Aer Lingus has said the €10 Irish airport travel tax announced in last month's budget will cost it €30m next year.
The airline said it expects to absorb the tax on 75% of bookings because competitive pressures on fares will make it difficult to pass the cost on to customers.
In a statement to the markets, Aer Lingus says work practices and pay rates at Aer Lingus are inappropriate given the level of competition the airline is facing.
Aer Lingus says it is going to make losses in 2009, on top of the €20m it expects to lose this year.
The airline says the €10 departure tax announced in the budget, which comes into effect next March, will cost it €30m as it will be unable to pass the charge on to customers.
Operating at a financial loss is not sustainable, the statement says, and the company has to deliver cost savings if it is to flourish.
Global problems
Aer Lingus is caught in the general bind impacting global aviation.
Too many planes and falling passenger numbers are combined with a competitive landscape where too many passengers are paying too little for their tickets.
Fare prices are falling and Aer Lingus expects average fares on short haul flights to decrease between 6% and 7% next year.
It is cutting the number of long haul planes from nine to eight for next summer.
Last night, the risk of travel disruption to Aer Lingus customers increased after SIPTU served two weeks notice of industrial action in objection to a management decision to outsource more than 1,000 jobs.
Aer Lingus says in the absence of ideas on alternative cost savings it has to proceed.
