The board of Aer Lingus and the Government will this week be presented with a doomsday scenario that calls for massive redundancies at the State-owned airline.
Aer Lingus will also reveal a series of fare cuts for travellers from Ireland, following the radical new fares announced last week to try and boost traffic from the United States.
An Aer Lingus spokesman would make no comment on the restructuring plan that will be submitted to the airline's board tomorrow but it is understood that it will involve 2,500 redundancies from the airline's 6,300 permanent staff in addition to the 700 temporary employees whose jobs will be phased out from next month.
Once the proposals have been considered by the board, the Government will be informed. The Government will then have to decide what aid, if any, can be offered to Aer Lingus to allow it to continue trading even in a much-reduced form. The company is facing losses of up to €216 million in the current year and next year. Bookings on transatlantic routes are down 80 per cent on last year's figures since the September 11th bombings with forward bookings to the end of December down 40 per cent.
It is understood that Aer Lingus takes the view that simply cutting its costs by 25 per cent in line with its planned 25 per cent cut in capacity would leave the airline standing still, and that substantially greater costs need to be taken out. But some sceptics believe that Aer Lingus is deliberately painting the worst possible scenario to put the maximum pressure on the Government to press the EU to be allowed provide financial aid.
The doomsday situation and the proposed package of cuts - drawn up by new Aer Lingus chairman Mr Tom Mulcahy and senior airline management - were revealed just as the EU Transport Commissioner, Ms Loyola de Palacio seemed to rule out direct state financial aid to European airlines. The Minister for Public Enterprise, Ms O'Rourke meets the EU commissioner tomorrow to see whether member states should be allowed put money directly into airlines after the Belgian government, in effect, wrote a cheque that allowed Sabena keep its aircraft in the air for the next month.
