DUBLIN - Aer Lingus Group PLC will slash its workforce by almost one-fifth and reduce wages for better-paid employees as the Irish airline seeks to cut costs and survive the recession.
A total of 676 positions will be eliminated, and salaries of more than $51,000 a year will be reduced, Aer Lingus said yesterday.
Chief executive Christoph Mueller said that the outlook for Ireland’s second-biggest carrier is poor and that more jobs may have to go to ensure the company’s viability.
Airlines may lose a combined $11 billion this year, the International Air Transport Association says.
Aer Lingus has been hit particularly hard as the Irish economy shrinks a projected 7.8 percent, with September traffic falling 4.5 percent from a year earlier.
“While difficult to swallow, these proposals offer the best shot at survival,’’ Joe Gill, an analyst at Bloxham Stockbrokers in Dublin, wrote in a note. The projected savings amount to 10 percent of nonfuel costs, he said.
Aer Lingus currently has 3,879 employees.
The carrier, which has fended off two takeover bids from a larger Irish rival and shareholder, Ryanair Holdings PLC, will cut 489 posts linked to flight operations, mainly among cabin crew, as it cuts routes and frequencies and alters work methods.
Increased use of technology will also result in the elimination of 187 office jobs, and all told the headcount of head office and support workers will drop by about 40 percent.
The company will cut 100 pilots, 229 cabin crew, and 110 ground staff from its main bases in Ireland, chief financial officer Sean Coyle told reporters in Dublin.
Pay will be cut by 10 percent for those earning more than $51,000 a year.
“Aer Lingus cannot continue with an operating cost base which is structurally uncompetitive when compared to that of its closest peers,’’ Mueller said.
The company will also fundamentally change work practices and is reviewing its pension plan with the aim of cutting costs, he said.
The Impact labor union, representing 1,500 Aer Lingus employees, said in a statement that the plan was “radical and severe,’’ with the proposed job losses for cabin crew “deeply unfair and devastating.’’
John Mattimoe, an analyst at Merrion Capital in Dublin, said that the savings strategy was positive and that “the alternative would have been going bust.’’
If the airline cannot agree on the cuts with staff by Nov. 18, it will have to fire workers, cut routes, and consider selling assets, Coyle said.