Aer Lingus is reviewing its labour cost base in a bid to offset likely losses this year of £20 million (#25.4 million), its acting chief executive said yesterday.
But Mr John O'Donovan said "definitely not" when asked whether redundancies were being contemplated. The focus was to match costs with revenues in an environment where the airline had increased capacity but suffered falling demand.
He added that no element of the business would be excluded from an analysis of costs, which is likely to be implemented in the autumn. Route capacity was a "very significant issue". "We'll be looking at all areas, including labour."
The review follows a long period of industrial relations strain, which Mr O'Donovan acknowledged had eroded confidence in the business.
His comments came as the airline recorded a record operating profit in 2000 of #79.9 million, up from #71.6 million in 1999. Revenues rose by 21 per cent to #1.37 billion from #1.13 billion.
A number of factors will cause profits to fall, Mr O'Donovan said. The foot-and-mouth crisis at a crucial period during spring and two stoppages due to strikes had an adverse impact on bookings.
The economic downturn in the US, where Aer Lingus makes most of its profits, had a further negative impact on seat sales and on the cargo market.
This occurred in the same period as the airline had increased its capacity, in anticipation of higher demand, and incurred higher fuel and wage costs.
Fuel costs would rise by #16 million this year and the airline projected a #35 million rise in its payroll, following agreements in the last six months with workers throughout the company.
The airline has yet to reach a deal with its pilots, who sought an initial rise of 70 per cent. Mr O'Donovan described demands at that level as "unreasonable and unrealistic".
Published yesterday, the airline's new annual report revealed that the package paid to the company's former chief executive, Mr Michael Foley, was worth #567,000 annually.
Mr Foley joined Aer Lingus last September but was sacked in June after a board subcommittee upheld two complaints of sexual harassment against him.
The report revealed that Aer Lingus made a separate payment of #166,000 to Mr Foley as compensation for benefits foregone at his previous employment as the president of US operations of the brewer, Heineken. Taxes of #78,000 were paid from that sum.
Mr O'Donovan said he had informed the company's board that he did not intend to apply for the post vacated by Mr Foley and declined to comment on the sexual harassment cases.
