The Aer Lingus board last night endorsed the rescue plan drawn up by management to save the troubled state airline. The directors also confirmed the appointment of Mr Willie Walsh as chief executive.
Mr Walsh (39) is the current chief operations officer and a former chief executive of Futura Air, the charter airline that is 85 per cent owned by Aer Lingus. Mr Walsh started his career with the airline as a pilot.
In a statement issued last night, Aer Lingus chairman Mr Tom Mulcahy said: "I am confident that Willie Walsh, with his strong reputation for driving change combined with an intimate knowledge of the airline business, will lead Aer Lingus through the fundamental restructuring required to build a strong, flexible and viable business capable of operating successfully in today's transformed airline industry environment."
It is understood that the board took legal advice on whether or not they should allow the airline to continue trading, given its difficulties. The directors could face prosecution for reckless trading if they allowed Aer Lingus to trade on without a realistic prospect of survival.
Aer Lingus management, led by Mr Walsh, will start briefing its 6,300 workers on the plan today. Some 2,500 of them will be made redundant when it is implemented. Aer Lingus says it will lose almost £200 million (€254 million) between now and the end of next year if the remedial measures are not taken. The plan, drawn up with the aid of outside consultants, will cut operations by 25 per cent and staff by 40 per cent. Substantial improvements in productivity - in the form of new work practices - will be demanded of the remaining staff.
The plan does not make any allowance for redundancy payments and the company has made it clear that the Government will have to fund a redundancy package if there is to be one. The Minister for Public Enterprise, Ms O'Rourke, is expected to ask her cabinet colleagues next Tuesday to approve a State guarantee for new loans for Aer Lingus, subject to European Commission approval. The Government's commitment was a crucial factor in the board's decision to endorse the rescue plan.
Union representatives met Commission officials yesterday to discuss the situation. Ms Kay Garvey, the secretary of the Central Representative Council, said that the Government "had not been vigorous enough in its actions in presenting the case for strategic investment in Aer Lingus".
She said that Commission officials "seemed unaware of the urgency of the situation facing Aer Lingus and the importance of transatlantic traffic to the airline and Ireland's economy".
The Taoiseach is expected to raise the issue of further state aid for the national airline at a meeting of EU leaders in the Belgian town of Ghent today. Commission sources have said that the State may be able to help Aer Lingus even though Transport Commissioner Ms Loyola de Palacio is opposed to any aid for Aer Lingus that goes beyond a general package announced by the Commission this week.
