Aer Lingus to cut 670 jobs in cost-cutting plan

DUBLIN

Irish airline Aer Lingus announced Tuesday it will cut 670 jobs as part of its long-postponed plan to slash more than euro90 million ($125 million) from annual operating costs and keep the business from facing bankruptcy or takeover.

Chief executive officer Christoph Mueller announced the cuts after unions representing the 3,500-strong work force completed balloting on whether to accept the airline's cutbacks, which were proposed last year.

Four unions representing pilots, maintenance, craft and administration staff accepted the plans, which include 10 percent pay cuts for many workers. But the union representing cabin crews rejected the terms on offer -- and Mueller warned they could face even sharper cuts in response.

"Someone who votes `no' to a proposition should not get an easier way out than the ones who have voted in favor," said Mueller, a German airline executive who took charge of Ireland's flag carrier last year. He added, however, that "retaliation is not our business."

He said 230 cabin-crew employees would be fired, while 440 workers in the other sectors would receive generous compensation packages for voluntarily quitting.

He said cabin-crew workers being laid off would get "no sweetheart deal," but confirmed the company would negotiate layoff terms with the cabin crews' union, Impact.

Earlier Tuesday, Aer Lingus postponed publication of its annual results because of the uncertainty overhanging its cost-cutting plans. It did release a trading statement that documented the company's soaring losses in 2009.

Aer Lingus said sales fell 11 percent to euro1.2 billion, chiefly because of heavy discounting of fares. It recorded an operating loss of euro81 million versus euro20 million in 2008. The airline offered no net figures.

Europe's major budget carrier Ryanair, already the largest Aer Lingus shareholder with a 30 percent stake, expects eventually to acquire its smaller Irish rival. But Aer Lingus -- which inherited healthy cash reserves when the government privatized it in 2007 -- still has euro335 million in net cash, barely half of its 2008 level.