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Aer Lingus €100 Cost-cutting plan..

  • 14-09-2008 5:00pm
    #1
    Celtic Mech
    Registered Users Posts: 246 ✭✭


    Posted in The Independent
    Link: http://www.independent.ie/business/irish/aer-lingus-to-shed-1300-in-8364100m-savings-plan-1475190.html

    Aer Lingus to shed 1,300 in €100m savings plan


    By Louise McBride

    Sunday September 14 2008

    AER Lingus is set to pull the plug on all 1,300 ground staff working in Irish airports in a dramatic bid for survival.

    The Sunday Independent has learned that the airline, which is under pressure to save €100m in costs, is in talks to outsource all ground staff in Dublin, Cork and Shannon airports.

    Aer Lingus baggage handlers and catering staff will not be the only ones affected -- the airline is also planning to outsource its check-in staff, as well as loaders and staff working in the cargo terminal.

    The move, which is part of the airline's cost cutting review, is expected to be announced at the end of this month. It would mean the airline would no longer directly employ ground staff in Irish airports.

    The rising cost of fuel - where oil prices almost doubled in price over the last year -- has played havoc with airlines across Europe and Aer Lingus is no exception. Stockbrokers believe the airline could lose between €25m and €40m this year, and as much as €90m next year.

    The outsourcing talks are being held with a number of suppliers, including Servisair, which offers ground handling services at over 140 airports worldwide. Although the exact details of the outsourcing deal have still to be ironed out, this paper understands that the airline is unlikely to backtrack on its move. Sources close to the talks believe the outsourcing will kick in in early 2009. It is likely that Aer Lingus staff will be given the option to transfer to the new supplier or leave the airline with a severance package, although these details also need to be finalised.

    Earlier this month, the chief executive of Aer Lingus, Dermot Mannion, warned that fundamental changes were needed to prevent a €100m operating loss in 2009. It costs Aer Lingus about €80 a seat to carry passengers on short-haul flights, compared to €60 for Easyjet and €40 for Ryanair.

    Last Friday, thousands of Irish holidaymakers were left stranded after the British tour operator, XL Leisure Group, went bust. The operator blamed the credit crunch and rising oil prices for its woes.

    - Louise McBride


Comments

  • #2
    Foggy43
    Registered Users, Registered Users 2 Posts: 1,321 ✭✭✭Foggy43


    'Outsource.' This word nowadays always hangs over any pay negotiations. Aer Lingus have probably deliberately leaked this story to see what the reaction will be.

    This is the thing about the stock exchange! It decides your future. I would be completely lost on how it works but I do know you must look after the share holders. If they do not make money they will sell their shares thus putting Aer Lingus in a very dangerous area. I suppose we must wait till tomorrow to see if there is any reaction on the Dublin stock exchange. If it looks really bad Aer Lingus can release a statement to calm thing down.


  • #3
    Tenger
    Moderators, Motoring & Transport Moderators Posts: 9,920 Mod ✭✭✭✭Tenger


    Foggy43 wrote: »
    Aer Lingus have probably deliberately leaked this story to see what the reaction will be..................................... I suppose we must wait till tomorrow to see if there is any reaction on the Dublin stock exchange. If it looks really bad Aer Lingus can release a statement to calm thing down.

    Looks like Louise McBride of the Sindo reads the FT (4th Sep) too. Great journalism there

    The figures quoted for the cost of seats is exactly as written in that paper! She fails to mention that EI cannot be easily compared to EX or FR as EI operate two fleets of different aircraft types on a mixed long/short haul operation. FR have single fleet and single market ops, EZ are getting close to single fleet but are still single market ops. A better analogy would be BMI.

    Losses of €22M does not take into account the recent savings in work practises and maintenance contracts which will impact on the second half of 2008 and into 2009. (Annual savings of €40M ) SO EI have published stand alone figures that do not give a true refelction of the current situaion.

    Operating losses of €22.3M were mainly due to the sharp rise of 48% in fuels costs. However fuel has dropped back to $107 per barrel from highs of over $130 so this drain of finances has self rectified. For the last 3 months we have heard so much about the impact of oil prices,I wonder will Mannion keep mentioning this now that the prices has dropped?

    At the start of July Aer Lingus had a net balance of €803M, At the same time in 2007 the balance was approx €750M. So compared to other European airlines EI is in a relatively good position financially.

    Dermot Mannion mentions the need for "fundamental changes.....everything is under review" How about his salary as he has hugely underperformed in his time at EI, also no mention of the large numbers of 'managers' in EI who don't actually deal with paying pax or frontline staff. While outsourcing will deliver short term savings in the long term pax satisfaction will drop,loads will drops and the ailrine will collapse. Look at SouthWest in the states who rely on their loyal staff to keep pax satisfaction high.

    100M savings by outsourcing all ground staff; Please file in the dictionary/thesaurus under 'throwing the baby out with the bath water'


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