The beleaguered Aer Lingus may relocate from Ireland to UK

Aer Lingus, the former state-owned flag-carrier airline of the Republic of Ireland, is likely to shift its operations to the United Kingdom with a view to cutting costs and also escaping from labour-union problems.

The struggling Aer Lingus has applied to the Civil Aviation Authority of the United Kingdom for a UK operating licence and to move its operations either to London or Belfast, The Wall Street Journal has reported.

If permission is granted, Aer Lingus could relocate its entire corporate headquarters either to London or Belfast, as well as virtually start afresh and require that its employees re-apply for their jobs under the new ‘Aer Lingus UK’ entity.

Right now, Aer Lingus, based at Dublin Airport, is holding negotiations with its labour unions over cutting 676 jobs through “voluntary” layoffs, with the company taking the stand that it has to make $150 million in savings by the end of 2011 in order to “stay alive.”

Reports say that Aer Lingus also has warned that if job cuts were not implemented by November 30, 2009, it would be compelled to resort to an alternative plan to reduce the size of the airline through reduction in routes as well as compulsory layoffs.

Aer Lingus has complained that it has a big problem with the pilot of its long-haul flights who earn up to $500,000 a year on the trans-Atlantic route, in addition to the ‘golden pension’ plans. Pilots of Ryanair, the low-cost carrier based in Ireland, say that they are paid only about half of that amount.

According to aviation observers, by relocating to Belfast International Airport or to London’s Gatwick International Airport, Aer Lingus will be in apposition to compel all of its pilots, who number about 500, to re-apply to the new company for jobs.

Meanwhile, Aer Lingus is currently facing its worst crisis regarding funding ever since the airline’s inception in 1936.

The company had revealed a week ago that its revenues declined by 10% in the third quarter of 2009, compared with the third quarter of 2008.

BBC quoted one aviation analyst as saying that the cash reserves of Aer Lingus is depleting steadily, prompting the company to speed up its attempts to reduce costs drastically, including job-cuts.

The company says that its cash reserves at the end of September 2009 were around $600 million – a 39% decrease from December 2008.

To add to its woes, Aer Lingus is also plagued by the global economic recession, which has hit hard airlines all over the world.

The worst-hit are Aer Lingus’ long-haul trans-Atlantic flights – especially the flights from Dublin and London to cities in the United States like New York, San Francisco, Chicago and Boston – mainly since the weak dollar makes prices in Europe very  expensive for the Americans.

In October 2009, Christoph Mueller, chief executive of Aer Lingus, had sketched out plans for job cuts which would result in doing away with 676 jobs from the company’s total workforce of about 4,000.

Some reports say that the airline may sell some of its planes, possibly 8 Airbus aircraft, as a part of its efforts to get out of the red.