Aer Lingus to reduce fares further even as it strives to cut costs

Aer Lingus, the airline based at Dublin, Ireland, had decided to cut its fares further. The move is seen by aviation experts as an effort to compete with budget carriers even as Aer Lingus has forecast losses amounting to at least €65 million in 2009.

The website irishtimes.com has reported that Aer Lingus is planning to “offer better deals on flights to drive customer volumes.”

In August 2008, the airline had announced a first-half operating loss of 22.3 million euros and said it would need “fundamental changes in its operating cost base in order to minimise losses next year.”

According to aviation analysts, Aer Lingus is planning to cut capacity and costs at a time when it is battling rivals, including Ryanair, Europe’s largest budget carrier that is twice as cost-efficient, carries five times as many passengers and has almost three times the cash.

The management of Aer Lingus said at meetings with its main labour unions: “The difficult market conditions would continue despite a reduction in the cost of fuel from over $120 ($87) a barrel to $100 ($72) in recent weeks as the majority of key markets are in recession. Losses will be €65 million in 2009 if the price of fuel stayed at its current level. This would be far less than the €100 million anticipated when results for the first half of the year were announced.”

In its ‘2009 Market Outlook,’ Aer Lingus says that it expects operating losses of around €23 million in 2008 “at best.”

The management of Aer Lingus has been pondering a variety of plans to reduce losses and make savings since the airline announced a comprehensive review of its operations after disclosing losses of as much as €22 million for the first half of 2008.

Among the cost-cutting proposals that the management is considering is outsourcing of 1,300 ground-handling staff at airports at Dublin, Cork and Shannon. However, the airline’s labour unions are sternly opposing this move.

The Irish media has reported that the management of Aer Lingus is holding talks with suppliers, including Servisair, an aircraft ground handling company that operates at 175 airports worldwide. There has also been speculation that the airline might hire US cabin crew on trans-Atlantic flights to make extra savings.

Other proposed plans at savings include a new deal on passenger charges at Shannon airport during the winter season.

Also, Aer Lingus is reportedly considering cancelling the stopover at Shannon airport from its Dublin to Chicago service.

In a statement, Aer Lingus said: “The carrier will proceed with a cost reduction programme to deliver the substantial savings that are necessary to ensure its long-term viability as an independent airline. The board has agreed the need for this fundamental change in the cost base to ensure that the company remains competitive and is appropriately positioned to take advantage of future growth opportunities.”

“Aer Lingus,” the statement continued, “is committed to delivering these cost savings as a matter of urgency and the management will meet with staff and their representatives next week to discuss how the savings will be achieved.”