Aer Lingus set to lose €216m as bookings tumble after attacks

Aer Lingus faces losses of up to £170 million (€216 million) in the aftermath of the terror attacks on the US, according to the Minister for Public Enterprise, Ms O'Rourke.

The Minister told the Dβil that the airline was predicting losses of £70 million this year and £100 million next year, based on its booking figures following the attacks.

Ms O'Rourke also announced measures to stimulate tourism, including a three-year moratorium on airport charges for new services to Dublin. Ryanair, which has been pressing for a reduction in charges at Dublin, dismissed the initiative as "limp-wristed and inadequate". Mr Michael Cawley, the airline's chief financial officer, said the offer was pathetic at a time when other European airports were prepared to offer 10- to 15-year deals.

Aer Lingus bookings on transatlantic routes are down 80 per cent on last year and forward bookings to the end of December are expected to be down 40 per cent, said Ms O'Rourke. On British and European routes, bookings are down 30 per cent, while forward bookings are expected to be down 10 per cent.

The Irish Hotels Federation said yesterday that the downturn in US visitors to the Republic between now and the end of the year would come to more than 200,000. "This shortfall represents lost revenue in excess of £100 million and will have an enormous effect on the cashflow of hotels and guesthouses," said Mr Jim Power, the organisation's chief executive.

Mr Power said every £1 million spent by tourists supported 51 jobs here, suggesting more than 5,000 people would lose their jobs. The drop in demand would also lead to an earlier closure of businesses in the winter, he added.

The new Aer Lingus losses figure disclosed by Ms O'Rourke formed the basis of the restructuring programme announced by Aer Lingus last month, she said. The plan involves cutting operations by 25 per cent and the elimination of two transatlantic routes and 1,700 jobs. Even with these cuts, the company could run out of cash by next February or sooner, according to Ms O'Rourke.

Aer Lingus's future can be secured through a "complete overhaul and redesign of the airline to give a more cost-effective and flexible operation capable of adapting to the volatile and changing aviation world", said the Minister.

Ms O'Rourke said that the Government has noted the rescue packages put in place for Sabena and Swissair by the Belgian and Swiss governments, but gave no indication as to whether similar help might be available to Aer Lingus. She said she believed that the European Commission would only allow limited support to airlines in respect of losses directly attributable to the September 11th attacks.

The issue will be discussed by the next meeting of EU transport ministers, scheduled for October 16th, and also by the ECOFIN council of finance ministers, which meets on the same day.

Mr Didier Reynders, the Belgian finance minister and ECOFIN chairman, said yesterday that the rules barring EU countries from subsidising their airlines must be put up for debate, given that US firms are getting state aid.

"Is it possible to (have) European airlines with problems and without any intervention from the states or from the European Union at the same time that we can see in the US economy or in Switzerland . . . that some public authorities are giving new aid for companies?" he asked.

Fine Gael used yesterday's private Dβil members' motion on Aer Lingus to attack Ms O'Rourke's handling of the airline, which was due to have been floated on the stock market last year. "From the summer of 2000 onwards, the Minister lost control of this situation. One day it was a public offering of Aer Lingus stock, the next day it was a sale to anyone who might buy it," said Mr Michael Noonan, the Fine Gael leader.

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