Minister for Transport Shane Ross has told the Cabinet that Bus Éireann is "at a crisis point" and could be insolvent within two years.
The gloomy briefing on the bus company's financial position comes at a time when the Labour Court is hearing a 21% pay claim from workers at the firm.
The Labour Court hearing has finished, but the institution is still available to both parties, and sources within the company believe that the court would not be making a recommendation as management could not deal with the pay claim separate to other cost cuts.
It is reported that management will put proposals to the unions before the end of January.
Mr Ross has reiterated that Bus Éireann made losses of €5.6m last year, and if it went on as it was, it may be insolvent within 24 months.
The Minister said the company was worried about its ability to afford the pay claims.
According to RTE, Mr Ross said the company's Expressway service was losing millions.