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Aer Lingus cost review won't touch staff for now

Aer Lingus's chief executive officer said the airline would look at trying to reduce its fuel bill and would lobby the Dublin Airport Authority to reverse its 39-per-cent increase in airport charges.

Haydn West/AFP/Getty Images/Haydn West/AFP/Getty Images

Ireland's Aer Lingus will try for reductions in airport charges and fuel costs before it considers another round of job and pay cuts, the airline said on Friday.

Faced with "awful" economic conditions in its home market, higher fuel costs and constant pressure from its larger and leaner rival Ryanair, Aer Lingus is considering ramping up existing cost-cutting measures to cement its hard-won return to profit.

Chief executive officer Christoph Mueller told reporters on the sidelines of the company's annual meeting that the group was not about to replicate its existing cost-cutting program, known as "Greenfield," which has saved it €72-million ($103-million U.S.) but triggered an expensive bout of industrial action earlier in the year.

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"We will first and foremost address those costs which have increased," Mr. Mueller said.

"To just look on staff cost savings is a little too early. There are many more costs to be addressed. We have pledged that the staff would not be approached before 2012. We feel committed to that pledge, so we have to find other ways to address our increasing cost base."

Mr. Mueller said the company would look at trying to reduce its fuel bill and would lobby the Dublin Airport Authority to reverse its 39-per-cent increase in airport charges. It will update investors on its progress in early June.

Earlier, the company's chairman told investors that Aer Lingus, which returned to operating profit last year, had some way to go before it could consider paying them a dividend.

"We had a relatively good year last year but we have a long, long way to go," Colm Barrington said. "Economic conditions in Ireland are awful, fuel prices have been rising very significantly, and the euro has been rising.

"We are not out of the woods yet, and we think it would be premature to pay a dividend, and it would be damaging to Aer Lingus and its shareholders if we paid a dividend at the present time."

The company's stock has risen around 20 per cent since hitting a nine-month low of 70 cents at the end of March, helped by a government-sponsored report published in April which recommended that the state sell its 25-per-cent stake in the airline.

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A government minister has said Dublin is unlikely to sell any state assets this year, and Mr. Mueller said rumours that the government had been approached about its holding were speculation.

"There is a lot of speculation. There are denials from the different [government]departments. I take that for granted. The rest appears to be speculation," Mr. Mueller said.

Ryanair, which has a near 30-per-cent stake in the company and has had two hostile bids for Aer Lingus rebuffed, said it had not made a fresh offer.

"We haven't made a new bid," Finance Director Howard Millar, who attended the Aer Lingus annual meeting and berated its management for failing to pay a dividend, told reporters.

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