Profits at Aer Lingus are expected to fall this year by £45 million compared to 2000, its directors were told yesterday.
At an unscheduled board meeting to discuss what one insider described as a "very, very serious and severe downturn in business", the State airline warned directors that the outlook was bleak.
While the company expected a profit this year of £50 million, it now estimates that this will fall to £15 million. It is believed to have made a £60 million profit in 2000.
Its £50 million target for 2001 allowed for a £30 million increase in operating costs, reflecting pay rises for staff, some of which have not yet been agreed.
The likely fall in profit was attributed to work stoppages linked to pay disputes and to a drop in bookings due to the foot-and-mouth crisis in Britain and the economic slowdown in the US. These leave the airline facing the first downturn in profits since recovering from the financial crisis which almost closed it in the mid-1990s.
The reduced estimation was conditional on no further foot-and-mouth outbreaks in the Republic and no further escalation of the epidemic in Britain.
In a statement, the company said: "A further deterioration in any one of a number of factors could have the most serious consequences for the profitability of the company."
The board meeting took place while pay talks with pilots continued at the Labour Relations Commission and while the Labour Court sought to avert a strike next Thursday by 3,000 clerical and operative staff represented by SIPTU.
Pilots are seeking a 70 per cent pay rise. Clerical and operative staff, who reached a pay agreement with the company last year, want further increases to "catch up" with deals granted to cabin crew.
Two stoppages by clerical and operative workers in the past fortnight have cost the airline £4 million in lost revenues.
An additional £4 million was lost due to a 20 per cent fall in bookings from Britain, France and Germany because of foot-and-mouth.
The airline has also lost about 5 per cent of US bookings due to the slowdown in the economy there. This is regarded as a grave development because transatlantic routes have a disproportionately positive impact on Aer Lingus profit margins.
The airline's board yesterday agreed to suspend recruitment; to pursue an aggressive reduction of all costs; to review schedules to match capacity; to revise forecasts; and to match staffing, overtime and other resources to those revisions.
A spokesman said: "These initial steps are aimed at stabilising the current situation. Depending on the extent and duration of some of the external and internal factors, further action may be necessary."
The company has appointed Mr Pat Casey to the new position of group human resources director. Mr Casey takes up his position next month.
