success. The airline’s plan was smart and well executed and it was well on its way to creating a highly successful transatlantic hub at Dublin before the pandemic struck. And when Covid passes, hopefully it can begin to rebuild that model again.
But when that day comes, Aer Lingus executives, and their counterparts in Ryanair, should remember that it was their staff — and the Irish taxpayer — who will have paid the heaviest cost to get them out to the other side.
Aer Lingus CEO Sean Doyle is to join BA