AER LINGUS has warned that its controversial €97 million cost-containment programme at the airline may not be sufficient to protect profitability and that more cuts could be needed.
In a statement yesterday, the airline signalled that additional measures could be required given the weakness in domestic demand and rising fuel prices.
Aer Lingus made an operating loss of €53.7 million in the first three months of this year. This was 41 per cent ahead of the same period in 2010. The airline said its operating profit would be “significantly lower” than in 2010.
“As anticipated, we experienced a challenging start to 2011,” Aer Lingus chief executive Christoph Mueller said. “Our performance was affected by the Impact cabin crew disruption in January and February, as well as difficult demand conditions, particularly on leisure routes from Ireland.”
Aer Lingus’s short-haul revenues fell by 3.4 per cent in the quarter while its long-haul was down 4.1 per cent. Ancillary revenues were 15 per cent lower.
The trade union Impact, which represents pilots and cabin crew at the airline, said any future cost-cutting measures would need to be considered carefully. The union said it was open to talks. It maintained that “if there are genuine questions about the viability of the company, staff would need to be involved in discussions”.
Siptu, which represents other staff at the airline, did not comment.
The Greenfield plan, which was announced in 2009, involved over 600 voluntary redundancies.
In its statement yesterday Aer Lingus said it was “examining whether the Greenfield cost reduction programme combined with an ongoing focus on costs is sufficient to protect profitability for the future or, alternatively, whether further measures are required, given the above factors and fuel price inflation”.
Trade unions are scheduled to meet with airline management on Monday. Some union sources suggested that the statement regarding new cuts was a smokescreen to divert attention away from a probable row at its annual general meeting today where shareholders, including Ryanair, are expected to raise the controversy surrounding the so-called “leave and return” redundancy scheme for staff.