BUSINESS OPINION:IF IT was not for the prospect of losing €100 million next year, the current crisis gripping the airline industry could almost be said to suit Aer Lingus, writes John McManus

Just over three weeks ago Seán Coyle took up the post of chief financial officer at Aer Lingus.

Coyle has joined from Ryanair where he was director of scheduled revenue and was heavily involved in sweating Ryanair's fleet.

His appointment - something of a coup for Aer Lingus's chief executive Dermot Mannion - is the clearest indicator yet that Aer Lingus does not see a long-term future for itself unless it can match the cost bases of rivals such as Ryanair and easyJet.

As the outgoing chairman of Aer Lingus, John Sharman, pointed out when Coyle's appointment was announced, "challenging times bring unique opportunities". And one of the opportunities is the chance to drive through some cost-cutting at Aer Lingus that otherwise would be inconceivable.

It's clear from the comments made last week that Aer Lingus management are not planning to respond to present difficulties by looking to trim a few million here or a few million there. They are going for the big one.

They have in their sights the work practices, pay grades and other State-company legacies which go a long way to explaining the difference in costs between Aer Lingus and the likes of Ryanair.

Persuading its staff of the need for this sort of fundamental reform at the same time as you are sitting on €800 million in cash is a pretty hard sell, notwithstanding the daily torrent of bad news in the aviation industry.

The difficulties experienced by Aer Lingus in getting through the last cost-cutting measures contained in the current package - PCI 07 - which sought only €20 million in savings, only confirms the scale of the challenge facing the Aer Lingus management if they are serious about shaving €100 million off the airline's costs.

But it might be possible in the context of the blood bath that some are forecasting for the airline industry in the remainder of this year and early next year. Or better still, in a climate of fear created by the anticipation of an apocalypse that never quite arrives.

It would appear, however, that on this occasion Aer Lingus management are not exaggerating the scale of the crisis the airline faces.

There does appear to be consensus among analysts that Aer Lingus does face a pretty tough time, although obviously the analysts are relying the company's own projections.

Goodbody Stockbrokers is anticipating losses of €25 million this year and €70 million next year on the basis of management guidance.

Goodbody also notes the strength of the company's balance sheet and that it is better placed than most of its peers to weather the coming storms, with its shares trading at close to the net cash-per-share value.

NCB is predicting losses of €35-40 million this year and up to €90 million next year.

Davy is talking about operating losses of €20-30 million for the full year.

The key variable in all these forecasts is, of course, the price of aviation fuel. And while the management of Aer Lingus has to be conservative and assume it's going to remain high next year, the extent of the crisis faced by Aer Lingus, and thus the need for the sort of radical surgery now being called for, depends really on your view of where oil prices are going. And that, as they say, is another story. But if oil was to come back significantly, a lot of the red figures turn black once again and the hopes of getting Aer Lingus staff to accept further cuts diminish.

Although they probably don't see it quite this way, the management of Aer Lingus are in the peculiar position of needing things to be bad enough to enable them to convince staff of the necessity to embrace, finally and fully, the low-cost culture that is the best guarantee of some sort of long-term future for the company.