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Aer Lingus cuts may not be enough to stem losses

Aer Lingus is in the throes of implementing a cost cutting plan. But the €97 million that has been earmarked for cuts might not be enough.

Fuel costs, the economy, a three-week cabin crew strike and late Easter break all contributed to an operating loss of almost €56 million in the first three months of the year.

Christoph Mueller, the carrier's chief executive, said that the initial months of 2011 had been challenging.

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"Our performance was affected by the Impact cabin crew disruption in January and February, as well as difficult demand conditions, particularly on leisure routes from Ireland. While we still expect that Aer Lingus will be profitable in 2011, we expect that the level of profitability will be much lower than in 2010," he said.

"In light of the continued weakness of the Irish economy and pressures on non-controllable costs, we are assessing whether the Greenfield cost reduction program is sufficient to protect profitability for the future or whether further measures are required," Mueller added.

That program envisaged over 650 voluntary redundancies, pay cuts and a pay freeze for Aer Lingus employees.