View Full Version : Aer Lingus "on brink of meltdown"!

The Guvnor
8th Apr 2001, 12:42
From today's Sunday Times

<font face="Verdana, Arial, Helvetica" size="2">
AER LINGUS may be forced to shut down if its staff keep
striking, directors at the airline will be told tomorrow. At an
emergency meeting, the board is expected to discuss the
closing of several routes as well as retrenchments.

Informed sources say the 65-year-old company, which narrowly
escaped bankruptcy seven years ago, is in dire financial
difficulty. At a recent board meeting, directors were informed
that the airline, which made 60m profit last year, could slip
into losses. That stark message is to be conveyed to the
government this week, in what will be a strongly-worded profit

"Complete closure is the nuclear option, but clearly the
company is at risk," said a government source. "It cannot
operate forever in these circumstances."

Wage settlements with striking employees are expected to
cost an extra 30m a year, while foot and mouth disease and a
downturn in the American economy could dent revenues by a
similar amount. Airline traffic to Britain and the Continent has
fallen by 20% in recent weeks, and the number of passengers
on transatlantic flights has dropped by 5%. Bookings for the
summer season, usually the busiest time for airlines, point to a
further deterioration.

"If things do not pick up, the consequences could be very
severe. Another outbreak of foot and mouth, for instance, would
be devastating," said a senior company source.

He added that the airline was likely to close a number of leisure
routes in the near term, and cut flights on others. Job losses
were also in prospect.

The airline's problems are, to some extent, of its own making.
Management at the company conceded generous pay
increases to cabin crew early on, opening the door to a flood of
copycat claims. So far, they have done deals with stewards
and hostesses, administration and front-of-house staff, as well
as cleaning and catering workers. The airline's pilots have
submitted a me-too request for an increase that would put them
on a par with counterparts at British Airways.

Critics say that Michael Foley, a high-flyer parachuted in as
chief executive last year, has been too soft on unions and was
naive to suppose he could ring-fence a deal with cabin crew. If
strikes continue to cripple the company, his position could
become untenable.

Aer Lingus has, to some extent, fallen prey to a battle for
market share between Siptu and Impact, the two unions
operating at the airport. With the latter poaching members from
the former, both have become increasingly militant, with each
attempting to outshine the other in terms of pay awards.

Every striking day costs the airline up to 3m, and that is
without counting the long-term cost of lost loyalty.

Internal strife at the airline has been compounded by a
deterioration in the external economic climate. A slowdown in
America, notably in the high-tech sector, which has close links
to Ireland, has led to a drop in business bookings, while foot
and mouth has caused a drop in leisure travel.

Aer Lingus's flotation, a vital part of future growth plans, is now
off the agenda. The company can no longer go cap in hand to
the government, traditionally its favoured method of raising
money, and private investors are unlikely to respond favourably
to requests for cash.

"We were depending on flotation money to cover the cost of
expansion," said one director. "Now we have the overheads,
without any chance of raising the money." Aer Lingus's
expansion plans were to be financed by up to 1 billion in
borrowings and cash, and will now almost certainly have to be
put on hold.

Such a dramatic decline in fortunes is not unusual for airlines.
The industry is notoriously volatile and a number of household
names have gone to the wall in a matter of months during
economically turbulent times in the past.

Aer Lingus itself has experienced more than a few crises. The
state airline came close to bankruptcy in 1994, and was only
saved by a 175m hand-out from the government.

It implemented a rescue programme, named after its chairman,
Bernie Cahill, that shaved 50m off annual costs and cut the
workforce by 1,200. </font>

8th Apr 2001, 14:25
So cut staff costs is the answer (it always is)


Ireland is going though a time of very very high growth. People are emigrating to Ireland, the reverse of the last few hundred years.The effect of this is the highest inflation in the eu plus a real increase in general living standards.

There is no way the airline can cut its self off from this, if the wages do not follow the
rest of the economy the airline will lose most of its staff. So big pay deals are needed,and big fair increases. If the market will not take the increases then the airline will have to cut back. People who leave will easily get a job in the Dublin area,probably for more money.

But in the Ireland of today low pay increases = NO workers.

Celtic Emerald
9th Apr 2001, 02:33
Yes the question is are EI going to destroy itself from within.

While the whole country has pulled together and made sacrifices to prevent foor and mouth permeating the country what do Are Lingus employees do but shout me me I want when the company is in serious crisis. Three factors are effecting the companies future profitability, firstly the downturn in the US economy (bookings for summer flights are down 20pc), secondly the foot & mouth containment & thirdly every one-day stoppage costs the airline 3m.
The company has agreed already to pay wage increases totalling 20m & when pension costs & other settlements are added on it is likely to have a wage bill which is 30 higher than last year.
How much money does it have to spend. In 1999 it made operatring profits of 58m & for last year profits of approx 60m. If all the pay demands were met it would cost about 50m to 60m. The company set profit targets for this year based on an increased bill of 30m & still hoped to make a profit of over 58m but that is all pipe dreams now along with its plans for a stock market flotation.

If the current situation continues the company is on track to make no profit this year & possibly lose money!

The company in the meantime is attempting to finalise deals with five different groups within the company representing 5,000 employees. The largest group consists of 1,500 clerical workers & a similar number of operatives, with also 1,600 cabin crew, 500 pilots & 150 mid management personnel all looking for their piece of the cake.
The people who will suffer in the long run from Aer Lingus's emploees behaviour are the employees themselves. The brand name which has taken yeasrs to build up is being badly damaged by these strikes.

I appreciate & sympathise with many of EI's staff & feel many of their grievances have been justified but is now the time to air them. The strikes are financially crippling the company. Maybe they would be better to wait to settle their grievances at a more appropriate time then let a culture of me feinery drag the companies profitability down to such a dangerous state & possibly jeopardise their own jobs and the company itself.

Is it worth that? I don't think so.

Nuke them
9th Apr 2001, 02:47
Celtic Emerald,

I once worked for them. Lowest paid job I ever had flying airplanes. Worst working conditions of any airline I know. Aer Lingus have the highest productivity of airline piots in Europe. Management regularly bragged about it at conferences.

How come they never had the highest profits in the business??

It's not because of overpaid pilots or cabin crew. Its because they have a management structure that is so top end heavy. Some efficient airlines ten times the size have less managers, and that's a fact.

Now, I left because I couldn't live on a copilots salary there. Why should the workers be blamed?

9th Apr 2001, 03:41
Quite right. Aer Lingus management have invested all their energy for years in frustrating the staffs attempts to make any sort of progress on even the most minor issues, let alone pay rates. Now the level of dissatisfaction and frustration is boiling over.

They've created a monstrous mess.

9th Apr 2001, 04:04
Cost attributable to Flt OPS is 4% of total airline cost, 9% in BA 11% in AA.
The Captain who left his 777 in the mud in CDG yesterday earns in excess of $350,000pa and has a pension fund of over $3m if he's done his 30 years.

If the airline meltsdown and fails it will not be due to paying the staff excessive salaries.

[This message has been edited by Maxfli (edited 09 April 2001).]

The Guvnor
9th Apr 2001, 12:03

Ryanair is making tons of money, without government interference.

Aer Lingus is losing tons of money, with government interference.

Is there, possibly, a relationship? :) :) :)

EI - E I - O
9th Apr 2001, 13:17
Yes RyanAir is turning over a lot of money, but the fact is that the money people @ FR classify maintenance as an asset. In other words if they put 2-3 million into one of their clapped out JT-8's, its put on the books as being worth an extra 2-3 million after overhaul, may work on papar, but in reality it's a no-no, and time will tell. How can 30-50 million in maintenance costs, P.A. be recorded as an asset, simple, float the company and hide it in the end of year reports, shareholders are happy, what else matters. Do not get me wrong, I admire the sheer brass neck FR management have, but facts are facts.
I am not a big Aer Fungus fan, but there once was a time when pay and conditions were excellent, but that all changed in the early nineties and the government still have a sting in their tail for EI.
I sincerely hope the airline is not sacrificed out of a deadly combination of Greed and Stubborness. Aer Lingus is one of the Few truely Irish Owned Companies left, and that with me counts for something.

Good luck guys (and Gals) but "Thread Softly"

13th Apr 2001, 00:58
I heard today that Aer Lingus marketing was instructed to cease all advertising during the last six or eight weeks because of the Foot & Mouth scare...government wanted to be seen to be 'standing tough'. After first month the Aer Lingus board asked to be allowed commence advertising again. government said NO.

Meantime B.Midland and Ryanair are going hell for leather with the ads.

Major damage to 'Lingus traffic reported.

To quote the Guvnor;

<font face="Verdana, Arial, Helvetica" size="2">Ryanair is making tons of money, without government interference.

Aer Lingus is losing tons of money, with government interference.

Is there, possibly, a relationship?

What do you think??

dick badcock
14th Apr 2001, 02:19
Way too much management, way too much red tape, way too much government, way too much job protection, way too many empty seats on the A330s between EIDW and EINN. Look at SAS, they are in as much trouble: 53 unions, and 50% government owned! SIPTU (a trade union) is soooo poor that when they can't negotiate good pay deals, they let IMPACT (another union) do it for another group and then move on to the scene asking for the same increases!! Go SIPTU!

14th Apr 2001, 03:23
Are we in trouble? Why am I always the last to know?

Hugh Jeego
14th Apr 2001, 08:11

Leave the plane keys at the office...take the phones off the hook...turn off the cellphones and just get amnesia about the rosters..if it dont fly the suits get worried and if it gets bloody the suits go not the troops!

Get tough guys and girls and the BMW brigade will be history. Lets face it an airline without aircraft that flies isnt an airline at all!!!!

All the best


14th Apr 2001, 18:31
hugh,hugh,hugh...that's not how it works here at aer fungus...management under-crew aircraft( they do that with their ever so famous 2 week roster the second week being a shadow roster subject to change so in fact nobody really knows what they're doing until a week before)...you go sick or get roster amnesia the lad on reserve gets called to do your flight, he misses his golf game on saturday morning, and tells the lad he's flying with friday afternoon what a ***** you are for having screwed up his plans for the week-end, very interested in this bit of goss the 2 of them go out for a couple of pints and meet up with another crew that and you both get into a irish game called 'water the poison seed'....by the time they get back to EIDW the whole fleet knows who went sick on the fateful day......another day in the land of the begrudgers........the company thrives on it.