Aer Lingus poised to make job cuts in US$100m cost cuts

17th Nov 2009
Aer Lingus poised to make job cuts in US$100m cost cuts

Beleaguered Aer Lingus is expected to announce further job cuts as it concludes talks with trade unions as part of a new round of US$100m cost cuts.

Last week, the former state-owned carrier revealed that its revenues fell 10% in the last quarter, compared with the same period in 2008, whilst its rate of cash burn is worrying industry analysts.

At the end of September, it had cash reserves of about $600m, some 39% lower than last December.

The airline’s transatlantic market, flying from London and Dublin to US cities such as Boston, New York, Chicago and San Francisco, has been struggled, especially as Americans find the weak dollar makes prices in Europe so expensive.

Furthermore Ireland is suffering one of the deepest recessions in Europe, with any recovery predicted to be a long time in the future.

CONTINUES BELOW

Last month, the new chief executive, Christoph Mueller, outlined plans for cuts that would include 676 jobs from the workforce of nearly 4,000.

The airline could sell some of its aircraft, and according to some reports, eight Airbus jets could be sold.

However, it is still possible that the future of Aer Lingus could be determined by its major competitor and biggest shareholder, Ryanair.

The low-cost, no-frills, airline owns nearly 30% of Aer Lingus. It is though chief executive, Michael O’Leary, is still interested in doing some sort of deal to get control of its rival.

However, Mr O’Leary and his fellow decision makers at Ryanair are forced to sit on the sidelines right now as the competition regulators have ruled against a merger, for now.

Last month, Mr O’Leary denied a report by the Financial Times that claimed Ryanair could take control of Aer Lingus through a rights issue. He insisted there was “no substance” to it.

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