Ireland's Aer Lingus ground staff reject cost-cutting plan
DUBLIN, Ireland—Aer Lingus faced a renewed threat of disruption Friday after the airline's 1,800 ground staff rejected a painstakingly negotiated cost-cutting plan.
The deal, which was struck between Aer Lingus chiefs and union leaders in February, capped more than a year of negotiations and strike threats. It would require workers to accept much more flexible working hours and conditions and reduce overtime costs, delivering estimated annual savings exceeding $15 million.
The carrier had previously vowed to begin imposing the new work-practices regime -- and to suspend any worker who refused to observe the changes -- even if union members did not accept the reform package. The directors of Aer Lingus declined to comment Friday.
Leaders of Ireland's major union -- the Services, Industrial, Professional and Technical Union known as SIPTU -- expressed disappointment at their own members' rejection of the deal. They had already had members vote again after an initial rejection earlier this month.
"While SIPTU regrets the rejection of these proposals, which were recommended for acceptance by shop stewards, it is clear that members view them as a step too far," said the union's national industrial secretary, Gerry McCormack.
The airline's pilots and cabin crew have accepted their own $15 million cost-cutting package.
Aer Lingus has reported modest profits ever since the government privatized the airline in September 2006. It has greatly expanded its U.S. network over the past year and has struck partnerships with two American carriers, United Airlines and budget carrier JetBlue.
But Aer Lingus faces ruthless competition on its European network from its Dublin-based rival, no-frills leader Ryanair, which tried to swallow up Aer Lingus in a failed hostile takeover last year.
Chief Executive Dermot Mannion argues that Aer Lingus must become much leaner to hold off Ryanair, which continues to hold nearly 30 percent of Aer Lingus' shares.
Unions are pressing for higher wages to keep pace with Ireland's high cost of living. Inflation is currently running at 5 percent.
Aer Lingus shares closed 2.2 percent higher Friday at 1.90 euros ($2.97) on the Irish Stock Exchange, before the result of the SIPTU union ballot was known. The share price stands at 14 percent below its flotation price.
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On the Net:
Aer Lingus, http://www.aerlingus.com
SIPTU, http://www.siptu.ie/
