The boss of Aer Lingus' parent, IAG, has warned it will be limiting investment in the airline until such time as an agreement is struck with pilots on a new pay deal.
Luis Gallego said the company needs to make decisions about where new aircraft go and whether Aer Lingus is the right place to invest.
"We are still in a process to resolve our pilot wage agreement," he said.
"As we have always said our capital allocation and growth plans are based on being able to do so profitably and sustainably and until those discussions are concluded we will be limiting investment in Aer Lingus."
He said the gap between the sides was extreme, but added that if an agreement can be achieved, IAG will continue investing in Aer Lingus in the same way it has done since it joined the group.
Later this year the airline is due to take delivery of two new Airbus extra long range aircraft.
Just over two weeks ago, talks between Aer Lingus management and pilots on the issue failed to reach agreement at the Workplace Relations Commission.
The matter is now being referred to the Labour Court.
Irish Airline Pilots Association representatives had sought pay increases that were significantly higher than the 12.25% increase in consolidated pay and 1.5% increase in unconsolidated pay that had been recommended by an independent pilot pay tribunal in its report in December 2023.
It is understood that IALPA had sought an effective increase in pay for pilots of 27%.
This was comprised of a 20% pay increase over three years and the full cost of a 2019 crewing agreement understood to be worth a further 7%.
Profits
The development came as Aer Lingus today announced an operating profit of €225m for 2023, an increase of €168m on the €57m reported in 2022.
The airline said its revenues for the year amounted to €2.194 billion.
Aer Lingus said its "positive" financial performance last year reflected strong demand for leisure travel on both short haul and long haul routes.
Aer Lingus carried a total of 10.7 million passengers last year as it operated its biggest ever North American network and added more routes and capacity to European destinations from Ireland.
It started flights to Cleveland and resumed its route to Hartford, Connecticut, along with additional frequencies to Los Angeles, Seattle, Orlando, and Washington DC. The airline will also resume its service to Minneapolis and launch a new route to Denver this year.
The airline said its financial performance in 2023 is not yet at 2019 levels of profitability and margin due to higher operating costs. It had reported operating profits of €276m in 2019.
It also noted that while business travel in 2023 lagged pre-Covid levels, it is showing some signs of recovery in early 2024.
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Aer Lingus took delivery of two Airbus 320 neo aircraft last year, and said the new planes have the lowest emissions per seat on its short haul network.
It also secured its first supply of Sustainable Aviation Fuel (SAF) during the year and is aiming to use 10% SAF by 2030.
Aer Lingus's CEO Lynne Embleton said today's results put Aer Lingus on the right trajectory for the future.
"We have a compelling growth strategy for Aer Lingus that will be good for the company, our employees, our customers and for Ireland," the CEO said.
"However, achieving it is dependent on having the right cost base and productivity levels and not being constrained by the unnecessary passenger cap issue. These challenges will need to be resolved by a collaborative and sensible approach by all stakeholders that delivers the right outcomes," she added.
On the issue of the passenger cap at Dublin airport, Ms Embleton said it was a serious issue.
"And this has not been well managed at all," she claimed.
"And it will have serious consequences if it isn't lifted and that would be for the airlines, it would be for jobs and more importantly it is for the economy."
