Aer Lingus : Update on Cost Reduction Plan

The Board of Directors of Aer Lingus met today to review progress on its objective of delivering €97million of cost savings required as part of its Transformation Plan (the 'Plan') announced on 7 October 2009.

Since the announcement of the Plan on 7 October, and as outlined in the Interim Management Statement of 9 November, it is clear the operating environment for Aer Lingus and airlines generally remains extremely challenging. In this context the Board has today re-affirmed that if Aer Lingus is to maintain its present scale of operations, it is essential that it urgently achieve the full €97million in savings as outlined in the Plan.

The Company has accepted an invitation from the National Implementation Body to conclude negotiations with employee representatives under the auspices of the Labour Relations Commission ('LRC').

At the conclusion of these talks on 30th November, the Board and Management will meet to review the results. In the event that the required €97million savings have not been agreed in full, the Board and Management will proceed to implement an alternative means of delivering the savings within the same timeframe set out under the Plan.

These alternative means will include further reductions in capacity resulting from an uneconomic cost base, which in turn will lead to additional redundancies beyond those included in the Plan. While the preference will be for such redundancies to be on a voluntary basis, compulsory redundancies cannot be ruled out.

The Board will closely monitor progress at the LRC talks over the coming week