Aer Lingus wants to trim €130 million from its cost base after cutting €190 million from the bottom line in a rescue plan that brought it from the brink of bankruptcy but saw 2,000 staff leave.
The State-owned airline has not ruled out further job cuts, although it wants to source the bulk of the latest savings from "relentless" cuts on ticket distribution, airport charges and other overheads.
"We have stressed on a number of occasions that the survival plan was only the beginning of change," said chief executive Mr Willie Walsh.
After striking pilots led to grounded flights for five days in May, he said the recovery plan introduced last October had been implemented in full. Aer Lingus has described the plan as the "minimum" required to continue trading.
In addition to cutting costs - through possible reductions in the commissions paid to travel agents and through the migration of passengers to its internet booking service - the company wants to reduce aircraft turnaround times at airports. The company offers budget-rate seats but argues that it is still a full service carrier.
Aer Lingus yesterday said it had lost €12 million in the January to June period and projected that the losses would continue for the remainder of the year. Mr Walsh said the performance this year was ahead of target and he projected that the losses would end next year. But he added: "It's still far to early to say when the airline will return to profit."
The company saw no improvement in the business-class market, which declined significantly at the start of the downturn last year. It said the transatlantic business this year was "ahead of expectations" but the market in Europe was poorly, with yields falling on incoming flights in particular.
The latest losses follow a 2 per cent fall in revenues to €1.35 billion last year while passenger numbers fell 4.6 per cent to 6.6 million. The 2001 Aer Lingus annual report shows the company had a €139.9 million deficit in 2001, a poor year for the company in which the attack on the US on September 11th compounded slower sales due to strikes, the economic downturn and foot-and-mouth.
Shareholders' funds were pushed downwards to €223.9 million at the end of 2001 from €363 million a year earlier and the net cash position fell by €169 million to €66 million. The Aer Lingus group operating loss was €50.6 million, net of €6.7 million Government compensation for the closure of US routes immediately after the September attack.
Air travel operations lost €52 million on day-to-day activities, an improvement of €27 million on the projection in its survival plan.
The company incurred exceptional costs of €104.1 million, for worker severance payments mainly but also for aircraft write-offs.
The deficit last year contrasted with an operating profit of €79.9 million in 2000, when the company planned a stock market flotation.
With the Government postponing plans to sell off the airline, Mr Walsh said management was not addressing ownership at present.
Aer Lingus chairman Mr Tom Mulcahy said the question of "investment" would arise only when the recovery was further developed. The company had not yet quantified the scale of investment required going forward, he said.
The company said it would introduce three new services from Dublin in October, to Prague, Vienna and Geneva. It will also initiate a service between Cork and Malaga.
Mr Walsh said the way forward for the business was based on a view of the industry "that sees competition increasing and fares falling". He added: "Conceptually, this is a simple business. In the past many airlines, Aer Lingus included, have been guilty of over-complicating it."
