September 2022, Virtual
September 29 2022, Virtual
Now in its 27th year, the Business Travel Awards
Spectre of Ryanair looming
Aer Lingus risks being taken over by rival Ryanair unless staff agree to cost cuts, the new head of Aer Lingus warned.
In an interview with the Financial Times, Christoph Mueller, who has been the ceo of the Irish national carrier since September, was quoted as saying: "If Aer Lingus isn't capable of mastering its own destiny, then of course the likelihood that some form of non-independence might occur is more likely."
When asked if this meant a takeover by Ryanair, Mr Mueller said: "Yes."
Ryanair, Europe's biggest low cost carrier, has made two hostile attempts to buy its Irish rival, both of which failed. Under Irish takeover rules, Ryanair, which has a 29.82% stake in Aer Lingus, could make a new bid in January.
But its ceo Michael O'Leary said in September that while it was prepared to invest more money and "rescue" its rival, a third takeover bid was "highly unlikely".
Its second bid of €748m - €1.40 per share - was rejected earlier this year by the then Aer Lingus board as a "rip off".
"I know that it is the desire of all our employees to stay independent and that is the reason I feel obliged to do everything I possibly can to reach an agreement with the unions," Mr Mueller told the FT.
"One group of employees is resisting and bringing Aer Lingus closer to a situation where we might lose our independence."
Aer Lingus has already announced route cuts and up to 1,000 compulsory redundancies after talks with unions failed earlier this month.
The airline had aimed to save €97m under its Transformation Plan, drawn up after the arrival of Mr Mueller and instigated in October, which would have meant voluntary redundancies and €23m in non-staff outgoings.
But in talks with unions representing pilots and cabin crew, the airline failed to reach an agreement by the airline-imposed deadline of November 30.
Mr Mueller said: "Instead of sustainable savings of a structural nature, only temporary savings over a short few years were offered by IALPA (the Irish Airline Pilots Association).
"Aer Lingus was asked for very high compensation in return.
"Our pilot compensation and productivity remains out of line with the compensation and productivity of our competitors."
Mr Mueller said most staff understood that the airline had to make "significant and urgent change if it is to have an independent and successful financial future."
Aer Lingus, reported a 9.7% fall in revenue between July and September this year.
It said cash flow since the end of December 2008 had fallen 38.8% to €399.9m by the end of September.
This drop was due in part to €107m re-structuring costs and a final payment for two new A330 aircraft.
www.aerlingus.com www.ialpa.net www.ryanair.com