Aer Lingus expects reduced operating loss

Aer Lingus said its full-year operating loss will be lower than previously predicted as the cost of fuel declines. However, the airline said in a statement the Government's new €10 airport tax would cost it €30 million next year.

The loss will be about €20 million, compared with an earlier estimate of as much as €30 million, the airline said in statement.

The airline said it was "imperative" its operating costs be reduced. "There is no choice but to address legacy work practices, pay rates and pay inflation which are inappropriate to the business model and the competitive environment in which Aer Lingus competes", the statement said.

The carrier predicted it will have a loss in 2009 and said operating at a financial loss is not sustainable.

Aer Lingus's plans to introduce nearly 1,500 job cuts through out-sourcing, voluntary redundancy or early retirement to save around €74 million per annum. In the absence of an agreement with unions on alternatives, the airline said this morning it would implement this plan.

Yesterday Siptu formally notified the airline that it planned to take industrial action from November 24th in opposition to the proposal.

Aer Lingus said the €10 passenger departure tax introduced in the Budget and due to come into force on March 30th next would cost it €30 million per annum. This is because Aer Lingus said it expects to have to absorb this tax on 75 per cent of bookings.

"The airline industry is facing an exceptionally tough trading environment which has progressively deteriorated throughout 2008,'' Aer Lingus said.

Revenue in the nine months through September rose 8.5 per cent from a year ago as the number of passengers carried increased 9.7 per cent to 7.7 million.

In the nine months to September the carrier's short-haul capacity rose by 17.5 per cent and long-haul by 20.2 per cent.

At 8.30am Aer Lingus shares were up just under 1 per cent at €1.20 in Dublin.