Wednesday 7 December 2016

Secret Aer Lingus document reveals plans for harsh cuts

Report commissioned by the airline recommends slashing costs with job cuts from pilots to catering

Published 28/05/2015 | 02:30

Aer Lingus needs to make "aggressive" cuts of at least €60m if it hopes to compete with its international competitors, according to a confidential presentation given to senior managers last month.

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A report commissioned by the airline recommends slashing costs by cutting jobs among pilots, cabin crew and catering staff. It recommends cutting pilots and cabin crew by 10pc each to make saving of €2.9m, while catering staff should be cut by 25pc for a €3.9m saving.

The report also found Aer Lingus is at a disadvantage because the majority of its business is based in Dublin and Heathrow, where airport charges are higher.

The finding will raise concerns over the future of the crucial landing slots in Heathrow - which have been central to the €335m takeover bid.

The report recommends Aer Lingus take the approach of a low cost carrier to efficiencies.

"Although Aer Lingus cannot achieve the cost base of the low cost carrier competitors, we believe that the airline should set aggressive targets for short haul efficiency at a minimum of €60 or €5-6 per seat."

The 'benchmarking study" was done by consultancy firm Nyras. It compares Aer Lingus's 2015 budget on a "like with like" basis with its competitors easyjet and Spanish carrier Vueling for short haul flights, and Virgin Atlantic for long haul flights.

After the report emerged, Fianna Fáil transport spokesman Timmy Dooley called for the vote on the Aer Lingus sale to be suspended immediately.

"The Government itself claims to be entirely unaware of the report - a very serious situation in itself, given the Government's status as a 25pc shareholder," Mr Dooley said.

"If there is a shred of good faith on the Government benches, there will be no vote on the future of Aer Lingus unless and until TDs get to examine all the relevant paperwork ... including the Nyras Report," he added.

Fianna Fáil leader Micheál Martin accused Taoiseach Enda Kenny of trying to "ram through" the sale of Aer Lingus in the Dáil. "The Dáil has been treated in an appalling manner," Mr Martin said.

But Mr Kenny said the deal on the sale of the 25.1pc share had secured the slots, and the move was endorsed by all three airport managements, while Knock would have improved traffic via London Gatwick.

"I reject Deputy Martin's assertion of treating the Dáil with contempt," the Taoiseach said.

The Nyras report found Aer Lingus has a cost disadvantage on all three of its competitors on airports and handling, cabin crew and sales and marketing.

It stated Aer Lingus has 40pc more staff than easyjet, which gives the British airline a €13m cost advantage.

The report suggests the airline needs to introduce a "leaner structure" and reduce handling costs by "restructuring labour agreements".

The older average fleet age of Aer Lingus's short haul planes means it has higher maintenance costs than easyjet.

Aer Lingus's long haul seat costs are "relatively competitive" against Virgin Atlantic. However it has a cost disadvantage on cabin crew, fixed overheads and aircraft ownership costs.

Blueprint

Aer Lingus last night insisted the document was not a "blueprint for job cuts" at the company but instead is benchmarking analysis" aimed at assessing competitiveness versus comparable airlines.

"The list of targeted savings by category is being claimed by certain politicians to somehow relate to employment within Aer Lingus. This is not the case," said a spokesman.

"The opportunities identified in the benchmarking exercise relate to costs incurred through purchasing third party services and have no bearing on employment in Aer Lingus.

"This type of exercise is part of the normal course of business in the highly competitive and international airline sector," he added.

Irish Independent

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