Unions finally agree to cost-cutting plan at Aer Lingus

Aer Lingus and the Services, Industrial, Professional and Technical Union (SIPTU) recently agreed on the implementation of key aspects of a ‘mobility and flexibility’ cost reduction agreement. The agreement is part of a wider annual €20 million cost reduction plan and provides for a range of flexibility measures. In return, SIPTU members among Aer Lingus staff will maintain their jobs and current earning levels.

Aer Lingus and the Services, Industrial, Professional and Technical Union (SIPTU) reached agreement in mid May 2008 on a way to partially implement a ‘mobility and flexibility’ cost reduction plan that had been formally rejected by the trade union. The outcome is the result of a pragmatic trade union response. Furthermore, it is regarded as a success for Aer Lingus management after almost 18 months of talks with the trade union and considerable uncertainty in relation to the plan.

Industrial unrest over cost reduction plan

Aer Lingus first launched its €20 million cost savings plan, formally known as the ‘Programme for cost improvement 2007 (PCI-07)’, in January 2007. The statutory dispute resolution agencies – the Labour Relations Commission (An Coimisiún um Chaidreamh Oibreachais, LRC) and the Labour Court (An Chúirt Oibreachais), with the assistance of the informal social partner-controlled National Implementation Body (NIB) – helped to prevent industrial action on at least two separate occasions in 2007. The airline did, however, suffer some loss of business due to the uncertainty engendered by these industrial action threats, as well as the constant media reports surrounding trade union and management disagreement over the terms of PCI-07.

The Irish Municipal Public and Civil Trade Union (IMPACT), which represents some 1,800 flight services staff, concluded its negotiations on €10 million worth of cost savings with Aer Lingus in March 2008. The trade union represents pilots and cabin crew, as well as some management grades in the company. The pilots came close to commencing strike action in August 2007, over one specific aspect of PCI-07, namely how it would affect industrial relations at the company’s new Belfast base (IE0710049I).

The IMPACT agreement on PCI-07 was broadly based on the company’s original plan and includes work organisation changes in areas such as the roster system and crewing. In return for agreeing a variety of changes in the field of work organisation, the company lifted two frozen national pay rises, which amount to a 5% increase in wages, and a further pay increment of 2.5% for all IMPACT members. The company had made payment of the agreed pay rises conditional on securing a deal on PCI-07.

Alternative deal lacks support from SIPTU

SIPTU, which has 1,800 members in the airline, represents a far broader range of occupational categories than its sister union IMPACT. SIPTU members are largely made up of ground staff, including loaders, clerical workers, baggage handlers, as well as check-in and catering staff.

SIPTU had objected to the changes sought under PCI-07 for its members, arguing that many of its members would suffer a loss in real take-home pay. The trade union argued that an alternative deal, entitled the ‘mobility and flexibility’ agreement, could produce savings similar to the amount which the company required under PCI-07. Aer Lingus agreed to look at this alternative model and subsequent talks resulted in a draft deal in March 2008. The latter provided for a cost reduction of €9.6 million in the first year of the agreement. A decisive aspect of the draft deal was that the trade union was successful in maintaining earnings and jobs of its members.

However, this draft SIPTU–Aer Lingus agreement ran into trouble in April when SIPTU officials failed to persuade trade union members to vote for it in sufficient numbers. After weeks of local talks in a bid to clarify aspects of the prospective agreement, the trade union put it to a second ballot in May. This time, there was an aggregate vote in favour of the agreement among the trade union’s 11 different sections in the company, by a margin of 62% to 38%. Nonetheless, three of the union’s Aer Lingus sections had voted against the draft deal. As a result, according to local SIPTU rules, the entire deal had to be formally rejected.

Pragmatic decision by SIPTU officials

The second ballot result placed SIPTU in a very difficult position. Trade union officials had negotiated an agreement that resulted in all of its members maintaining their existing earnings, while avoiding any job cuts, in return for roster adjustments and other changes in work organisation. Instead of holding a third ballot, trade union officials and management agreed that the mobility and flexibility plan could be implemented in those business areas where members had voted for it. In the sections which voted against the agreement, further discussions are taking place.

The trade union’s decision to tacitly agree to the company moving forward its plan in those areas which had voted in favour of the agreement was essentially a pragmatic response to a difficult situation. In a press statement on 16 May 2008, SIPTU highlighted that it rejected the company’s plan to implement ‘unilaterally’ the work practice change proposals. However, in an effort to avoid a damaging dispute, the shop stewards committee stated that it had ‘unanimously endorsed a proposal for an interim agreement to allow the implementation of the proposals in the areas which have accepted them’.

Brian Sheehan, IRN Publishing