Aer Lingus chief refuses to rule out job losses

JOB losses look likely at Aer Lingus, as part of the airline’s strategic review aimed at cutting operating costs. The review has been described by the company’s management as a “fundamental evaluation” of the entire business and will cover costs, work practices, routes and fleet.

Speaking after yesterday’s annual general meeting in Dublin, Aer Lingus executive chairman Colm Barrington said the structural review of the airline by management was ongoing.

“We’re working on a programme and we will announce its results when we’re ready,” he said.

However, when asked about the prospect of job cuts, he said some lay-offs were likely .

With regard to the future prospects of Aer Lingus – the company made a loss of more than €100m last year, after a profit of about the same amount in 2007 and recently said that further operating losses are expected this year – Mr Barrington added: “If we do nothing, then we won’t survive forever; but if we take action – which we are doing – then our long-term future is secure.”

Ryanair chief, Michael O’Leary recently claimed Aer Lingus could go out of business within two years if it didn’t cut costs andalter its management structure.

Mr Barrington said there was no need for the airline to be re-nationalised and refused to comment on whether or not management was in “rescue” talks with Air France/KLM, as has been speculated – claiming that Aer Lingus is not looking for a “white knight” nor does it need one. He did say, though, that the airline continues to “talk to various people about various things”.

On the issue of a new chief executive – to replace the recently departed Dermot Mannion – Mr Barrington said the search (taking in internal and external candidates) was ongoing, but should be concluded “soon”, adding that interest in the position had been strong.

In response to a question relating to the costs involved in employing international recruitment consultants for the search, he said management had a duty to shareholders to ensure that the best candidate was found.

Two resolutions brought by Ryanair – Aer Lingus’s 29% shareholder – for a slashing of Mr Barrington’s annual salary from €175,000 to €35,000 and a halving of non-executive director fees from €35,000 to €17,500 – both fee levels were already decreased by 20% earlier this year – were not passed at yesterday’s AGM.

Ryanair said the rejection leaves Aer Lingus’s board and the Minister for Transport, Noel Dempsey “with no credibility”, but Mr Barrington said the rise in directors’ fees between 2006 and now were justifiable given the difference between a publicly quoted company and a state-owned entity, which Aer Lingus was three years ago.

In response to a question from a Ryanair representative about the potential for Aer Lingus’s hubs at Belfast and Gatwick (which opened in April), Mr Barrington said that Belfast should break even this year and Gatwick was on track for the same by next year.