Changes at Aer Lingus

Aer Lingus

The Irish airline, Aer Lingus, is set to go through some changes. It's going to have a battle with the unions on its hands after announcing its plans to axe at least 676 jobs, and slash the pay of hundreds more workers.

Only a day after larger rival British Airways announced they were cutting jobs and extending pay freezes, Aer Lingus revealed a wide-ranging "transformation plan". Under the scheme it will operate fewer flights; cabin crew and backroom jobs will be lost; working practices will be changed; and anyone earning more than €35,000 (GBP£32,400) will see their pay reduced.

The airline, which employs nearly 3,900 people, has claimed that the actions are necessary because it is currently too inefficient to survive the downturn which is currently effecting the industry.

"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 cost base, which is structurally uncompetitive when compared to that of its closest peers," said chief executive Christoph Mueller.

Aer Lingus will now start a six-week consultation period with employees and unions.

Aer Lingus said that 489 jobs will be cut from its "operational areas and some support areas", including cabin crew and pilots. It is offering voluntary redundancy packages, but warned that it will be forced to make compulsory cuts if not enough staff volunteer.

A further 187 staff are being cut from its head office and support staff once a new IT system is implemented in 2011.

Staff earning €50,000 or more will see their pay cut by 10 percent, with a 7 percent reduction for those on between €40,000 and €50,000 and a 5 percent cut for workers earning between €35,000 and €40,000. The company said that this was "the fairest and most balanced way to reduce costs towards the level of lower-cost competitors, while protecting the less well-paid employees within the group."

With top management and non-executive directors at Aer Lingus have agreed to cut their own pay by 10 percent.

The recession has been a bad time for the airline, with business travel especially being hit. Aer Lingus said its losses had almost quadrupled after it was forced to slash ticket prices. Its net cash reserves had fallen to €439.6 million on 30 June 2009, down from €802.6 million a year earlier.

With the news from BA about job cuts yesterday, and the news from Aer Lingus today, it is now being predicted that there will be industrial action soon. It is rumoured that the BA strikes could happen over Christmas.

"This inevitably brings a strike closer. We have been working flat out to find a negotiated solution with this company but they are clearly not interested in compromise, preferring conflict instead," said a senior Unite union source.

As Aer Lingus makes changes, it is saying that it plans to base most of its future operations in the UK, rather than Ireland.

"The UK operations have far greater flexibility in working conditions and a far lower cost of production than our Irish operation has," Chief Financial Officer Sean Coyle said.

Like this article? Get the RSS feed: