IRELAND - Aer Lingus has seen deficits in both of its domestic defined benefit funds increase over the last six months as it once again rejected calls to eradicate the shortfall through additional contributions.

In its half-yearly results, released today, the former state-owned Irish flag carrier noted the strike action threatened by unions over the situation, but said that it would continue its negotiations with the Labour Relations Commission.

The report said there had been no change in the "risks and uncertainties" of the pension arrangements since it released figures for the end of 2011, at which point the multi-employer Irish Airlines Superannuation Scheme (IASS) reported a €700m deficit.

"The group's position remains that it has no responsibility for the funding shortfall in the Irish Airlines Superannuation Scheme or the Irish Airline Pilot Pension Scheme," the company reiterated.

However, figures from the end of June showed that the IASS deficit had risen by €27m to €727m under the country's minimum funding standard, with the country saying around two-thirds of the shortfall stemmed from its own employees.

According to the report, the pilot's pension scheme had also seen its deficit increase, albeit less noticeably, by €2m from October last year to €172m.

The company warned that lack of deficit reduction payments on its part could be subject to a legal challenge "on various grounds from various potential claimants".

"Any such challenge would be strenuously defended," Aer Lingus said. "Lengthy litigation could ensue. If, contrary to the firm legal advice that the Group has received (that such a challenge is unlikely to succeed), a Court were to find against the Group in any such litigation, significant or very significant loss could arise."

The Irish government has previously ruled out state aid to support the IASS funding shortfall, while one of its largest shareholders, rival airline Ryanair, has threatened a lawsuit if it addresses the deficit, contradicting agreements that the airline should not increase contributions or make any attempts to help the scheme back to full funding.

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