Aer Lingus, The Flag Carrier Term Paper

Length: 9 pages Sources: 2 Subject: Transportation Type: Term Paper Paper: #58548907 Related Topics: Privatization, Ireland, Unfair Labor Practices, Merit Pay
Excerpt from Term Paper :



The incident occurred when Aer Lingus said it would suspend pilots who refused to willingly help train and recruit pilots for the airline's base at Aldergrove (Tilson 2007). The management set the deadline at 1:00 PM that day. Any pilot who would refuse would be suspended. The previous week, the airline company suspended seven pilots who refused to comply. It also warned that there would be more suspensions for the refusal. The pilots adopted a non-compliance and non-cooperation policy with the Belfast base on account of its terms and conditions they deemed unfair (Tilson).

Breakthrough

Hope could have motivated Aer Lingus chief executive Dermot Mannion to invite the members of IALPA to a dialogue. It was aimed at settling or reducing the troubles hounding the new Belfast base (RTE 2007). But IALPA president Evan Cullen said that the invitation was too late to make as some of the executive members were away. Phil Flynn, the company's industrial relations troubleshooter, said that he was unaware of proposals for Belfast and would deal with pilot concerns through joint discussions. A spokesman for Aer Lingus said that the airline intended to proceed with the opening of the Belfast base according to local rates, terms and conditions (RTE).

Approximately 480 Aer Lingus pilots would go on strike to oppose airline plans to hire pilots for this new base but on less favorable terms than those flying out of the Republic (RTE 2007). Minister for Community, Rural and Gaeltacht Affairs Ramon O. Cuiv said he would not influence Aer Lingus to reverse to end its route from Shannon to Heathrow. He expressed agreement with the Minister of Transport Noel Dempsey that interference with the affairs of Aer Lingus would be inappropriate. Instead, he felt that the search for alternatives to solving the problems at Shannon should be undertaken instead of reversing the decision made by Aer Lingus. He also believed that the Shannon Airport authority should create new market opportunities and new services from the airport (RTE).

Significant Progress Noted at Aer Lingus Negotiations

Critics and other observers said that Are Lingus management and the unions had attained a significant level of progress in their talks (RTE 2007). With this encouraging trend, further negotiations were expected. The two parties negotiated in the presence of the National Implementation Body or NIB for months over the company's plans to cut costs worth 20 million euros through a restructuring program. In its report, the NIB said that the research work conducted by its independent advisors evidenced a reasonable justification for this program. The savings the company sought would be realized through mobility and more flexible arrangements. The rest would come from other grades, including pilots, cabin crew and craft workers. The company intended to hire new staff at lower terms and conditions than the previous staff. Under the NIB arrangement, new or recent recruits would remain on standard terms and working conditions until the final deal. It would look into labor costs to determine the most appropriate terms and conditions for these new ones. In the meantime, the pay free would remain until a cost-cutting arrangement was reached (RTE).

Towards the Year 2016

The NIB said that procedures could be set on how to deal with non-payment of increases (RTE 2007). The SIPTU brought the issue against the airline to the Labor Relations Commission and the labor court. The NIB likewise suggested the creation of internal partnership structures for resolving disputes. The company expressed full commitment to cooperate with the unions in bringing this dispute process to an end. On the other hand, SIPTU noted that the process itself proved its position correct that cost cuts could...

...

The union saw that decision to be quite wrong and detrimental to the country and the taxpayer. It would do an injustice to the workforce and mean bad business for Aer Lingus. The country would lose its international flag carrier and control over a company, which was necessary for an open island economy. Taxpayers would lose their dividends from their ownership of the company. The airline would lose at least 100 million euros of its value (SIPTU).

The more viable, less costly and workable alternative would be to let Aer Lingus remain in public ownership and control (SPITU 2005). At the same time, it should continue to have access of the required capital for development and replacement of its fleet. These can be achieved if the government all options. Privatization would not be a sound decision. New investors would seek to maximize their profits as their greater priority than the interests of the airline, the customers and the workforce. They would tend to abolish or sell it once it became unprofitable. They would have no sentiment towards it. But as it was, Aer Lingus was one of the world's biggest airline earners. In 2004, it has an operating profit of 107 million euros. It had a high return of 10.6% on turnover. It went close to a 12% in 2003. Aer Lingus realized profit rates higher than practically all other airlines. Its market value grew between 500 and 950 million euros. As it stood, it required more equity or capital to explore its potentials for further success. Its employees were themselves ready to invest in Aer Lingus through job cuts and increased productivity levels. Yet the government did not have this readiness. The unionized workers of Aer Lingus viewed the decision to sell the airline as a betrayal of their collective efforts, sacrifices and success in saving the company and restore its level of profitability. The government talks all the time about protecting national interests. But privatizing means ceding control to outside investors. When this happens, it will only be a matter of time before the government bows to the pressure of these outside investors. In the hard and cruel world of business, a take over would gain control. Soon, Aer Lingus would be deep in the debts of those who would borrow to buy it. The airline's vital financial performance through the worst international aviation crisis (SPITU) following the 9/11 attacks is the basis of the choice to make.

Bibliography

Airline Industry Information. Aer Lingus Pilots Endorse Settlement Plan. M2

Communications, Ltd.: Gale Group, 2002

Aer Lingus Could Break Even by 2003., 2002

Aer Lingus Staff Suspend Strike Threat as New Pay Talks

Agreed, 2000

Aer Lingus Survival Plan Unveiled, 2001

Aer Lingus Union Threatens Strikes, 2001

Archives CNN. Dispute Grounds Aer Lingus Dispute. CNN.com: Cable News Network,

Business Editors. Oneworld Cockpit Crew Coalition Decries Union Busting Tactics at Aer Lingus. Buesiness Wire:…

Sources Used in Documents:

Bibliography

Airline Industry Information. Aer Lingus Pilots Endorse Settlement Plan. M2

Communications, Ltd.: Gale Group, 2002

Aer Lingus Could Break Even by 2003., 2002

Aer Lingus Staff Suspend Strike Threat as New Pay Talks


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