Written Answers. - Aer Lingus Severance Package.

Richard Bruton


205 Mr. R. Bruton asked the Minister for Public Enterprise if her attention has been drawn to the fact that the Aer Lingus severance package does not include a facility for early retirement; if she will raise with the company the possibility of paying part pension from age 58; and if other European Governments have topped up airline pension funds without challenge from the EU on State aid grounds. [27783/01]

A vitally important component of the Aer Lingus survival plan is the redundancy programme for which 50.79 million (£40 million) will be made available by the company through the sale of aircraft and borrowings. The company advise that this is the absolute maximum they can afford if the airline is to have any prospect of surviving. The redundancy package allows for an average of four weeks pay for every year of service which is considerably in excess of statutory redundancy payments. The company has indicated that the deadline for receipt of applications for the redundancy package is 30 November 2001. In the negotiations that are now under way between management and unions in Aer Lingus, it is a matter for those parties to negotiate whether the severance package costing 50.79 million (£40 million) can accommodate an element of early retirement in addition to redundancy payments.

I am only aware of one case where an EU Government contributed towards the pension fund of an airline. I understand that in 1995, the European Commission investigated plans by the German Government to contribute to pension funds concerning Lufthansa employees as part of the company's privatisation programme. The measures were linked to Lufthansa withdrawal from a supplementary pension fund managed by the VBL (Versorgungsanstalt des Bundes und der Laender), to which as a public company it had been obliged to belong but as a private company was obliged to leave. This proposal was challenged by the European Commission for its compatibility with State aid rules. The Commission decided not to raise any objections on the basis that a private investor in the same position as the German Government would very probably have acted in the same way and the injection was therefore found to be compatible with State aid rules.