Aer Lingus, the loss-making Irish airline, yesterday said it planned to save €97 million a year by 2011, largely by cutting nearly 700 jobs and staff pay.
The world's commercial airlines have struggled in the face of a spreading global recession that has curbed demand for flying.
British Airways on Tuesday said it would cut 1,700 jobs and freeze pay in its latest action to stem losses.
Aer Lingus' new chief executive Christoph Mueller yesterday described the company's outlook as "poor," adding that no "near-term recovery" was expected. "Against this backdrop, Aer Lingus cannot continue with an operating cost base, which is structurally uncompetitive when compared to that of its closest peers," added Mr Mueller who began his term as chief executive on October 1.
Aer Lingus said in a statement that it planned to reduce operating costs, excluding fuel, by €97 million per annum by 2011, including staff cost savings of €74 million.
The group said it would axe 676 positions in two stages.
"Changes in staff numbers resulting from a reduced flight schedule and changes to work practices are expected to result in a surplus of approximately 489 positions in operational areas and some support areas," it added.
Aer Lingus also plans to axe 187 staff during a second cull.
The airline meanwhile said staff keeping their jobs would be required to take a pay cut as the airline "cannot survive in a situation where staff are paid significantly more and operate less efficiently than comparable positions at its peers".
It added: "Significant operating cost savings have been identified through... banded reductions in basic pay for staff whose basic pay exceeds €35,000 per annum and reduced variable pay and allowances for all staff."
Aer Lingus' net losses more than tripled in the first half of 2009, as the global economic downturn curbed demand for air travel, the carrier had announced in August.
It suffered a net loss of €73.9 million in the six months to June. That compared with a loss after tax of €21.6 million in the same period of 2008.
Revenues tumbled 12.2 per cent to €555 million on the back of lower passenger fares and cargo revenues.
Aer Lingus last month appointed Mr Mueller, former aviation director at travel group TUI Travel, as its chief executive.