JOINT COMMITTEE ON TRANSPORT debate -
Wednesday, 22 Apr 2009

Pension Provisions: Discussion with SRS/Aer Lingus Pensions Group.

Vice Chairman (Deputy Paul Connaughton)

I welcome the representatives of the SRS/Aer Lingus pensions group. I draw attention to the fact that while members of the committee have absolute privilege, the same does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses, or an official, either by name or in such a way as to make him or her identifiable.

I welcome Mr. Derek Neville and Mr. Paddy O'Sullivan and propose that we hear a short presentation from them. For a variety of reasons, many members of the committee are committed to attending other meetings. The statements made by the delegates will be included in the Official Report and brought to the attention of those members not present.

Mr. Paddy O’Sullivan

Most of our presentation is already available to members in writing. I was general manager of SRS Aviation from 1966 until my retirement in 1986. My colleague, Mr. Neville, was general manager in the maintenance, ground handling and marketing division and retired in 1997. We have been before the committee previously when we made a full submission; therefore, we will not go back over all of the information members already have.

We have been victims of appalling treatment. We have been isolated and cannot get Aer Lingus to address the inequality of the situation.

Vice Chairman

Has there been any improvement since the delegates last appeared before the committee? Is a resolution any closer?

Mr. Paddy O’Sullivan

There has been no progress because Mr. Mannion has disregarded the views of the committee, our submissions and representations made by public officials and others, including the former general manager and chairman of the board of SRS Aviation, Mr. Horton, who specifically recommended that the group be catered for in the sale. However, this was disregarded and we were the only group isolated and not looked after at the time of the sale of SRS Aviation. Since then we have had more than 20 years of representations and, in the final analysis, Aer Lingus is responsible. In the meantime it was sold and only around 22% of the company is now owned by the State. Consequently, there is a degree of independence.

Vice Chairman

How many members are involved?

Mr. Paddy O’Sullivan

There are four people alive and five widows. We were the management team of SRS Aviation from 1966; we supervised, managed, governed, dealt with staff problems and promoted the company. Mr. Neville and I travelled all over the world for 20 years promoting the development of Shannon Airport and the company, SRS Aviation, on behalf of Aer Lingus.

Vice Chairman

What has been the cost for members?

Mr. Paddy O’Sullivan

There has been no increase in my pension for more than 20 years. We tried to put a figure on it a couple of years ago and found that the total cost to the company of solving the problem and raising pensions to current levels would be around €300,000.

Vice Chairman

Did Mr. O'Sullivan not go to the Ombudsman at the time?

Mr. Paddy O’Sullivan

We went to the Ombudsman on a separate issue which Mr. Neville will address. The Ombudsman confined himself to legal implementation of the terms of the pensions scheme. Discretion to provide for the cost of living was not a condition of the scheme. The Ombudsman admits he was restricted in what he could refer to and that this matter was outside his ambit. The interaction with him had no bearing on the issue.

Vice Chairman

Do the delegates feel nothing will happen at this stage?

Mr. Paddy O’Sullivan

Obviously, while it appears nothing will happen, we do not accept this. This problem arose when Aer Lingus was 100% State-owned; therefore, it is responsible for what was allowed to happen to suit its purposes and those of its executives, at the time. We are victims and will not give up; we are using every available avenue to bring the matter to a conclusion.

Mr. Derek Neville

Let me deal with the matter of the Ombudsman. I made representations to the Ombudsman who made a determination within his remit. However, he subsequently wrote a letter to us from which I will quote:

As a rule I do not enter into correspondence with complainants following the making of a final determination. However, since the issues you raise must be dealt with, I am writing to you now ... Unfortunately, when my office was set up by the Oireachtas, that body did not have in mind a holistic approach which would enable me to take account of agreements entered into in good faith, or otherwise, by employers and employees. I am restricted solely to maladministration under the terms of a pension scheme and I cannot consider matters which are purely contractual issues or matters of understanding, whether contractual or otherwise, between employers and employees. Believe me, my job would be very much easier if that was the case.

In other words, I never made a case in respect of maladministration on the part of the trustees of the day. Therefore, the Ombudsman felt obliged, given the case made to him, to write back in this way.

Vice Chairman

Why did the delegates not go back to the Ombudsman on the matter?

Mr. Derek Neville

He would not answer further representations. He said he fully realised that what we had sought was well within the powers of the company and its trustees but said, "I cannot force them to use these powers under my remit". He also said he had no doubt as to what had been intended and that it had been dishonoured. I have read excerpts from the letter that show how the Ombudsman felt about the matter; committee members will see where we are coming from. Some members of the last Joint Committee on Transport were aware of this. They will be aware of the recommendations made on pages 29 and 30.

Deputy Thomas P. Broughan

I welcome the delegation and I apologise for missing the earlier part of the meeting owing to the Order of Business. It is clear that a huge anomaly arose regarding the index linking of the pensions of a small group of workers. Does the scheme have the support of the Irish Airlines superannuation scheme and other schemes? Has it liaised with the Aer Rianta schemes? Do any trade unions or professional groups offer support? This relates to very small amounts of money and there is an issue of natural justice.

Mr. Derek Neville

Absolutely.

Deputy Thomas P. Broughan

The Chairman will confirm the position but we are interested in pursuing the case. Does the scheme have the support of the rest of the airline community? Aer Lingus came before this committee and its members expressed concerns about current defined benefit schemes.

Mr. Paddy O’Sullivan

The SRS Aviation scheme was a separate scheme and an independent, legal entity. The scheme was funded by SRS Aviation which was a wholly owned subsidiary of Aer Lingus, and all revenue and profits by SRS Aviation went to the benefit of the parent company. It is not of direct interest to the existing schemes either of Aer Lingus or Aer Rianta — they would not deal with it.

Vice Chairman

The SRS scheme is mostly on its own.

Mr. Paddy O’Sullivan

We have been on our own from the beginning. The worst feature is the fact that nobody comes back to us to respond to the case we have made. Aer Lingus has not made any comment in recent times. Mr. Mannion, whom we met on a half a dozen occasions to make submissions, undertook——

Deputy Thomas P. Broughan

Was it raised with the board?

Mr. Paddy O’Sullivan

Mr. David Begg raised it with the board. We do not have any official standing with the trade union.

Deputy Thomas P. Broughan

Has the pension scheme contacted Mr. Barrington, who is effectively the chief executive?

Mr. Derek Neville

It was raised by Mr. Begg at a board meeting but he has not received a response. There seems to be a policy of total silence. The SRS workers had a contract of employment which was in every respect similar to that of employees of Aer Lingus. It was never envisaged under the terms of that contract that we would be at any disadvantage in terms of our pension. The pension scheme was set up in line with the prevailing wisdom of the day when there were many ancillary activities connected to Aer Lingus. That is why it is totally independent of the Aer Lingus scheme. When SRS was broken up, I was directly responsible for finding a buyer for the engineering division, which I did in the shape of UPS. I sealed my own fate by doing that because the company absorbed the SRS staff into Aer Lingus, making us members of Irish Aviation. Mr. O'Sullivan and I were involved in the ground handling division and I had responsibility for overall marketing. I received benefits every year in the form of shares and we both carry Aer Lingus ID cards. We were never allowed to receive anything over and above the remuneration made available to Aer Lingus staff and always presumed that, on the basis of what we were told by the unions, that state of affairs would continue as regards the payment of pensions.

As Mr. O'Sullivan said, we do not have any clout and that is our weakness.

Vice Chairman

I remember the witnesses bringing this matter to the committee on an earlier occasion. I remember thinking that if I had ever seen an injustice this was it. We will bring this matter to the attention of Mr. Barrington next week and will discuss it again at a later date. Given the service the two witnesses have given, as professional people, this is a poor way of saying "thank you".

Mr. Paddy O’Sullivan

We have tried every avenue to resolve this. We have met Mr. Mannion on several occasions and have repeatedly stated that we are prepared to go to any form of conciliation, negotiation or arbitration. He was to come back to us and give us an indication of his preference in that regard. We discussed it at least four and maybe six times but we have received no response. I hope I can convince the committee to make representations with a view to the case being submitted to a qualified independent authority with the power to make a recommendation, either by arbitration or conciliation. We will live with whatever decision is arrived at.

Vice Chairman

I take it members will be happy to do that.

Deputy Thomas P. Broughan

Yes. I will propose it and my colleague, Deputy Feighan, will second it.

Mr. Paddy O’Sullivan

Let the authority in question carry out a full assessment and make a recommendation.

Vice Chairman

We will put it to Aer lingus next week.

Mr. Paddy O’Sullivan

I much appreciate that.