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.

When Lufthansa bought earlier this year BMI Airline, they didn’t take into account that the company may be facing such major problems. The airline has a permanent of 4,500 workforce and it’s fighting to survive since is forced to shutdown seven services operating out of Europe and nine aircraft from its fleet of 39 planes.

Flights from Heathrow to Brussels, Tel Aviv, Kiev and Aleppo will be suspended in January. The service from Heathrow to Amsterdam will be also suspended in March 2010. Seasonal services from Heathrow to Palma and Venice will not be reinstated next summer. BMI will continue to offer services from London to Brussels through an arrangement made possible with Brussels Airlines.

Airline analysts believe it could lose as much as £200m this year.

It’s pretty much obvious, that at least for now, BMI has postponed its plans of expanding and entering more markets, blaming the economic slowdown for its problems.

BMI is the second largest airline at London Heathrow, one of the world’s busiest and best-connected international airports. From the Heathrow hub BMI operates services in the UK, Europe, the Middle East, Central Asia and Africa. Former known as British Midland, it was rebranded bmi British Midland in 2001, which was subsequently shortened to bmi two years later. In 2002, bmibaby, a low-cost subsidiary with its own unique brand, was launched.

Most of the job cuts will take place at Japan Airlines International Co., which operates all JAL flights, according to Kyodo News.

The additional job cuts (4,000 more than it was announced) will involve the sale of equity stakes in JAL Hotels Co. and consolidating subsidiaries from abroad of the JALPAK Co. travel agency.

JAL also made a formal request to banks to write off or convert their $2.7 billion in loans into equity, as a plan to return profitability to the company. The plan for the restructuring is to be released at the end of the month.

In the statement issued, AEA told reuters:

“August produced another negative figure in the relentless series of traffic decreases which stretches back to November 2008. The latest result was minus 1.8 percent in passenger kilometres and minus 3.5 percent in passenger boardings. The preliminary outlook for September is for a figure worse than in August, at about minus 3 percent (in passenger-kilometres).”

The forecast is that European airlines face a “paradigm shift with far-reaching and irrevocable consequences.” The combined loss for the entire 2009 is set to be as much as US$4.3 billion. It is also said that 34,000 European airline jobs will be lost by the end of 2009.

Among the measure recommended by the association to reduce charges that might reflect in airline tickets is increasing access to credit to fund fleet renewal programs. Will we have to pay more for flying with our favorite airline? If the trend continue, we just might have to.