More than 500 employees at Shannon airport have been given to the middle of next month to accept a voluntary redundancy package aimed at reducing the workforce by 220.

A "survival plan" for the airport, circulated to staff by the Dublin Airport Authority (DAA), says that over the next 10 years Shannon faces a €137 million accumulated loss unless radical measures are immediately taken.

Shannon airport is on course to make a profit of € 3 million this year but only as a result of a significant contribution from US military traffic. The DAA points out that in the preceding three years, the airport has made an accumulated loss of €9.3 million due to its high cost base.

By 2014, the DAA states the airport will have an accumulated loss of €137 million, excluding interest on existing debt. The authority's report also states that the airport will require €85 million in capital expenditure over the next 10 years.

In its eight-page document, the DAA states that the current situation is "unsustainable". "This serious underlying financial crisis is untenable to both management of Shannon and the DAA." In order to break even in 2014, the DAA proposes outsourcing functions from a number of areas including aspects of security, support services, airport operations, corporate affairs and commercial services and to exit from catering.

The DAA states that the direct provision of catering by an airport operator is almost unique in the industry, noting it will cost €5.6 million to upgrade facilities when only limited funds are available. The DAA also states that, to ensure that Shannon "has a commercially viable future", the airport must generate new traffic streams, have voluntary redundancies, flexibility on work practices and non-core activities, and rigorous management of costs.

The DAA has warned that the severance package will only be available if the measures can be agreed and substantially implemented by year end. The DAA's director of management for change at Shannon, John Horgan, has commenced a series of meetings with staff.

A Siptu spokesman said yesterday that the union would under no circumstances discuss the proposal to outsource functions at Shannon airport. He said: "This is akin to the Irish Ferries situation and outsourcing is not up for discussion. The DAA is proposing to outsource functions from profitable areas of the airport, which is nonsensical."