The first consequence of last week's attack on America for Irish business occurred yesterday when Aer Lingus announced to its trade unions that it will shrink its operations by 25 per cent. Aer Lingus, prior to the attack, had been planning cutbacks in response to the economic downturn but the scale of the measures announced yesterday are far greater than was originally envisaged; the "maybe someday" cutbacks have been firmed up and advanced.
It will not cheer Aer Lingus employees to know that other airlines are suffering too but the projected decline in passenger traffic is having widespread ramifications. Continental Airlines, a major US carrier, is cutting 12,000 jobs and warns that it may file for bankruptcy. Virgin Atlantic says it will axe 1,200 jobs and that more redundancies are inevitable. British Airways may have to lay off 6,000 staff.
Aer Lingus is particularly vulnerable because while the Atlantic services account for only 40 per cent of its operations, they contribute 60 per cent of the company's profits. Forward bookings on some of its routes are down by as much as 75 per cent. As things stand, analysts are of the view that Aer Lingus will run out of cash in six months time and the possibility of banks stepping in with loan capital recedes by the day; small wonder that Mr Ned Sullivan of Glanbia has declined the offer of the chief executive's position.
The crisis which Aer Lingus is facing would have been severe enough if it were only up against a steep drop in revenue but the airline simultaneously will have to cope with a sharp rise in operating costs brought on by last week's hijackings. Aer Lingus, throughout its route structure, must embrace the additional security measures, regardless of cost or inconvenience.
Passenger and baggage screening measures have had to be fundamentally strengthened; this causes delays and drives up costs but is unavoidable. Airlines, for example, used be satisfied that if baggage could be matched to passengers then there was no danger because nobody would put a bomb on a plane on which they themselves were travelling. Such an assumption is no longer valid. Already, Aer Lingus check-in times for transatlantic flights have been widened to three-and-a-half hours before departure. It will be no surprise if next week's meeting of the International Civil Aviation Organisation decides on further safety precautions such as those adopted successfully by EL Al long ago.
Not surprisingly, US airlines are pleading for Government aid and the administration, not wanting them in effect to be put out of business by terrorists, has indicated that it will help; a $15 billion grants and loans package has been put to Congress. European airlines must not be disadvantaged by such assistance, however well-intended. European governments must respond in kind.