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Troubled Aer Lingus planning drastic staff cutbacks

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN – Airline management and unions appear on a collision course after crisis-hit Aer Lingus finally revealed details of its rescue plan last week.

The ailing airline had employed almost 7,000 staff in the summer, but when the restructuring and layoffs are finished, the management want it slimmed down to half that.

About 700 part-time workers are going and the company wants to lay off 2,026 permanent staff across all areas, grades and categories by Christmas.

A further 800 permanent staff in support services like IT, loading, catering and cleaning will be transferred to subsidiary companies with the intention of selling them off so that they can be outsourced.

The plan also involves a wage freeze in 2002 and ’03 and “radical and widespread changes in work practices.”

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It entails more use of Internet booking, simplified fare structures and less restrictions on fares, such as mandatory Saturday-night stays.

Public Enterprise Minister Mary O’Rourke warned the situation is approaching a point where Aer Lingus might not be able to continue to operate without exposing directors to charges of “reckless trading.”

If the company is forced to seek the protection of the courts and go into examinership or receivership, the cuts could end up going deeper.

The government doesn’t want to see Aer Lingus close, the minister emphasized. “The situation is becoming very close to that if we don’t move quickly.”

In his first day on the job, new chief executive Willie Walsh said he was saddened to have to outline the bad news. The plan aimed to save _148 million in costs and make Aer Lingus viable.

“This is a radical plan based on a fundamental restructuring of our business, transforming the way we deliver service to our customers. It is vital in order to sustain the airline into the future,” Walsh said.

“It will substantially reduce anticipated losses in 2002 to _21 million and return the airline to profit in 2003.”

Walsh, a former pilot who was promoted from operations manager to chief executive the day before the rescue plan was unveiled, said he fully recognized the trauma it would cause.

“I don’t think anyone appreciates the total affect that the events [of Sept. 11] could have. This industry has changed and changed radically,” he said.

The company says it is essential to get agreement with the unions by the end of November and implementation of the plan by the end of the year.

However, the two unions, SIPTU and IMPACT, are opposed to compulsory layoffs, want alternatives such as unpaid leave, job sharing and sabbaticals investigated, object to the plan for subsidiary service companies, question the size of the losses and seek negotiations on work practices for staff staying on.

O’Rourke will seek backing from government colleagues this week to give a guaranteed loan to fund layoffs and working capital. It will have to be endorsed by Brussels.

But IMPACT’s Michael Landers said a loan was not enough to solve the problem, as the repayments would cripple the company going into the future. What is needed is a mixture of a state-backed loan and cash aid, he said.

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