Aer Lingus to cut more jobs
AER LINGUS’ new boss stamped his mark on the ailing airline yesterday, announcing another round of job cuts after talks with unions to reduce the airline’s wage bill collapsed.
Ex-package holidays executive Christoph Mueller, who took up the post at Aer Lingus on 1 September, is trying to overhaul a carrier which has resisted two hostile takeover bids from rival Ryanair, and reported massive losses of €120m (£108m) for 2008.
His announcement yesterday, which comes after unions rejected plans to axe one sixth of the carrier’s workforce, could see a further 1,000 compulsory redundancies at the firm. Mueller had also wanted to cut the wages, overtime rates and allowances of staff who earn more than €35,000, and axe their pension arrangements altogether.
Instead, Aer Lingus will “immediately” begin the process of cutting further routes, and taking planes out of active service, “which in turn will lead to additional redundancies beyond those included in the transformation plan.”
Mueller wants to make savings to the airline’s annual operating costs of €97m, as the downturn hammers the aviation industry. He wants €74m to come off the firm’s wage bill.
The chief executive has recently admitted that the Irish flag carrier’s chance of survival is just 50 per cent.
Mueller said he had come close to agreeing with most unions on a reform plan, but resistance remained from some groups, including pilots, who he said were asking for too much money. It had already announced 676 job losses. Earlier this year, Aer Lingus fended off a second takeover attempt from rival Ryanair, which is leading the industry in cutting costs, and is making a profit while competitors struggle to survive.
TIMELINE: AER LINGUS
2006
Ryanair’s first hostile €1.5bn (£1.4bn) bid for Aer Lingus is rejected by the European Commission because it would create a near monopoly in European flights out of Dublin.
December 2008
Ryanair revives its courtship of its Irish rival, this time bidding just €750m.
January 2009
Ryanair walks away from its bid as the Irish government, an Aer Lingus shareholder, rejects it.
March 2009
Aer Lingus swings to a pre-tax loss of close to €120m in 2008, and says it is unlikely to meet its previous forecast of a pre-tax profit for this year.
April 2009
Chief executive Dermot Mannion stands down, saying the airline needs a new leader to compete in an intensely competitive market and help it return to profit.
May 2009
The airline announced plans to cut winter routes in the downturn.
May 2009
Aer Lingus rejects Ryanair’s claims that it is facing bankruptcy.
June 2009
The Aer Lingus chairman Colm Barrington warns shareholders the airline is facing the most difficult period in its 73-year history.
October 2009
Aer Lingus announced cost cuts of €97m by the end of 2011.
August 2009
Christian Mueller takes the helm.