Aer Lingus Faces €55M Bill from Pilots’ Industrial Action

4 months ago Editor

Aer Lingus is grappling with a €55 million financial hit due to a recent pilots’ pay dispute, coupled with intensified competition on North American routes. The airline’s operating profit dropped significantly, prompting a review of its cost structure and network, including regional airports like Cork and Shannon.

Aer Lingus is confronting a substantial financial burden of at least €55 million following the conclusion of a pilots’ pay dispute, which resulted in a 17.75% pay increase for the pilots. The airline attributed this financial strain and intensified competition on North American routes for a €29 million drop in operating profit to €92 million for the three months ending in June, compared to the previous year. The profit for the first half of 2024 decreased by €31 million to €9 million.

The industrial action’s direct financial cost is expected to impact the business significantly in the second and third quarters, not accounting for the potential impact on future bookings. Aer Lingus is currently reassessing its cost base and network in light of ongoing competition and the 32 million annual passenger limit at Dublin Airport.

Lynn Embleton, CEO of Aer Lingus, highlighted that the review would encompass regional airports, including Cork and Shannon, which lack the connectivity between long and short-haul flights available at Dublin. This poses challenges for growth in these regional locations.

The airline noted that North American airlines increased seat capacity on Dublin routes by 20% this summer, affecting Aer Lingus’s profitability from transatlantic flights, though business class revenues remained strong.

Luis Gallego, CEO of International Airlines Group (IAG), Aer Lingus’s parent company, confirmed that Aer Lingus is again considered for new Airbus jets that could reduce long-haul flying costs. The outcome will be decided later this year.

The recent pay agreement with pilots has spurred cabin and ground crew unions to seek further discussions with Aer Lingus, aiming to renegotiate their terms. Ictu, representing various staff unions, will request a meeting with the airline in the coming weeks to address these issues.

IAG also announced the termination of a deal to acquire the remaining 80% of Air Europa, opting to pay a €50 million break fee. Gallego stated that this decision was in the best interest of IAG’s shareholders.