Aer Lingus today announced details of a two stage transformational restructuring plan to reduce operating costs and ensure the continued viability of the airline while retaining what it called a brand focussed on service quality and delivery. The plan is expected to reduce annual operating costs, excluding fuel, by €97 million before the end of 2011. 676 jobs will be cut. Separately, the airline reported that traffic rose in September.

Thee former Irish State airline said significant operating cost savings have been identified through staff cost reductions including reduced headcount; banded reductions in basic pay for staff whose basic pay exceeds €35,000 per annum and reduced variable pay and allowances for all staff.

The airline said it believes that the proposals are the fairest and most balanced way to reduce costs towards the level of lower cost competitors, while protecting the less well-paid employees within the group. Total staff cost savings will amount to €74 million per annum from 2011, with approximately 80% of these savings accruing in 2010 and the full savings coming in 2011 once the second phase of the plan has been achieved.

The airline has a payroll of almost 4,000 and it intends to roll-out its plan on a phased basis and stressed that the majority of redundancies would be sought on a voluntary basis.

The airline said that a reduced flight schedule and changes to work practices will lead to 489 redundancies in operational and support areas. These cuts are in addition to the departure of 100 staff this year, including 63 temporary cabin crew who were let go last month.

Aer Lingus said it is also seeking to cut a further 187 positions from its back office and headquarters operations, reducing headcount at its head office by 40% by 2011

The second stage of the plan will focus on a series of initiatives to deliver revenue growth, improved customer service and further cost savings through a series of business process improvements.

This will include a broadening of the Aer Lingus customer base beyond the current dependency on the Irish consumer through the use of an Airline Operating Certificate in the UK.

Aer Lingus said it cannot survive in a situation where staff are paid significantly more and operate less efficiently than comparable positions at its peers; work practices - in the air, on the ground and in support staff areas must be changed and at least match its competitors in terms of productivity. In addition, Aer Lingus' operational flexibility cannot continue to be held back by restrictive practices that date from the past.

Christoph Mueller, Aer Lingus CEO, commented: "The outlook in each of our current core markets is poor and, in line with the macroeconomic outlook, we do not expect any near-term recovery. Against this backdrop, Aer Lingus cannot continue with an operating cost base, which is structurally uncompetitive when compared to that of its closest peers. A significant differential in operating cost is not sustainable. Aer Lingus has a strong brand which is valued by our customers. Our plan to reduce our operating cost base and change work practices will secure Aer Lingus' future as a viable and strong airline that can prosper in one of the most competitive travel markets in the world. We regret the impact that the proposed plan may have on our employees, however, we must transform the business now to ensure that Aer Lingus has a business model for the long-term and can deliver value for all stakeholders."

Colm Barrington, Aer Lingus Chairman, commented: "This is a very difficult time for the global airline industry and for Aer Lingus. The board and management has completed a thorough review of all elements of our business and our operating model and has unanimously agreed and proposed this plan to transform the business. As part of the Plan, the executive and management teams have agreed to a 10% reduction in salaries, which will be frozen at least through the end of 2011, and the non-executive directors have unanimously agreed to a further 10% reduction in their fees on top of the 20% reduction which they took earlier this year. It is imperative that we all now make the right - and radical - choices to ensure that our company can prosper in the future; providing an attractive and competitive product alternative for our customers, a vibrant and developing environment for our employees and a viable investment proposition for our shareholders."

Aer Lingus reports rise in September 2009 traffic;  Short-haul rose while long-haul plunged over 20%

Aer Lingus today announced traffic statistics for the month of September 2009. Short-haul traffic rose while long-haul plunged over 20%.

Aer Lingus’ total passenger numbers in September 2009 were 960,000 an increase of 4.1% compared to September 2008. Short-haul passengers were 874,000, a 7.4% increase on September 2008 and long-haul passengers were 86,000, a 20.4% decrease on September 2008.

Aer Lingus’ overall load factor in the month was 77.5%, an increase of 2.5 points compared to September 2008, with capacity decreasing by 7.6%. Short -haul load factor was 80.8%, an increase of 1.0 point on 2008, with capacity increasing by 7.7%.

Long-haul load factor was 71.6%, an increase of 2.7 points on 2008, with capacity decreasing by 26.9%.

Aer Lingus Scheduled Traffic Statistics
	September				Year-to-date
	2009	2008	Change %		2009	2008	Change %
Passengers (thousands)
Short haul	874	814	7.4		7,455	7,100	5.0
Long haul	86	108	(20.4)		841	976	(13.8)
Total	960	922	4.1		8,296	8,076	2.7
Revenue passenger
kilometres (RPKs) (millions)
Short haul	971	891	9.0		8,013	7,409	8.2
Long haul	466	613	(24.0)		4,583	5,563	(17.6)
Total	1,437	1,504	(4.5)		12,596	12,972	(2.9)
Available seat kilometres
(ASKs) (millions)
Short haul	1,202	1,116	7.7		10,090	9,474	6.5
Long haul	651	890	(26.9)		6,363	7,766	(18.1)
Total	1,853	2,006	(7.6)		16,453	17,240	(4.6)
Passenger load factor (%)			% Points				% Points
Short haul	80.8	79.8	1.0		79.4	78.2	1.2
Long haul	71.6	68.9	2.7		72.0	71.6	0.4
Total	77.5	75.0	2.5		76.6	75.2	1.4