CIÉ sickman of transport
It is interesting to contrast the fortunes of CIÉ and Aer Lingus since the economy collapsed in 2008.
Both are large transport groups integral to the running of our economy. CIÉ is State-owned while the Government has a 25 per cent share in Aer Lingus.
Both have seen passenger demand contract sharply against a backdrop of rising fuel costs.
In 2008 and 2009 Aer Lingus recorded pre-tax losses of €122 million and €154 million respectively and was in danger of going out of business.
Under Christoph Mueller it implemented the Greenfield restructuring plan to achieve cost savings of €97 million a year, axed unprofitable routes, raised its fares to more realistic levels, and narrowed its focus to the island of Ireland rather than bases abroad.
Last year, Aer Lingus made a pre-tax profit of €84 million and it will probably beat that number this year.
Decisive action to address the fundamental issues within the business have put Aer Lingus back on track.
Four years into the recession and CIÉ is still haemorrhaging money.
CIÉ received more than €500 million in State funding last year for a variety of things and yet still lost €6 million. The State had to pony up €36 million in emergency funding in July to keep the show on the road.
It is expected to record losses out to 2015. That’s in spite of having reduced its annual cost base by €174 million since 2008 and having reduced its headcount by 1,450.
It’s a shocking state of affairs, highlighted by the auditors in the 2011 annual report in their warning about CIÉ’s ability to continue to trade. It remains to be seen if CIÉ’s new chairperson Vivienne Jupp, like Mueller at Aer Lingus, can take decisive action to address CIÉ difficulties once and for all rather than applying another sticking plaster solution to the problem.