AER LINGUS chief executive Christoph Mueller warned Minister for Transport Noel Dempsey last month that the planned rise in passenger charges at Dublin airport would increase the cash-strapped airline’s costs by €25 million a year.
The Aer Lingus boss also told the Minister that this could force it to seek greater savings from staff in its latest restructuring plan.
Mr Mueller's warning was delivered to the Minister in a hardhitting letter, seen by The Irish Times, dated November 22nd.
This was 12 days before the Commissioner for Aviation Regulation, Cathal Guiomard, granted the Dublin Airport Authority (DAA) a 41 per cent increase in passenger charges for 2011 if the new Terminal 2 facility opens on November 1st next.
Mr Mueller told the Minister that the planned rise in charges would have to be “absorbed by the airline” due to weak consumer demand and the pressure on fares.
“It will not be possible in the current and expected demand environment to simply pass these increased costs on to the consumer,” Mr Mueller said.
He added that the increased costs from this charge would have to be found in staff savings and would raise “the required savings target from €97 million [in its current restructuring plan] to €122 million”.
“In the context of our cost-reduction plan, the effect . . . will be for the savings from staff taking pay cuts or even being made redundant having to be handed over to DAA just to cover increased airport charges,” Mr Mueller said.
Aer Lingus is in arbitration with its pilots to agree costsaving measures as part of a major plan to reduce its overheads and help return it to profitability.
Mr Mueller’s comment about seeking additional savings from staff is likely to anger unions and workers at the airline.
His comments were made in the wake of Mr Dempsey’s direction to Mr Guiomard in October to structure the airport charges in a way that would allow the DAA to recoup the €1 billion-plus cost of a major upgrade of Dublin airport.
“At a time when traffic is falling and the industry is seeing a structural change in what consumers are prepared to pay; we find it bizarre that you should, in effect, direct the DAA to increase charges further,” Mr Mueller said.
No comment was available from the Department of Transport last night.
Separately, Aer Lingus has appointed Andrew Macfarlane as its interim chief financial officer.
Mr Macfarlane (53) began his duties yesterday and will replace Seán Coyle, the former Ryanair executive who is leaving the airline this month. His most recent position was as finance director of Rentokil, a support services and pest control firm. He left Rentokil in January less than 12 months into a five-year turnaround plan.
Mr Macfarlane is also a former partner with Ernst Young and held senior positions with Land Securities and Holiday Inn.
It was not clear last night if Mr Macfarlane would take the role on a permanent basis in 2010 or if Aer Lingus would conduct a search process for a long-term replacement for Mr Coyle.
