Aer Lingus has announced that it wants to make 676 job cuts at the airline. In a statement to the markets this morning, it says it needs to reduce annual costs by almost €100m before 2011.
The airline says 489 jobs will be cut from amongst its pilots, cabin crew and ground staff. It said it will hold a six week consultation period with staff and unions which is expected to be completed by November 18.
It added that a further 187 jobs will go in back office operations by the end of 2011.
The airline says current staff costs do not reflect current and expected trading conditions and are significantly out of line with its peers.
It says that while it is hoped that many of the redundancies will be voluntary, compulsory redundancies may be necessary.
It also warned that it is not possible to deliver the required cost savings in line with the plan and within the required timeframe, it may have to cut more jobs in order to ensure the continued viability of the airline.
Airline to make pay cuts for workers over €35,000
The airline also said that it will introduce banded reductions in wages for staff whose basic pay is more than €35,000. It also announced plans to introduce a new defined contribution scheme for the future service of all employees.
Aer Lingus chairman Colm Barrington also said that as part of the plan, the airline's executive and management teams are taking a 10% salary reduction, which will be frozen at least until the end of 2011. Its non-executive directors have also agreed to a further 10% reduction in their fees after a 20% cut earlier this year.
Aer Lingus currently employs 3,800 people.
In a statement, the airline said it had developed a two stage transformation plan to reduce costs and remove legacy work practices. It says this will enable it to more more effectively with its peers who have significantly lower operating costs.
It said the changes implemented under the plan are expected to reduce the airline's operating costs, excluding fuel, by €97m a year. This is made up of staff cost savings of €74m and non-staff cost savings of €23m.
Aer Lingus said the first stage of the plan is expected to deliver significant change across the organisation, mainly in operational areas although pay and staff numbers will also be reduced in support areas.
The second stage of the plan will focus on initiatives to deliver revenue growth, improved customer services and further cost savings through a serious of business process improvements.
In August, Aer Lingus reported a loss of €82m for the first six months of its financial year. That was a fourfold increase on the same six months in 2008 and means the airline is losing almost €19 for every passenger carried.
Earlier during the summer, the airline said it was stopping Shannon flights to Chicago from September 1, while services from Dublin to Washington and San Francisco are being dropped from October 25.
'The outlook in each of our current core markets is poor and, in line with the macroeconomic outlook, we do not expect any near-term recovery,' commented Aer Lingus CEO Christoph Mueller.
' Against this backdrop, Aer Lingus cannot continue with an operating cost base, which is structurally uncompetitive when compared to that of its closest peers. A significant differential in operating cost is not sustainable,' he said.
'Our plan to reduce our operating cost base and change work practices will secure Aer Lingus' future as a viable and strong airline that can prosper in one of the most competitive travel markets in the world,' he added.
Trade unions angry at latest cost cutting moves
The main trade unions at Aer Lingus have responded with anger to the airline's latest cost cutting plan.
SIPTU has said that it will not accept pay cuts for its members at Aer Lingus, and will take whatever steps are necessary to defend its members' interests.
National industrial secretary Gerry McCormack said the union will convene a meeting of its National Shop Stewards Committee to consider the proposals for pay and job cuts.
He said it was positive that outsourcing did not appear in the plan, but added that he was concerned about the potential implications for Shannon.
IMPACT, which represents 1,500 cabin crew, described the plan as vicious and punitive.
IMPACT said the loss of so many cabin crew was devastating and complained the airline was continuously looking to staff for savings to stave off ruin.
Long-haul passenger numbers slump 20%
Meanwhile, Aer Lingus said its passenger numbers in September rose by 4.1% to 960,000 compared to the same time last year.
Its short-haul passenger numbers increased by 7.4% to 874,000 but its long-haul numbers slumped 20.4% to 86,000.
It said its load factor, or how many seats it fills on each plane, rose by 2.5 percentage points to 77.5% as capacity fell by 7.6%.
Shares in Aer Lingus closed up 3.5% at 74 cent in Dublin.
