‘We don’t play games with people’s livelihoods’

Interview: ‘It’s been one hell of a year,’ says Lynne Embleton, chief executive, Aer Lingus

Lynne Embleton, Aer Lingus chief executive. “I don’t think anybody doubts the importance of aviation, but I think what is possibly not understood is that time matters.” Photograph: Dara Mac Dónaill

Lynne Embleton, Aer Lingus chief executive. “I don’t think anybody doubts the importance of aviation, but I think what is possibly not understood is that time matters.” Photograph: Dara Mac Dónaill

 

On Tuesday last, Aer Lingus operated 34 flights. On the same date in 2019 – June 22nd – it had 318.

“It’s just a handful,” says Lynne Embleton, who became the airline’s chief executive in April.

“We’ve got a New York, a Boston, a Chicago, primarily propped up by cargo rather than passengers. Then we have a few Heathrow flights and bits and bobs of flights, but nothing like a normal schedule.”

Normality is fading in Irish aviation’s memory. Aer Lingus’s regional partner, Stobart Air, folded two weeks ago. European figures show the Republic’s traffic is down almost 80 per cent on 2019, against 50 per cent on the continent.

Job numbers at Aer Lingus, whose business should connect the State with the US, UK and Europe, have fallen sharply.

“We’re over 1,100 down on where we have been,” Embleton says.

“We’ve lost head office roles as well as frontline roles, we’ve made use of the employee wage support scheme (EWSS), we’ve made use of voluntary [severance], and that has been in Dublin, as well as in the regions.”

The airline now employs 4,460 people, had Covid not intervened, that could have exceeded 6,000. More than 90 per cent of those jobs have been lost in Dublin. Aer Lingus plans to close its Shannon base, leaving a question mark over the future of another 126 people, while it is reviewing ground-handling operations there and in Cork. Talks that may or may not lead to further cuts are continuing with unions.

When she appeared this week at the Oireachtas Transport and Communications Committee, some suggested the company was using Covid as a cover for changes it had sought for a long time.

“We don’t play games with people’s livelihoods,” she responds simply.

She repeats what she and her colleagues have been saying for some time: that Aer Lingus is burning €1 million per day. Losses last year reached €360 million and it’s been €103 million in the first quarter of 2021.

It owes the State-owned Ireland Investment Fund (ISIF) €150 million plus interest, which includes a risk premium. Aer Lingus has no choice but to stem the bleeding so it can get back to the point where it can rebuild a profitable airline, Embleton says.

“We’re nearly halfway through the year,” she notes. “You can’t imagine the last three months have seen any major change. So the swing, given that we would have expected to have brought in cash over the period to buy aeroplanes and invest in the business, goes beyond the losses. In aggregate you’re not far off a billion .”

Embleton stresses that the airline’s management would not make decisions such as closing Shannon if it were not in this position.

“We’re in discussions with all of the unions. This isn’t just Shannon, the main core of aviation is actually here in Dublin. We came into this crisis with what we thought was sufficient liquidity to weather the storm, but it’s been one hell of a storm.”

Second loan

She won’t rule out job more losses as Aer Lingus is going to be smaller – for a while – when it emerges from the crisis.

“The extent of the job losses actually does depend on the outcome of the discussions with the unions, if we can change our productivity, our costs, then I think we can justify more flying, if we can justify more flying then we protect more jobs.”

The airline is talking to ISIF about a second loan. The amount has to be finalised but she describes the discussions as constructive. She notes that the State fund is there to support vital industries, while Aer Lingus will borrow on commercial terms.

“There is no reason why the Government should refuse that sort of support for Aer Lingus,” she says.

Another possible source of support is its owner, International Airlines Group (IAG), whose other carriers are British Airways, and Spain’s Iberia and Vueling. Before Covid, Aer Lingus was a star pupil, delivering the best returns of the quartet for shareholders’ money, but losses of €360 million have dramatically reversed that position.

IAG is looking at all its airlines, according to Embleton.

“They don’t like the situation that Aer Lingus is in but they understand the [travel] restrictions here are more problematic, more burdensome than in any other country. But they also know that pre-Covid Aer Lingus was a great part of the group and they will work with us to ensure that it is post-Covid. Between ourselves and IAG, we will tackle the liquidity issue,” she says.

From South Shields, close to Newcastle in north-east England, Embleton graduated with a maths degree from Nottingham University. The aviation bug bit during a work experience stint with British Airways after completing her masters at Strathclyde University in Glasgow.

Her masters focused on applying maths to business problems. There is no overestimating the scale of the problem she faces in Aer Lingus. Her first was getting here. Appointed on April 5th, quarantines then in force meant she had to wait several weeks before physically arriving.

“I got to know my team on Teams,” she remarks.

Even though she was the airline’s chief executive, the State did not deem her an essential worker, as she has yet to complete a process with regulators that will qualify her as competent manager for safety purposes. While Embleton goes through this, the role is held by Donal Moriarty, chief corporate affairs officer, who was acting chief executive from October.

When she was appointed, the vibes from Government were that reopening for short haul travel was unlikely before September, with later in the autumn for longer journeys. So the May 28th announcement that international travel could reopen on July 19th fuelled moderate optimism.

IAG is looking at all its airlines, according to Embleton. “They don’t like the situation that Aer Lingus is in but they understand the [travel] restrictions here are more problematic, more burdensome than in any other country.” Photograph: Niall Carson/PA
IAG is looking at all its airlines, according to Embleton. “They don’t like the situation that Aer Lingus is in but they understand the [travel] restrictions here are more problematic, more burdensome than in any other country.” Photograph: Niall Carson/PA

Anti-family policy

That evaporated when it emerged that restrictions could still hit key Aer Lingus markets in the US and UK. Families could primarily suffer, according to Embleton, who adds that this could hit her personally.

Non-vaccinated children coming with inoculated parents from the US and UK will have to self-isolate, with the option of release after five days with a negative PCR test. But their equivalents from the EU will not face the same curbs.

This will hit Irish children returning with parents from a trip to the UK or US, or families from either jurisdiction who want to holiday here.

“So, it’s simply an anti-family policy,” Embleton says bluntly. “We don’t believe that’s data driven, it puts further hurdles in the way of Aer Lingus’s markets.”

Government insistence on expensive, slow, PCR tests for travel, over the cheaper, quicker antigen screening adopted by most of Europe, adds a further barrier.

For anyone not vaccinated, it also complicates the issuing of EU digital Covid certs, which the Republic is due to adopt on July 19th, and which should otherwise make travel to EU destinations straightforward. So there was no explosion in bookings from next month.

“This summer will be a trickle, a fraction of what it should have been,” she observes.

Embleton has met Taoiseach Micheál Martin, Tánaiste Leo Varadkar and Minister for Transport Eamon Ryan, to put the case for lifting those hurdles. Along with the rest of its industry, Aer Lingus also wants the EWSS extended to next year, support for airport charge rebates and stimulus for weaker routes. All Ministers told her they understood the company’s predicament and the importance of aviation. But caution remained when it came to restrictions.

“It feels more of an almost zero-risk approach rather than a risk-managed approach.”

She argues that other European countries adopted traffic light systems more quickly, opted for antigen testing and not to close borders where vaccination and infection rates allowed. They are getting a tourist season in return.

“I don’t think anybody doubts the importance of aviation, but I think what is possibly not understood is that time matters.”

Financial trough

It matters to Aer Lingus for two reasons. One is that every day puts the business deeper in the financial trough, the other is that as those days pass, the summer slips away. So it could be April or May again before it gets meaningful numbers of passengers.

Aer Lingus’s August schedule is 40 per cent of the same month in 2019 and it is now looking elsewhere for business. It plans flying from Manchester to New York, Orlando in Florida and Barbados this year. Ongoing transatlantic restrictions have delayed the US flights’ launch from July to September, but Barbados starts as planned in October.

The move is meant to exploit opportunities left by Thomas Cook’s failure in September 2019. But it has caused ripples of anxiety here as Aer Lingus will use long-haul aircraft originally destined for the Irish market. The theory goes that the flights will carry passengers who otherwise could have been routed to North America through Dublin.

Embleton dismisses this. The aircraft are sitting on the ground, she says.

“The reality is that air travel is a highly-competitive market with loads of ways of getting from A to B. So even if Aer Lingus doesn’t decide to put that service in, that doesn’t mean that those passengers are all Aer Lingus’s passengers to carry over Dublin. Markets will develop and airlines will step in, I’d rather be generating cash for Aer Lingus and generating footprint for the brand.”

Observers argue the Manchester move is evidence of IAG’s waning enthusiasm for backing Aer Lingus plans to use Dublin as a hub to develop transatlantic services.

North America became the carrier’s main source of growth from the point that the group bought it in 2019, with routes spanning Canada and the US, from the east coast as far as LA, San Francisco and Seattle in the west.

Even without restrictions, restoring that network will take time, and the parent’s backing. So is that still forthcoming?

“Absolutely,” she says.

But after the attrition of the past 15 months, the group cannot make a commitment on timing, particularly with the uncertainty about lifting restrictions here. IAG always said it allocated aircraft across its airlines according to their performance. Historically, Aer Lingus did well out of this approach. Embleton believes it can do so again, but not without taking action and “a lot of hard work”.

At the other end of the scale, Stobart’s failure has left a gap on regional routes. Before its partner ceased trading, Aer Lingus had begun final contract talks with a new business, Emerald Airlines, founded by a former Aer Lingus executive, Conor McCarthy, to take on the franchise from January 2023.

Aer Lingus and its sister carrier, BA Cityflyer, have stepped in to operate 10 routes from Belfast and Dublin to Britain for the time being. Embleton now has available aircraft and crews, but ideally those services should be operated by smaller planes.

Could Emerald take up the contract early?

“Assuming, of course, that we conclude discussions, then that would probably be a positive thing for covering that ex-Stobart network. If I were them, and I can’t speak for Emerald, I’d be looking at my plans and working out if there were aspects of my plans that I could accelerate.”

Despite everything, the Aer Lingus chief emphasises that it remains open for business.

“If you know anyone who might like to fly, tell them to fly with us,” she says.

“In the near term, I’m frustrated, frankly, with the situation, when I look at the long-term problems, I’m absolutely a glass half-full person, I’m an optimist.”

But for now, she adds: “Every day matters”.

Name: Lynne Embleton

Post: Chief executive, Aer Lingus

Why is she in the news? Embleton has taken the airline’s helm in the midst of the Covid-19 crisis, which is costing it around €1 million per day.

Family: Married with two children.

Something you might expect: She’s a maths graduate with a taste for aviation.

Something that might surprise: Embleton recently earned her first Tae Kwon Do black belt after practising the martial art for just five years, and she plays the drums.

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