New restructuring plan at Aer Lingus may cut 1,300 jobs

Aer Lingus's new restructuring plan is likely to include cuts of 250 jobs from permanent cabin crew, 150 ground-handling jobs at Shannon Airport and the virtual elimination of some of the State company's operations, The Irish Times learned last night.

Chief executive Mr Willie Walsh is set to unveil the plan at a board meeting on Monday. It is understood that it will seek to cut the existing 4,600-strong workforce by 1,100-1,300.

In the short term the company's catering and cleaning divisions are likely to be axed, and the service will be outsourced. The catering service employs around 300 people.

Large sections of its baggage and check-in services will also be outsourced. According to some company sources, there are subcontractors already providing these services in the Republic for more than 20 per cent less than the cost of these operations to Aer Lingus.

Over the medium term, it is understood that the Aer Lingus cargo operations will be drastically reduced, with just some services, Germany and transatlantic, kept in operation.

The reduction of cargo services is in line with Mr Walsh's goal of focusing on the core business and turning Aer Lingus into a low-cost operator.

Mr Walsh and his colleagues have been working on the plan for some time, and there has already been some initial contact with the airline's unions.

He has also told workers that he will not sign off on a deal that would increase the employees' stake in the airline from 4.6 per cent to almost 15 per cent until a new restructuring procedure is agreed.

Since Mr Walsh took over in 2001, he implemented a survival plan for the airline that cut more than 2,000 people from its payroll. The airline was facing bankruptcy when he became chief executive.

Earlier this month, he and two colleagues - chief financial officer Mr Brian Dunne and chief operations officer Mr Séamus Kearney - sought permission from the Department of Transport to "develop an investment proposal", which was interpreted as a management buyout, for the State company.

The Government responded by establishing a Cabinet sub-committee, chaired by the Taoiseach, Mr Ahern, to consider all the options facing Aer Lingus. That is expected to reach a decision in the autumn.