AER LINGUS'S share price closed down by just under 1 per cent in Dublin yesterday in spite of the company securing agreement from staff on a plan that will yield annual cost savings of €50 million for the airline.
The agreement with members of Siptu and Impact will see at least 200 ground handling staff and cabin crew leave the airline in the near future, according to the airline. Aer Lingus will then employ about 3,500 workers.
"The big thing is that it's a transformational change and means that Aer Lingus can compete now even better in the future going forward against all of the competition that we face in the Irish market," Aer Lingus chief executive Dermot Mannion said yesterday.
"This means we will be even more on Ryanair's tail in the future than in the past."
Aer Lingus's shares closed yesterday in Dublin at €1.54. This is 14 cents or 10 per cent above the €1.40-a-share offer made by Ryanair for Aer Lingus last week and suggests that Michael O'Leary will have to increase his bid significantly if he hopes to gain control of his Irish rival.
Mr Mannion said on RTÉ Radio yesterday morning that Aer Lingus was looking at developing its short-haul services in 2009 and was planning to open its first overseas aircraft bases.
"We are looking at opportunities for short-haul growth everywhere," he said. "We have now got a cost base that we can leverage in all of our existing bases - Dublin, Cork, Shannon and Belfast.
"We are also looking at bases outside the jurisdiction. We are talking about a campaign of growth in 2009 and beyond, and in due course we will be making the announcements to support that."
In its offer last week, Ryanair, which already owns 29.8 per cent of its rival, said it would double the size of Aer Lingus's short-haul fleet and create 1,000 new jobs, primarily by opening new bases in Britain and continental Europe.
Mr Mannion said the cost savings agreed with staff would also allow Aer Lingus to readjust its financial forecasts for 2009. These revisions would be announced shortly, he added. Analysts are predicting an operating loss of more than €50 million in 2009.
Mr Mannion told RTÉ he never meets Ryanair chief executive Michael O'Leary. "We don't because we are major competitors and I don't think it's appropriate."
Mr Mannion said Aer Lingus would reveal its defence strategy once Ryanair formally released its offer document which is expected to be published within the next week to 10 days. Aer Lingus will have 14 days to issue its defence.
According to Mr Mannion, "there is no doubt that the Aer Lingus brand would be damaged by an association with Ryanair because we are the airline that provides a little bit extra".
He rejected Mr O'Leary's assertion last weekend that comparing Ryanair to Aer Lingus was like comparing English Premier League champions Manchester United to Burnley.
"In this marketplace we are almost of equal size, so a comparison of Manchester United and Liverpool in this market would be more valid."
