Aer Lingus airline was tonight set to shed more than a third of its 7,000-stong workforce following a crisis meeting of the company's board in Dublin.
Company directors met to discuss a possible rescue package following confirmation of a bookings slump of up to 80 per cent on some routes following terrorist attacks on the US.
The carrier has also reduced its services by 25 per cent, mostly on trans-Atlantic flights, and yesterday it slashed some prices by up to 70 per cent in a bid to win back customers.
As tonight's board meeting ended, a spokesman said the recovery plan was "at an advanced stage."
The Minister for Public Enterprise Mrs O'Rourke - who today briefed cabinet colleagues on the present position - told the Dáil last week that the situation was "very grave", adding that the company expected to make losses of £70 million for 2001, rising to £100 million in 2002.
According the Taoiseach Mr Ahern, the firm is losing £2 million a day, and cash reserves are set to run out by February 2002.
The view within Mr Ahern's government was that other measures would be required to save the airline as well as the job cuts.
Though no formal comment followed the cabinet session, it was understood that ministers were examining a formula utilised by the Belgian government to bail out their own troubled Sabena airline.
That involved handing the company almost £100 million in secured loans, and it was understood that a solution being considered in Dublin centred on a series of Sabena-style guaranteed loans for Aer Lingus to fund the inevitable redundancies.
Whether that would satisfy the determination of the European Commission to permit only very limited aid for airlines, was not clear.
And a protest against such a move was anticipated from Ryanair and other parties. Ryanair has already lodged a complaint with Brussels over the Belgian development.
Tonight the IMPACT trade union underscored the need for the government to support Aer Lingus "in the interests of the wider economy."
The union warned that if state support was not provided, trans-Atlantic flights by the national airline could become a thing of the past which would be a disaster on the crucial Irish tourism industry.
IMPACT also maintained that the absence of US flights would prompt some high-tech US companies to relocate from Ireland to parts of Europe where staff and freight had direct links with their home country.
The response of the flying public to the cheaper Aer Lingus fares - which came into force this morning - was tonight said to have been "very brisk" in relation to British and other European destinations, but less so in the case of routes to the US.
PA