Irish carrier Aer Lingus (EI, Dublin Int'l) has admitted that its short-haul operations are 'structurally unsustainable' and that it is facing increased competition from Ryanair, Norwegian, and other low-cost carriers. Ireland's Independent newspaper has seen a copy of a report submitted by Aer Lingus to the Labour Court in which it outlines the reasons it cannot concede to a staff payrise totalling EUR107 million (USD125 million).

Trade unions have asked for pay increases of 5% per year for three years and a profit share. Aer Lingus claims that this would be a 29% increase in staff costs, and that staff currently earn considerably more than their counterparts in easyJet (U2, London Luton).

Trade unions reject Aer Lingus' claim that it is surviving on marginal profits, pointing out that the airline's profits have almost doubled from EUR124 million (USD125 million) in 2015 to EUR233 million (USD272 million) in 2016. However, the airline says that profits have been driven by lower operational costs, such as a decline in fuel prices.

The 49-page document highlights other troubles faced by the Irish carrier, particularly with increasing competition from Ryanair and Norwegian Air International (D8, Dublin Int'l), as well as legacy US carriers, and other expanding competitors such as WOW air, Icelandair, WestJet, Air Transat, and Air Canada rouge. It notes Norwegian's plans to increase its widebody fleet to thirty-two by 2018.

"Furthermore, Ryanair is targeting its growth on primary airports as well as secondary airports. This means that Aer Lingus faces a greater proportion of direct 'same airport to same airport' competition," the Aer Lingus submission says. "This is significant to Aer Lingus as the Aer Lingus cost per ASK [available seat kilometres] excluding fuel is 5.16 euro cents (USD0.06) as compared to Ryanair at 2.1 euro cents (USD0.025), so Ryanair's cost base is less than half the level of Aer Lingus."

Aer Lingus then goes on to say that short-haul operations have "delivered cumulative losses between 2008 and 2015" rendering them "structurally unstable due to the higher cost of employment and lower productivity levels when compared with direct and genre competitors."

Aer Lingus is part of the IAG International Airlines Group – alongside British Airways (BA, London Heathrow), Iberia (IB, Madrid Barajas), and Vueling Airlines (VY, Barcelona El Prat) – which just posted a EUR27 million (USD31.6 million) profit after tax for 1Q17, a decrease of EUR77 million (USD90 million) in the period.