Both I and my officials remain in constant contact with Aer Lingus on matters relating to its survival plan. I met the chairman last week for an update. He advised me that while a degree of stability has emerged, market conditions continue to be difficult in the international aviation sector and the airline remains vulnerable to external shocks. The challenge to remain competitive is ongoing and unrelenting in this difficult sector.
The chairman also advised me that significant progress summarised as follows has been made in relation to the plan: the 25% reduction in capacity came into effect with the introduction of the winter flight schedules and will continue into the summer season; the voluntary severance/early retirement programme is proceeding satisfactorily; extensive work practice and other changes as set out in the survival plan are being implemented to yield the required cost savings; and a number of non-essential assets have been sold.
Furthermore, the survival plan has been assisted by aggressive cost management and a recovery in the volume of sales due to fare promotion initiatives and the upgraded Internet facility. The board will consider the 2001 accounts at its meeting today. I understand that due to the progress on survival plan measures outlined earlier, the results for the year will show an improvement on the projected substantial loss at the operational level in the survival plan. However, I am also advised that significant exceptional costs arose in 2001 with the result that a large overall loss will arise for the year.
In relation to performance in 2002, I am advised that there has been a recovery in traffic volumes on the transatlantic route, but yields are considerably below budget projections and previous year levels. In addition, market conditions on some European routes are reported as difficult. On the other hand, notwithstanding the current difficulties, Aer Lingus continues to monitor opportunities for new and more profitable services within the constraints of existing resources.