Aer Lingus has put back the deadline for its rescue plan to 6 p.m. on Sunday to allow the company more time to finalise its figures. The company's unions are expected to use the opportunity to press their case for more consultation and State aid to avoid the loss of 2,500 jobs.
Union leaders came away from their meeting with senior management yesterday seriously questioning company strategy. It emerged that proposals to cut jobs by 2,500 were based on a calculation that, with average wages of £38,000, such a level of redundancies would yield £95 million out of the £130 million needed in operating cost savings to break even by 2003.
The company also told union leaders it had yet to do an exercise to see if the company could remain operationally viable after shedding 700 temporary and 2,500 permanent staff. The shedding of 25 per cent of schedules would only produce redundancies of around 550 in pilots and cabin crew, possibly slightly more if meals for economy class passengers were shed on short-haul routes.
But even if this allowed for the closure of its catering section and ground handling was contracted out in its entirety, the company would still be about 1,000 jobs shy of its target figure. Union leaders were sceptical of leaks to the media that redundancy targets could be met by the end of November.
The company was stressing yesterday that it had still to decide where specific job cuts would come. However, a spokesman said: "The starting point has to be whether there is a viable company and, at the moment, that means is it a financially viable company? If the finances don't make sense, there is no business." The chairman of Aer Lingus Mr Tom Mulcahy is due to meet the Minister for Public Enterprise, Ms O'Rourke, on Sunday to give her a final briefing on the survival plan. Meanwhile, the central representative council at Aer Lingus, which is a joint union-management forum, is seeking an urgent meeting with the Minister to highlight its concerns.
"We believe she has the best interests of the company at heart," council secretary Ms Kay Garvey said. "The role she holds as chief shareholder cannot be exaggerated and the Government must be at least as supportive of Aer Lingus as any other EU member-state is of its airline."
One hopeful sign yesterday came when EU transport commissioner Ms Loyola de Palacio told the transport committee of the European Parliament that no final decision of the emergency aid given to Sabena by the Belgian government would be taken before Wednesday, the day after the Council of Transport Ministers meets in Luxembourg.
When she responded to opposition questions in the Dβil yesterday, Ms O'Rourke seemed anxious to address union concerns, although she also outlined the grim financial realities.
She said she had already received an outline report from Mr Mulcahy showing "Aer Lingus is losing £2 million per day". Without action "the company will run out of cash early next year and is forecasting a loss of £74 million in 2001 and losses of £120 to £130 million in 2002.
"As a result of the events of September 11th, bookings, particularly on the transatlantic routes, have been dramatically reduced. Recovery next year is difficult to predict given the uncertainty about the US military situation.
"Without urgent action, the company will be insolvent within a short period of time. One of her key aims was to "protect the maximum number of sustainable jobs" by "ensuring we will have an airline, fundamentally restructured, which will have a basis from which to grow in the future when markets improve."
At next Tuesday's meeting she would be seeking that "at a minimum, European airlines are not disadvantaged in relation to their US competitors". She said the quick response of the US government to the problems of its aviation industry had seen $2.4 billion paid out so far, including $327 million to Delta Airlines, a competitor of Aer Lingus.
Continental, the other US operator on the Irish north Atlantic, received $119 million in government aid. "I will be calling for an urgent response to address the European airline industries difficulties in these exceptional circumstances, taking account of the need for a level playing field on the transatlantic /[routes]/."
She would also be stressing the importance of direct transatlantic links for Irish tourism, manufacturing and the services sector. "I will be pointing out that the transatlantic aviation market is proportionately more vital to the Irish economy than it is to the economy of any other EU member-state."
Ireland ranked seventh among the 15 EU countries in terms of passengers carried on direct routes to the US, she added. Aer Lingus accounted for 70 per cent of direct Ireland/US traffic, and the transatlantic accounted for up to 60 per cent of Aer profits.
On "the question of the Shannon transatlantic policy", she said: "It should be obvious that a viable future for Shannon is dependent on the survival of Aer Lingus. Government policy is that both Aer Lingus and Shannon survive as viable entities going forward."
