DUBLIN, Oct 18 (Reuters) - Ireland's Aer Lingus must push through severe cost savings announced earlier this month if it is to survive, the country's Transport Minister and 25 percent stake-holder Noel Dempsey said on Sunday.
Aer Lingus, which has been rapidly been burning through its cash reserves, is to cut almost a fifth of its 4,000 staff to reduce annual operating costs by 97 million euros ($145 million) by 2011.
However, its shareholder structure has been a stumbling block to reform in the past and could hamper the implementation of the plan, which the airline wants to complete by Nov. 18.
'Aer Lingus is faced with a very fundamental question - survival or a continuation for perhaps maybe two years. I don't think there's any choice any more,' Transport Minister Noel Dempsey told national broadcaster RTE.
'There is little doubt in my mind having seen how the cash has been burned up in Aer Lingus over the last 12 months that unless they get the savings of up to 100 million euros, we will not be talking about an Aer Lingus in a few years time.'
Irish rival Ryanair has a nearly 30 percent stake in Aer Lingus, while the government and Aer Lingus staff, past and present, own 25 percent and 14 percent, respectively. Unions are also represented on the airline's board.
Aer Lingus said it was bracing itself for possible strikes after the SIPTU and UNITE trade unions, which represent ground staff and technical workers at the company, opposed the cuts.
The IMPACT trade union which represents hundreds of Aer Lingus cabin crew and pilots said the proposals were as severe as expected and that it would consider its response.
'I think they should sit down and should talk ... It's a huge difficulty for the company and the workforce in the company, but the choice is fairly stark -- to carry on with the reforms as outlined or as modified during talks,' Dempsey said.
Asked if he supported the management in bringing in the cuts, the minister said: 'I support the fact that they have to reorganise, they have to change, they have to be able to compete and I would also be very supportive of both sides sitting down, working through those cuts and achieving what they need to achieve.'
Aer Lingus, which has fended off two hostile bids from Ryanair, one of the most cost-efficient players in the industry, is driving through the reforms to compete with thriftier airlines.
(Reporting by Padraic Halpin, editing by Will Waterman)
($1=.6702 Euro) Keywords: AERLINGUS/ (padraic.halpin@reuters.com; Reuters Messaging: padraic.halpin.reuters.com@reuters.net; +353 1 500 1504) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Aer Lingus, which has been rapidly been burning through its cash reserves, is to cut almost a fifth of its 4,000 staff to reduce annual operating costs by 97 million euros ($145 million) by 2011.
However, its shareholder structure has been a stumbling block to reform in the past and could hamper the implementation of the plan, which the airline wants to complete by Nov. 18.
'Aer Lingus is faced with a very fundamental question - survival or a continuation for perhaps maybe two years. I don't think there's any choice any more,' Transport Minister Noel Dempsey told national broadcaster RTE.
'There is little doubt in my mind having seen how the cash has been burned up in Aer Lingus over the last 12 months that unless they get the savings of up to 100 million euros, we will not be talking about an Aer Lingus in a few years time.'
Irish rival Ryanair has a nearly 30 percent stake in Aer Lingus, while the government and Aer Lingus staff, past and present, own 25 percent and 14 percent, respectively. Unions are also represented on the airline's board.
Aer Lingus said it was bracing itself for possible strikes after the SIPTU and UNITE trade unions, which represent ground staff and technical workers at the company, opposed the cuts.
The IMPACT trade union which represents hundreds of Aer Lingus cabin crew and pilots said the proposals were as severe as expected and that it would consider its response.
'I think they should sit down and should talk ... It's a huge difficulty for the company and the workforce in the company, but the choice is fairly stark -- to carry on with the reforms as outlined or as modified during talks,' Dempsey said.
Asked if he supported the management in bringing in the cuts, the minister said: 'I support the fact that they have to reorganise, they have to change, they have to be able to compete and I would also be very supportive of both sides sitting down, working through those cuts and achieving what they need to achieve.'
Aer Lingus, which has fended off two hostile bids from Ryanair, one of the most cost-efficient players in the industry, is driving through the reforms to compete with thriftier airlines.
(Reporting by Padraic Halpin, editing by Will Waterman)
($1=.6702 Euro) Keywords: AERLINGUS/ (padraic.halpin@reuters.com; Reuters Messaging: padraic.halpin.reuters.com@reuters.net; +353 1 500 1504) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
