Aer Lingus 2014 Annual Report Download - page 131

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3 Other
Other provisions relate mainly to the frequent flyer programme and free flight entitlements in respect of former employees. The frequent
flyer provision is utilised when points are used or when they become non-redeemable. Points are redeemable for a maximum of three years.
Measurement uncertainty associated with the frequent flyer and free flight programmes typically arise from variances in estimates of flight
utilisation and length of sectors flown by programme members. In 2014, the Group also recognised a provision in respect of a probable
outflow of benefits arising from a dispute with a supplier.
29 Provision for IASS solution – once-off pension contribution
2014
2013
€'000
€'000
At 1 January
-
-
Provided during the year
190,700
-
At 31 December
190,700
-
Analysed as current liabilities
31 December 2014
190,700
-
31 December 2013
-
-
In December 2014, Aer Lingus Group plc shareholders voted in favour of the IASS solution which seeks to address issues arising from the
funding deficit in the IASS (see Note 26). The approval of the IASS solution involved a once-off exceptional charge of €190.7 million in
Aer Lingus’ consolidated income statement (see Note 10) and the recognition of a provision, also with a value of €190.7 million, in the
Group’s consolidated statement of financial position.
The proposed once-off contribution of €190.7 million has been placed in an escrow structure has been disclosed as a restricted deposit
balance in Aer Lingus’ consolidated statement of financial position (see Note 23).
This liability reduces further and potentially to nil as the correctly executed waivers referred to in Note 26 are received. No such correctly
executed waivers had been received as at 31 December 2014.
See Note 39 'Events after the reporting period' and Note 26 'Defined contribution pension schemes' for more detail in relation to this
provision.
30 Contingent liabilities and assets
Arrangement relating to Stobart Air
Aer Lingus Regional flights are operated by Stobart Air (previously known as Aer Arann). However, passengers book their flights using the
Aer Lingus website and booking channels. Should Stobart Air fail to meet its obligations to passengers and if such passengers were to then
seek refunds from their credit card providers, Aer Lingus may have an obligation to reimburse those credit card companies for losses
incurred. In such circumstances, Aer Lingus would have a corresponding claim against Stobart Air.
No amounts have been provided in respect of this matter.
Air travel tax
On 25 July 2012, the European Commission (“EC”) issued a decision with regard to the Irish air travel tax. With effect from 31 March 2009,
Ireland introduced an air travel tax for flights departing from Irish airports. The tax was set at €2 for destinations within 300km of Dublin
airport and at €10 for those exceeding 300km. The EC found that the lower rate constituted unlawful state aid and ordered Ireland to recover
€8 per passenger (being the difference between the lower and the higher rate) for each passenger subject to the lower rate from a number of
airlines, including Aer Lingus.
In April 2013, the Irish Government commenced High Court proceedings against Aer Lingus pursuant to the EC’s decision of 25 July 2012
seeking recovery of approximately €4 million plus interest. Aer Lingus is contesting these proceedings and is assessing the implications for
these proceedings of the recent judgement of the General Court (see below). Aer Lingus has also issued separate proceedings against the
Irish Government on the basis that the air travel tax infringed EU rules on free movement of services. These proceedings seek repayment of
€8 per passenger for each passenger subject to the higher rate and/or damages.
On 5 February 2015, the European General Court annulled the EC’s decision in so far as it ordered the recovery of the aid from the
beneficiaries for an amount set at €8 per passenger. While the General Court found that the EC had not erred in concluding that the
application of the different rates of air travel tax constituted State aid in favour of airlines whose flights were subject to the lower rate of €2,
it found that the EC had erred in quantifying the amount of aid to be recovered at €8 per passenger. The General Court noted that the EC
had not established that the recovery of €8 per passenger was necessary in order to ensure the restoration of the situation which would have
prevailed if the flights subject to the rate of €2 per passenger had been subject to the rate of €10 per passenger. It also considered that it was
not possible for the airlines to recover retroactively from their customers the €8 per passenger which should have been collected and that the
recovery of such an amount would be liable to create additional distortions of competition since it could lead to the recovery of more from
the airlines than the advantage they actually enjoyed.
No amounts have been provided in respect of this matter.