Aer Lingus Settles Tax Row With Government

February 24, 2011

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Aer Lingus will make an exceptional provision of EUR€32.5 million (USD$44.7 million) in its financial statements to settle a tax dispute with the Irish government, the airline said on Thursday.

Dublin has insisted 715 Aer Lingus staff who were rehired after being made redundant should pay tax and social charges on their redundancy payments. Aer Lingus had assured staff their tax liability would be limited.

"On this basis, Aer Lingus believes it is inappropriate to seek to recover any amount from staff," the airline said in a statement. "We are deeply disappointed and frustrated that the group must now provide for and settle this liability."

The airline said it feared that if it pursued the issue it could end up costing more.

Aer Lingus is trying to improve relations with staff after an industrial dispute over longer working hours last month hit passenger numbers.

The company has cut unprofitable routes and reduced staff and fuel costs to reverse losses threatening its survival. It returned to profit last year.

Aer Lingus reports full-year results on Monday.

(Reuters)