Aer Lingus has produced a set of results which underline the serious financial crisis the State airline is facing. A profit of €79.9 million in 2000 became an operating loss of €50.4 million last year.
After one-off items, the net loss for the year was almost €140 million. Within these figures is a €100 million cost for implementing a radical restructuring plan, mainly representing the cost of 2,000 redundancies. The plan still has some way to go. The company's chief executive, Mr Willie Walsh, says a further €130 million must be cut from costs, to add to the €190 million in cost reductions to date. Profitability is not likely until next year.
The challenge facing Aer Lingus is daunting: it is to maintain a viable commercial airline which can compete in a cut-throat environment against lean competitors and still overcome adverse market condition.
To its credit, despite poor results, there are signs the company is beginning to turn its fortunes around. Yesterday's results show the airline has reduced its staff to 4,500, abandoned unprofitable routes and launched new ones. It has also reconfigured its business, moving from being a full service airline to one which can trade in both the high and cheaper ends of the market.
Moving to this position has not been without pain. Foot and mouth disease, the slowdown in the economy and the collapse in the business market have taken their toll. A series of damaging confrontations with employees, most recently the dispute with the pilots, led to a shutdown of the airline for several days.
With a further €130 million in cost reductions to be found, it is inevitable that there will be some industrial relations differences. However, it behoves both unions and management to ensure it does not translate into further work stoppages.
Mr Walsh said yesterday the only way to build a sustainable business for the future was to reduce costs relentlessly and provide lower fares and a quality service. Doing this and bringing its 4,500 staff along, will be the airline's biggest single challenge. If it can achieve this, Aer Lingus could become a template for how to successfully restructure State companies.