The Labour Court has recommended that Aer Lingus inject a once-off lump sum of €110 million to help plug the €750 million deficit in the joint Aer Lingus/DAA pension scheme.

The recommendation is aimed at resolving a long-standing row over how the pension entitlements of Aer Lingus pensioners, employees and former employees can be best protected as the pension fund is no longer sustainable.

Earlier this year, an interim Labour Court recommendation set out target benefits for pension scheme members, but left it to a technical group of pension experts to evaluate how best to create new pension arrangements.

That group concluded that a capital sum of €110 million would be sufficient to achieve the target benefit levels.

In his recommendation, Labour Court chairman Kevin Duffy says the €110 million lump-sum should incorporate three distinct elements:

1) An amount in respect of past service for Aer Lingus staff

2) An equivalent amount in respect of the effect of changes on potential further service for current employees

3) A third amount intended to bring projected pensions in line with the target benefits set out in the interim Labour Court recommendation earlier this year.

It also recommends special arrangements to ensure adequate benefits for those due to retire before June 2018.

However, the Labour Court also accepted that staff would have to contribute payroll savings.

Staff will receive their 2013 increment but no further increments will be paid until April 2017.

There will be no increases to take account of inflation.

However, Mr Duffy recommends that each full time employee should receive a total phased individual "stabilisation" payment between now and the end of 2016.

The unsustainable defined benefit pension will be closed and replaced with a defined contribution scheme, where Aer Lingus will contribute 10% of salary for the employee.

Employees are to contribute the same amounts as at present.

Mr Duffy specifies that the pension requirements of former workers who have not yet retired were not within his terms of reference.

In a statement to the Irish Stock Exchange, Aer Lingus said the board would now undertake a detailed consideration of the recommendation, and will issue a further announcement when appropriate.