Aer Lin­gus looks to claw back ex­cess staff hol­i­days

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE - Fearghal O’con­nor

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

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