AER LINGUS is planning to downsize operations significantly at its loss-making base at Gatwick airport in London, which was opened less than a year ago. The airline will announce its plans to reduce capacity at Gatwick at some stage today, with the changes expected to take effect for its summer schedule.
It is the latest step in the company’s plan to retrench and shut down loss-making operations in a move to preserve its net cash. It is currently negotiating with staff on a restructuring plan to save €97 million a year.
It is understood that Aer Lingus will continue to operate some flights in and out of Gatwick but will reduce the number of aircraft based there and axe a number of the 13 routes it operates from the London airport.
Aer Lingus currently has five aircraft based at Gatwick. It had originally planned to base eight planes at Gatwick within 12 months of its launch but the global recession and the slump in air travel put paid to those plans. One source said two or three aircraft would be removed from its Gatwick schedule.
The Gatwick base was opened in April 2009 as part of a growth strategy drawn up by former Aer Lingus chief executive Dermot Mannion. It was the company’s first base outside Ireland.
Aer Lingus’s operations in Gatwick have been loss-making from the start as the Irish airline invested heavily in marketing and cut-price promotional fares. It has faced significant competition from British low-cost carrier Easy Jet, which has a large base there, while demand has softened due to the recession.
Aer Lingus is operating flights from Gatwick to 13 European destinations, including Dublin and Knock. In June, the airline said it had sold more than 400,000 flights on its services from Gatwick and it had a market share of 24 per cent at the London airport at that time. But average fares are believed to have been low.
The opening of the Gatwick base was announced in December 2008. At the time, Aer Lingus said it would position the airline for “profitable growth in Europe’s largest aviation market”. But a price war with Easy Jet has placed significant pressure on average fares and resulted in this U-turn.
At the time of the launch, Aer Lingus said it would invest £100 million in the base, creating 120 jobs.
Last May, Michael O’Leary, the chief executive of Ryanair, Aer Lingus’s biggest shareholder, described his rival’s load factors in Gatwick as “dire” and predicted that the Gatwick base would close.
In an investor call yesterday, Mr O’Leary said he believed Aer Lingus was reviewing the future of its bases at Belfast and Gatwick – the only two that it operates outside the Republic.
Aer Lingus’s new chief executive Christoph Mueller appears keen to refocus the airline’s strategy, concentrating on profitable routes from its home market in Ireland and expanding its code-sharing partnerships and alliances with other airlines.
