Aer Lingus "to launch cost cuts"

Way open for third Ryanair takeover bid 

Irish carrier Aer Lingus is to launch cost cutting measures after it reported a €93m operating loss in the first half of the year.

The loss could trigger a third takeover by low cost rival Ryanair as ASer Lingus shareholders may be more likely to part with their stakes.

After the loss was announced, Ryanair, a 29% stakeholder in Aer Lingus, called on Irish regulators to explain why they had "allowed the Board of Aer Lingus to mislead shareholders."

Aer Lingus' share price closed at €0.52 last night, well below Ryanair's failed takeover offer of €1.40 per share earlier this year.

After its second takeover bid failed earlier this year, Ryanair alleged items in Aer Lingus' takeover defence document were false including claims of profitability and growth.

Aer Lingus' incoming ceo Christian Mueller now plans to single out areas where belts can be tightened including its workforce.

He will examine both staff and non-staff areas before presenting the plan to the airline's trades unions, Reuters said.

Aer Lingus has faced increasing competition from low cost rivals like Ryanair, resulting in declining traffic and seat revenues.

Analysts said Aer Lingus may need to find €130m in savings, about 10% of its cost base.

A spokesman for airline workers’ union SIPTU said it expected a cost cutting proposal but was yet to receive any details.

During the second takeover bid, Aer Lingus called Ryanair's takeover offer "a rip off" and urged shareholders to reject the bid.

Aer Lingus told shareholders to expect growth in the long haul market and a return to profitability this year.

Ryanair has been highly critical of Aer Lingus' management even before it was forced to write down its investment at a cost of around €300m.

In June Aer Lingus announced it would slash capacity by up to a quarter this winter after suffering heavy losses and falling demand.

The airline reported a pre-tax loss of €105m in March, prompting a sharp drop in share value.

www.aerlingus.com  www.ryanair.com