The High Court has refused to sanction a €500m reduction in the capital reserves of Aer Lingus Group to pay dividends to shareholders.
This is unless the company makes provision for potential legal claims resulting from a €930m deficit in the Aer Lingus pension schemes.
Mr Justice Roderick Murphy said the shortfalls in the general and pilots' pension schemes would seem to constitute a contingent future claim against Aer Lingus.
In those circumstances, he said, court approval of the resolution to reduce the capital reserves was subject to a condition that Aer Lingus provide for potential claimants arising from the penson funds deficit.
The proposed reduction in the capital reserves from almost €860m to about €360m was "substantially below" the level of the shortfall in the pension funds, he noted.
While the Aer Lingus group was entitled to seek a reduction in capital, the court had to address the matter on the basis of Section 73 of the Companies Act relating to the entitlements of creditors, he said.
The trustees of the pension schemes owed duties to the Aer Lingus pensioners and are contingent creditors of Aer Lingus in the circumstances of a shortfall in funding of the schemes, he ruled.
The judge also noted the trustees had engaged with Aer Lingus with a view to resolving the pension fund issues. He said they had expressed concern, if the company got approval for the share capital reduction before a final agreement was reached on pensions issues, such approval was likely to impact significantly on the talks.
