01 June 2009

Aer Lingus pay to be decided by Irish government

Ryanair has effectively forced the Irish government to decide whether Aer Lingus pays its board members too much in salaries.

In the latest saga of the long running dispute between the carriers, Ryanair has handed its votes on the issue of director pay to the Irish government.

Ryanair is Aer Lingus’ biggest shareholder with a stake of nearly 30% and now wants Transport Minister and 25% shareholder Noel Dempsey to make a ruling. Dempsey will have 55% of the votes at Friday’s annual general meeting.

Ryanair has proposed that the former state airline’s non executive chairman Colm Barrington should see his salary cut from E140,000 to E35,000, and that non-executive director fees be chopped from E36,000 to E17,500, to save costs. Aer Lingus has rejected the proposal.

Ryanair said its proposals would see fees paid to the Aer Lingus board fall from E730,000 in 2008 to E141,000 in 2009.

"If the minister for transport Noel Dempsey abstains or votes to protect these bloated directors’ fees, then he will have zero credibility when it comes to negotiations with Aer Lingus’ trade unions and its workers on the significant cost reductions and productivity improvements needed to return Aer Lingus to profitability and restore shareholder value," said Ryanair chief executive Michael O’Leary.

Aer Lingus rejected a takeover bid last year from Ryanair at almost double the current price of 0.67E per share and has put out two profit warnings this year.