Up to 1,000 permanent employees of Aer Lingus and 700 temporary staff face redundancy as Aer Lingus begins talks this morning with its unions on how to reduce operating costs by 25 per cent. Seven of its 40 aircraft will be disposed of and cutbacks are planned on routes to the US, Britain and Europe.

The national airline has had to radically re-evaluate its estimated losses for this year following last Tuesday's attacks on the World Trade Centre and the Pentagon. Bookings on the airline's transatlantic routes are down by 75 per cent and bookings on other routes by 50 per cent.

Estimated operating losses for this year have soared from £30 million (€23.4 million) to £70 million after the attacks.

Meanwhile, the Minister for Public Enterprise, Ms O'Rourke, said last night that a trade sale of Aer Lingus or IPO was "not as now an issue".

The priority was to secure the future viability of the airline. She was responding to calls from Aer Lingus unions for a moratorium on privatisation moves during the present crisis.

She also said that, given the US government was looking at the question of state aid for airlines, it was something EU governments, including Ireland, would have to review.

Aer Lingus is terminating two of its US routes from October, or even earlier if bookings permit. These are the flights to Newark and Baltimore-Washington. Both routes are only a year old.

The year-old service between Dublin and Stockholm is also being axed.

Flights between Dublin and London City, and Dublin and Amsterdam are each being scaled back from six to five a day.

Flights between Dublin and Paris are being reduced from five to four a day and flights from Dublin to Glasgow are being cut from four to three a day.

Further savings are likely to be achieved by letting 700 temporary staff go before the start of the winter season in October. Trainee pilots are also expected to be laid off.

The company was anxious to stress after a meeting with unions yesterday that "the who, the when and the where" of redundancies have still to be discussed.

However it seems to be accepted by both management and unions that reductions in flight schedules, cuts in overtime and non-renewal of seasonal contracts will not be enough to achieve the company targets.

Redundancies from permanent staff will inevitably be sought.

The company's director of corporate affairs, Mr Dan Loughrey said yesterday "a root and branch review into all aspects of the business" had been under way because of mounting losses, even before last week's tragic events.

The new business environment required "a more radical approach to the process in order to minimise the anticipated financial impact on the airline".

It was "imperative that Aer Lingus takes sensible and responsible decisions now to reflect the exceptionally difficult situation".

One piece of good news for the airline is that it has bought forward its fuel requirements to the end of the year and should not encounter higher costs on this front before then.

However Mr Loughrey accepted the tighter security requirements for passengers and freight would push up costs, possibly to prohibitive levels where some freight cargoes were concerned.

This is particularly valuable on the transatlantic route, which generates 70 per cent of Aer Lingus flight profits, because high freight levels in winter normally compensate for low passenger numbers. He ruled out fare increases to offset higher operating costs.

"The problem is there is too much capacity chasing too few passengers in the industry," he said. "Until people start travelling by air again, the industry can't recover."

Meanwhile, the Labour Party spokesman on Public Enterprise, Mr Emmet Stagg, said last night, "No Government minister who has ever had responsibility for the airline industry has done as much damage to Aer Lingus as Ms O'Rourke.

"She inherited an airline that, largely as a result of Labour efforts in two governments during the early and mid-1990s, was vibrant and strong. After more than four years of her stewardship our national airline is close to being on its knees."