IAG boss warns Aer Lingus investment stalled until pilot pay sorted

That even means that Aer Lingus might not end up being the launch customer for the Airbus A321XLR jet later this year, as had been expected.

The airline had anticipated receiving two of the jets in the final quarter of this year, but Mr Gallego said that without a pilot pay agreement, those jets might now be deployed elsewhere within the group. The XLR aircraft can be used to serve the United States from Ireland.

“The original idea was that they were going to fly in Aer Lingus, but today, I can tell you, without an agreement [with pilots], they’re not going to fly in Aer Lingus,” he said.

IAG also owns British Airways, Iberia and Vueling.

Aer Lingus is due to hold talks at the Labour Court with the Irish Airline Pilots’ Association (IALPA) after talks at the Workplace Relations Commission recently ended in a stalemate.

“As we have always said, our capital allocation and growth plans are based on being able to so profitably and sustainably, and until those discussions are concluded we will be limiting investment in Aer Lingus,” said Mr Gallego on Thursday as IAG released a strong set of full-year results. Aer Lingus posted an operating profit of €225m last year, up from €168m in 2022.

“We want to invest in Aer Lingus… but the gap we have between the company and the pilots is very extreme,” he added. “When they have things that are miles away from what we can offer, unfortunately we cannot have a commitment to invest in the company.”

Pilots at the airline rejected an effective 8.5pc pay rise in January. Last month, IALPA president Captain Mark Tighe said that the Aer Lingus pay offer did not reflect the sacrifices made by pilots to sustain the company during the pandemic.

Aer Lingus chief executive Lynne Embleton said that she has no date yet for when the Labour Court talks will begin.

She also said that it’s critical that the DAA apply for planning for an interim measure that would allow it to raise the annual passenger cap at Dublin Airport to 40 million passengers from the current 32 million while a full planning application to do so by the airport operator is being assessed by Fingal County Council.

“The passenger cap issue needs to be addressed urgently,” she said. “Something has to happen to get the growth and the economic benefits that we all know comes with aviation. If that needs an interim planning application, then that’s what needs to happen.”

She said the pilot pay talks are a “real, pressing issue”.

“The timescales absolutely do matter,” said Ms Embleton. “There are a lot of aircraft in the group that we would very much like to come to us. We do take a very fair, reasonable approach to pay.”

“We need to be cost competitive, but I’m optimistic and hopeful IALPA will recognise that this is in the best interest of their members, of customers, of future growth and jobs,” she added.