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Are Aer Lingus staff letting the airline go the way of Irish Ferries?



For Aer Lingus workers, anything beats having Michael O'Leary as their new boss, writes Martin Frawley Why are we asking this question now?

Last week, as part of the ongoing dispute between the unions and management over pay-cuts for staff, the Labour Court said Aer Lingus should be able to establish new foreign bases with pay and conditions for cabin crew set "with reference to local market conditions"; in other words "cheaper market conditions".

Are Irish wages that much higher?

The average weekly wage in Ireland is over Euro600. In Bulgaria it is Euro37, in Romania Euro66 and even in Poland, which is among the best payers of the eastern European countries, it is Euro147 per week - less than a quarter of wages here. Further afield, the gains are even more stark. In India average weekly pay is Euro22 while in rapidly expanding China it is Euro34.

It is hard for a company such as Aer Lingus, battling in such a cut-throat business and being stalked by its main rival and shareholder, Michael O'Leary of Ryanair, to ignore such 'cheap and cheerful' labour costs abroad.

Other companies are doing likewise and Ireland is losing one multinational a week to cheaper labour markets abroad.

Last week, the pharmaceutical company Procter and Gamble, which has been operating successfully in Tipperary for 20 years, said it had to let go of 280 of its 500 staff. The company is moving its skincareproducts facility to Poland.

But isn't Aer Lingus Irish and serving the Irish customer?

Not anymore. While the government retained a large slice of the company, once Aer Lingus was allowed sell shares on the market it became answerable not to the minister for transport but to the shareholders. The shareholders want to make money and the only way that can be done is to expand outside Ireland. With a population of around four million, the Irish market is too small to prop up an airline such as Aer Lingus, which became top heavy in costs operating under the protective shield of the state.

The shamrock has moved from being the symbol of the state airline to just a commercial logo. Unfortunately for Aer Lingus it is a logo that, while instantly recognisable and respected in Ireland, is virtually unknown elsewhere.

Ryanair understood this problem early on and now has more bases and operations outside Ireland. The Ryanair harp logo is far more recognisable across Europe than the Aer Lingus shamrock.

What do the unions think?

Quietly, the unions acknowledge that Aer Lingus has to expand its activities abroad to survive. Far from the knee-jerk reaction which followed every change in conditions announced by management when the unions could lean on the government, since the sell-off they have adopted a more pragmatic stance.

The unions had already conceded the principle of Aer Lingus setting up bases abroad and employing local labour. In fact, Aer Lingus already has a base in London, even though London rates of pay would hardly be lower than Irish rates.

However, they certainly won't be higher.

The unions' main concern is pay and conditions for existing staff in Ireland. The unofficial attitude now is that the company should be allowed to expand abroad and hire lower-paid staff to do so, particularly if that increases business, solidifying their operations at home. Also, once these foreign bases are established the unions can seek improvements over time.

Is this not the thin end of the wedge? .

Perhaps, but the unions now feel it is best to have what is still a relatively wellpaid job than no job at all. Two weeks ago, Mick Halpenny of Siptu strongly refuted reports that general operatives in Aer Lingus were paid up to Euro110,000 a year.

Halpenny said that with overtime and shift premium the average rate for GOs was Euro46,000 a year.

But even Euro46,000 is a decent wage for a general operative. It is not lost on the unions that Aer Lingus could get five such workers in Poland for the price of one in Dublin airport.

In addition to giving the company the green light to operate bases abroad, the Labour Court backed management's demand for the introduction of reduced terms and conditions for new and existing staff in Ireland. The court said the workers should agree to reduce their annual leave from one to two days a year, accept a standard working week of 37.5 hours exclusive of lunch breaks and accept new shift rates.

But the court said the workers should be compensated for accepting this latest dose of cost-cutting medicine, subject to negotiations.

Even last year, the unions would have thrown this out. But after a meeting last week with shop stewards, Siptu agreed to meet management tomorrow to "flesh out" the Labour Court's proposals.

So why the unions' sudden change of heart?

Michael O'Leary. Twenty years ago Ryanair turned Aer Lingus's comfortable world upside down when it introduced some much-needed competition into a business which was charging almost a month's wages to fly to London.

Today, O'Leary's lowcost airline is threatening to buy out the old lady of Collinstown.

Last autumn, Aer Lingus management introduced a raft of changes in preparation for the company's flotation on the stock exchange. Management had other, tougher costcutting plans in the pipeline but felt it was best to wait to see how the flotation bedded in. When O'Leary emerged as the audacious buyer of Aer Lingus shares, management panicked and moved to introduce the new contracts without agreement.

While this caused a brief dispute, it is clear from the reaction now that the unions seem prepared to accept inferior working conditions for serving staff and the possibility of the cheaper bases abroad to keep O'Leary out.

For the unions, anything is better than having their arch enemy as their new boss.




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