10/10/2001

Aer Lingus staff told of serious threat to company

Aer Lingus management have sent a letter to staff indicating that the company’s viability is under the most serious threat ever encountered.

The Chief Executive of Aer Lingus, Larry Stanley, told staff that the losses faced by the company were “truly staggering”. He admitted that the company had been facing severe problems, but that the fall off in business traffic had had a severe impact on the most profitable part of the business.

Mr Stanley said that the survival plan under consideration would entail a cutback of IR£130 million a year and confirmed that it could mean the loss of 2,500 jobs – around one third of the company’s current workforce.

Many European airlines including British Airways have announced crisis measurers such as the curtailing of flight schedules, redundancies, and pay cuts for staff. However, fears are growing that airlines will be forced to make further cutbacks on services following the EU Commission’s stance on fair competition.

After a week’s deliberation the Commission decided that, despite the plight of the industry, under EU fair competition legislation national governments would continue to be prevented from supplying airlines with substantial financial aid packages.

The Commission’s report painted a bleak picture for the short term prospects of the industry, which is facing losses of around £3 billion by the end of the year, and estimated insurance premium increases to be in the region of £100 million a year.

With the financial survival of Aer Lingus, which is reported to be losing up to IR£2 million a day, at stake, union leaders have called on the Irish government to apply pressure on the EU to permit state aid for the troubled airline.

While many national governments stepped in to help when airlines experienced difficulties with insurance guarantees for aircraft, under EU legislation they cannot legally do the same to help with running costs. The only exception may be a limited amount of compensation for the brief period when US air space was closed.

European Ministers will have to wait until next Tuesday before a case can be put to the next meeting of the EU transport committee. (SP)

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