Aer Lingus Group plc

ISE: EIL1           LSE: AERL 

Aer Lingus statement regarding the Irish Airlines Superannuation Scheme

Dublin & London, 30 January 2012: Aer Lingus Group plc ("Aer Lingus", "the Group") notes recent media comments and speculation about the Irish Airlines Superannuation Scheme ("IASS", "the Scheme").  Aer Lingus confirms that it is in discussions with parties involved in the IASS under the auspices of the Labour Relations Commission ("LRC"). These parties include trade unions representing Aer Lingus members of the IASS as well as Dublin Airport Authority ("DAA") and trade union representatives of DAA staff. These discussions follow on from meetings held in 2011, which were also facilitated by the LRC.

Aer Lingus has no obligation to increase its employer contribution to the IASS above its current fixed rate. However, the Group believes that it is in the best interests of Aer Lingus, its shareholders and employees to constructively engage with the above named parties in order to address the issues represented by the funding shortfall in the IASS.

The current discussions have two principal components. Firstly, the parties are exploring options to address the funding position of the IASS. Options under consideration include the possible freezing of the Scheme to reduce the risk that the deficit may increase further in the future as well as possible changes to the Scheme's investment strategy. These changes may include the purchase by the Scheme of sovereign annuities or similar products to improve the expected return earned by the Scheme on its investments and so reduce the deficit. These measures seek to preserve a higher level of pension benefit for IASS members than would be the case if the Scheme were wound up, which Aer Lingus believes is inevitable in the absence of corrective action.

The funding of the IASS, including the potential freezing of the scheme or changes to its investment policy remain matters for the Scheme Trustees alone. Any proposals, which result from the current discussions, can only be implemented by, and with the consent of, the Trustees.

The second component of the current discussions is to explore options for the provision of viable pension arrangements for future service. These discussions are based on the assumption that all parties will reach agreement that the IASS should be frozen so that no future contributions would be made to the Scheme. In such circumstances, Aer Lingus and DAA will need to establish new pension arrangements for future service. Aer Lingus believes that the best interests of all parties will be served by creating separate pension schemes for DAA and Aer Lingus employees for the future.

The discussions are complex and at an early stage. No agreements have yet been reached and negotiations continue. 

ENDS