AER LINGUS ANNOUNCES COST CUTTING MEASURES WORTH €100M - Aer Lingus has this morning announced a severe package of cutbacks including more than 670 job losses. The recession has put the airline under pressure to secure savings of €100m a year. The airline is also looking to impose a pay cuts on those earning more than €35,000 and replace the defined benefit scheme for all employees. The airline has not ruled out compulsory redundancies if cuts are not delivered in full and on time. Currently Aer Lingus is loss making and is eating into its cash reserves to pay its way. Management say the viability of the airline is at stake.
Aer Lingus chief financial officer Seán Coyle says the cuts are designed to extract about 100m in overheads from the airline. He says that while there is no danger of Aer Lingus running out of cash in the short term, he says today's plan is trying to stabilise the company and give investors some faith in the airline. He says that once the economy turns hopefully in the next two years, growth will return to Aer Lingus. Mr Coyle said he expects to see 489 jobs gone within the next 12 months and a further 187 jobs in 2011. The company is also looking at its pay and allowances structures. But Mr Coyle says that there will be no basic pay cut for those under €35,000 a year, but Aer Lingus will also look at employees' pensions.
The Aer Lingus CFO says that the cost cutting programme will hit both the airline's long and short-haul flights, but the bulk will fall on the long-haul network. He added that Aer Lingus will be taking another plane out of long haul business.
