O'Rourke vows to fight for EU airlines aid

Public Enterprise Minister Mary O’Rourke tonight pledged a fight to ensure that European airlines were not left at a cashflow disadvantage against their American rivals.

She gave the assurance after the 7,000 employees at Aer Lingus were told of near-40% job cuts as part of a survival package.

Mrs O’Rourke told the Dáil that the US Government had responded quickly to the serious difficulties of its airlines and significant funds had been handed over.

Earlier today, the European Commission gave the go-ahead for limited state aid to be given to airlines in difficulties, but imposed a number of restrictions.

Minister O'Rourke said the plan to save Aer Lingus would be finalised within a week, and highlighted the "very grave" situation facing the company.

She confirmed the national carrier was losing £2m a day and was set to run out of money next year, with a £74m loss forecast for the current year and up to £130m in 2002.

Mrs O’Rourke said that as a result of the September 11 terrorist attacks in America, Aer Lingus bookings, particularly on transatlantic routes. had been dramatically reduced.

Recovery next year was difficult to predict because of "uncertainty about the US military situation", and, without urgent action, Aer Lingus would be insolvent within a short period of time.

She told the Dáil: "Let me be perfectly clear - what is at stake is the survival of this company.

"The board believe there is a need for a reduction of 2,500 people in the workforce. I regret that this should be necessary."

The minister, who heard the EC plan referred to as peanuts from the opposition benches, said the financial state of European airlines and the question of compensation as the result of the events of September 11 was down for discussion at the next European Transport Council on Tuesday.

And she declared: "At that meeting I will be seeking to ensure that, at a minimum, European airlines are not disadvantaged in relation to their US competitors.

"I will be calling for an urgent response to address the European airline industry’s difficulties in these exceptional circumstances, taking account of the need for a level playing field on transatlantic routes.

"In adopting my position, I will be taking into consideration the plan submitted by Aer Lingus and the strategic interests of Ireland inc, as well as the fair competition issues."

Mrs O’Rourke’s department circulated figures showing that 95 American airlines have been handed more than $2.4bn by their government.

The minister said: "I will be pointing out that the transatlantic aviation market is proportionately more vital to the Irish economy than it is to to economy of any other EU member state.

"The case is greatly strengthened when you take account of our small population and our island status."

The government is believed to favour a guaranteed loan plan to enable Aer Lingus to meet its redundancy payment commitments under the terms of the recovery plan.

The scheme is along the lines of one used by Belgium to bail out their Sabena airline. Mrs O’Rourke said: "Sabena was about to go bankrupt; I do not intend to let that happen to Aer Lingus."

Earlier today, Aer Lingus employees heard the viability plan would save £130m each year.

The company additionally warned that the fleet reductions and 25% schedule, introduced after September 11, would continue into next summer, and it conceded there was little prospect of recovery in the short term.

In a letter to all staff, acting chief executive Larry Stanley wrote: "Before the tragic events of September 11 in the USA we were facing severe problems.

"The foot-and-mouth situation had hurt us and the downturn in the world economies compounded things. The fall off in business traffic, in particular, had a severe impact on what is the most profitable part of our business."