Aer Lingus has become the latest airline to axe staff and call on those left to take pay cuts in a desperate bid for survival.

The Irish flag carrier plans to axe almost 20% of its workforce, or 700 people, and has asked staff earning more than €35,000 (£32,400) a year to take pay cuts.

Aer Lingus is trying to save saving €97 million a year by the end of 2011. It has already cut 100 jobs and refused to rule out compulsory redundancies and further staff cuts.

In August, Aer Lingus reported a €93 million loss for the first half of the year — almost four times the figure for the same period last year.

Its move follows that of British Airways which revealed yesterday it is making 1,000 redundancies and forcing 3,000 staff to work part-time. Earlier this year BA asked staff to work without pay for a month.

Aer Lingus chief executive Christopher Mueller, said: “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.

“Against this backdrop, Aer Lingus cannot continue with an operating base, which is structurally uncompetitive when compared to that of its closest peers.”

Operational and support areas will be the main areas affected by the cuts, the airline confirmed. Capacity cuts and changes in working practices will lead to 489 “surplus positions” at the airline, which employs 3,900 staff. A further 187 redundancies will come from changes to its IT processes.

The job cuts proposed today total 666 and come on top of a total of 151 staff who have already been told that they have to go.

The cuts should help Aer Lingus to save €74 million a year, with a further €23 million of savings from airport charges, distribution and reduced operating costs.

It has twice rebuffed approaches by low-cost rival Ryanair to take it over, but experts believe it would accept a third attempt.