Aer Lingus is facing a substantial financial impact from recent industrial action taken by its pilots, with expected direct costs exceeding €55 million. This information comes from the airline’s latest financial results, which were released recently.
The pay dispute among pilots led to the cancellation of 610 flights, resulting from a two-week work-to-rule and an eight-hour strike. According to Aer Lingus, the industrial action is anticipated to impose a direct financial burden of €55 million on the business for the second and third quarters, not accounting for the potential impact on future bookings.
In a statement, Aer Lingus elaborated, “Following the resolution of the pilot pay dispute through a Labour Court recommendation that introduced structural changes to our operations, we are currently assessing the financial repercussions of the dispute within the context of the competitive landscape and passenger limitations at Dublin Airport.” The company further mentioned plans to review weaker parts of its network and its cost base as part of this assessment.
Aer Lingus Chief Executive Lynne Embleton noted that while the exact total cost of lost bookings due to the pilots’ action remains uncertain, there was a notable decline in bookings during the industrial action. However, she expressed optimism about recovery, stating, “I am pleased to report that bookings rebounded strongly once the industrial action ended.”
Embleton also clarified that the €55 million figure represents direct costs incurred from leasing aircraft, accommodating customers, and providing compensation during the period of disruption.
In terms of financial performance, Aer Lingus reported an operating profit of €92 million for the second quarter of 2024, a decrease of €29 million compared to the same period in 2023. The airline had an operating loss of €82 million in the first quarter of 2024, resulting in an operating profit of €9 million for the first half of the year. The second-quarter results were affected by competitive pressures on transatlantic routes and the recent pilot industrial action. The company noted that competitors increased their capacity into Ireland by 20% during the summer, which put pressure on Aer Lingus’ long-haul revenues, especially in the economy cabin.
Recently, members of the Irish Air Line Pilots’ Association (IALPA) voted to accept Labour Court proposals that include a 17.75% pay increase over four years. Following this development, unions representing other Aer Lingus workers, including SIPTU, Fórsa, Connect, and Unite, convened to discuss the implications of the pilots’ pay deal on their members.
SIPTU, which represents 1,200 workers in various roles at Aer Lingus, had previously agreed to a 12.25% pay deal over three years at the end of 2022. A similar increase was secured by the Fórsa trade union for cabin crew. These agreements include provisions that allow unions to renegotiate if another group of workers at the company receives a better pay deal.
SIPTU Aviation Sector Organiser Niall Phillips stated, “We will review the Labour Court recommendation to determine which aspects apply to our members. Under the 2022 pay agreement, we can approach Aer Lingus if any other group receives unfunded pay increases greater than the original agreement.”
IALPA argues that the pay increase is unfunded because it does not involve changes in work practices. However, Aer Lingus contends that the deal provides flexibility and productivity from pilots, as the Labour Court proposals include the elimination of a crewing agreement related to summer leave and the restructuring of pay scales.
FAQs
- What is the estimated cost of the industrial action to Aer Lingus? The recent industrial action by pilots is expected to cost Aer Lingus over €55 million directly.
- How many flights were canceled due to the pilots’ strike? The strike led to the cancellation of 610 flights.
- What steps is Aer Lingus taking to address the financial impact of the industrial action? Aer Lingus is assessing the financial damage within the context of current competitive conditions and passenger caps at Dublin Airport. This includes reviewing weaker parts of its network and cost base.
- What was the result of the Labour Court recommendation regarding the pilots’ pay dispute? The Labour Court recommendation resolved the pilot pay dispute, introducing structural changes and leading to a 17.75% pay increase over four years for pilots.
- How has Aer Lingus’ financial performance been affected in 2024? Aer Lingus reported an operating profit of €92 million for the second quarter of 2024, down by €29 million compared to the second quarter of 2023. The airline had an operating loss of €82 million in the first quarter of 2024, resulting in an operating profit of €9 million for the first half of the year.
- What impact did the industrial action have on bookings? There was a significant decline in bookings during the industrial action period, but bookings rebounded strongly once the action ended.
- How are other Aer Lingus unions responding to the pilots’ pay deal? Unions representing other Aer Lingus workers are reviewing the Labour Court recommendation to determine its implications for their members. They have provisions to renegotiate pay if another group receives better pay deals.
- What competitive pressures is Aer Lingus facing? Competitors have increased their capacity into Ireland by 20% during the summer, putting pressure on Aer Lingus’ long-haul revenues, particularly in the economy cabin.
