Irish airline Aer Lingus started cutting jobs and unprofitable routes after failure to reach an agreement with its union. The company is said to cut €97m worth of costs a year by 2011, by slashing 700 jobs and reducing staff salaries.

Chief executive Christoph Mueller said an agreement with unions has been reached for a “transformation plan” but pilots and cabin crew met this proposal with resistance. Without having an agreement, he will take whatever measures are necessary to ensure stability of the business, adding that redundancies are very likely.

“We have narrowed the gap with most union groups on the achievement of sustainable savings and this has brought us very close to signature with them. Instead of sustainable savings of a structural nature, only temporary savings over a short few years were offered by IALPA (pilots). Aer Lingus was asked for very high compensation in return,” Mueller stated.

It remains to be seen what are the routes that are unprofitable. The company launched 6 new routes including London – Bucharest last month.