Shannon decision set in stone, vows Mannion
Aer Lingus chief Dermot Mannion says Shannon decision cannot be overturned
Friday August 31 2007
Mr Mannion's comments came as Aer Lingus reported a 75pc slump in operating profits for the first half of 2007.
Ryanair, which holds close to 30pc of Aer Lingus, has called for an extraordinary general meeting (egm) to discuss the Heathrow decision. The Government holds 25pc and Aer Lingus employees hold 22pc, so management could theoretically be outvoted in the egm in a move that would make their position untenable.
However, Mr Mannion brushed off concerns about the management's future.
"I can't conceive of circumstances in which these resolutions will be passed," he said, while refusing to be drawn on whether the Government had guaranteed to vote in favour of management's decision.
Attack
The Aer Lingus board also used their results' statement to launch a stinging attack on Ryanair's egm demand, saying the motions laid down were "anticompetitive" and would "destroy shareholder value".
On the financial outlook, Mr Mannion told the market that Aer Lingus was still on track for "mid-teen" profit growth for 2007, even though half-year operating profits (before employees profit share) slipped by 75pc to €2.6m.
"You can't read anything into the percentage, the first half is seasonally the weakest. An operating profit level anything above the zero line is a good performance," Mr Mannion said.
"Fuel is up 28pc compared with the previous year and that took €25m right off the bottom line."
Aer Lingus results also showed a €66m rise in total revenue, to €574m, while revenue per passenger was up 7.8pc. Meanwhile, operating costs (ex fuel) were up 12pc, despite Aer Lingus's repeated commitments to cost cuts.
"We make no apology for saying that EI is in a period of change and transition," said Mr Mannion. "Increase in staff costs is not something we can allow to continue, but that's not news to us."
Aer Lingus is trying to push through cost savings through a the Programme for Continuous Improvement (PCI). The firm had warned staff that work practice changes would be introduced on August 1, but the deadline passed uneventfully.
"One of the major parts of PCI is the establishment of external base on local terms and conditions, we've started that and boy has it been controversial," said Mr Mannion.
"We are taking the painful and difficult steps but you can only bite an elephant one piece at a time. The commitment that we gave to shareholders is that PCI will deliver savings in 2008 of €20m and we're standing by that commitment."
Mr Mannion said the company had "exhausted" all industrial relations avenues and one-off compensation packages for work practice changes were the only thing left to be negotiated. Those compensation talks will happen "soon", he said.
Today, Aer Lingus is back in the Labour Relations Commission (LRC), after its pilots threatened to strike in protest at the terms and conditions being offered at Aer Lingus's new Belfast base.
Strike
That threatened strike cost Aer Lingus €3.5m, with "the vast majority" of this going on passenger refunds and Ryanair getting "very little" in deposits for the two Ryanair planes Aer Lingus had planned to lease.
"The lesson is that the threatened strike achieved nothing to further the pilots agenda. It's as simple as that," said Mr Mannion. "I couldn't comment on what we might do if there's a second threat of strike action."
