AER LINGUS chairman Colm Barrington confirmed yesterday that the airline will be seeking pay cuts by the end of the year to address “legacy” work practices and move the airline’s remuneration towards “market rates”.
Aer Lingus staff at its bases in Belfast and Gatwick are paid 30 to 40 per cent less than their counterparts in Dublin, Cork and Shannon and the airline is thought to want to significantly bridge this gap in a new cost-cutting plan that will be presented to its trade unions in the coming weeks.
Mr Barrington refused to be drawn on job cuts but said Aer Lingus “has probably got more people than it needs” given that it is cutting a quarter of its transatlantic flights.
The Irish Times reported yesterday that Aer Lingus is likely to seek about 500 redundancies among its 3,879-strong workforce as part of its latest restructuring plan in a bid to remove €130 million from its cost base.
Double-digit pay cuts are also likely to be sought when the plan is unveiled by new chief executive Christoph Mueller, probably in early October. Mr Mueller begins work at Aer Lingus on Tuesday.
Mr Barrington said staff had to realise that as Aer Lingus was a private company, the State was no longer available to provide financial support.
He said the airline had not “actually had significant pay cuts” and that if staff failed to “work at market conditions and market rates we won’t survive”.
This restructuring, Aer Lingus’s third since it was floated on the stock exchange in 2006, is aimed at restoring the airline to profitability.
On Thursday, Aer Lingus reported a record half-year operating loss of €93 million for the first six months of this year. Analysts have predicted losses of up to €150 million for the full year.
While passenger numbers rose by 1.7 per cent in the first six months, Aer Lingus’s revenues fell by 12.2 per cent due to reduced fares and cargo income.
The airline’s net cash balances declined to €439.6 million at the end of June from €802 million a year earlier.
Speaking to RTÉ Radio One yesterday, Mr Barrington also criticised the imposition of the €10 departure charge imposed in the last budget, calling it “a rather misguided tax”.
“Unfortunately, in the current market conditions Aer Lingus has had to bear a lot of that ourselves, we have not been able to pass that tax on because our passengers have been unprepared to pay it.”
He described Aer Lingus’s shareholding structure as unusual; with the Government and employees holding just under 45 per cent and Ryanair just under 30 per cent.
Mr Barrington said is was “outrageous that your biggest competitor can be a 30 per cent shareholder and can balk you at every turn.”
Aer Lingus is before the European courts trying to have Ryanair removed from its shareholder register. “I think Ryanair has done a lot to damage to Aer Lingus and damaged the share value of Aer Lingus,’’ Mr Barrington said.