Aer Lingus is examining the idea of spinning-off its entire long haul operation and flying for the first time into Ryanair-style secondary airports throughout Europe as it seeks to prevent its cash pile dwindling to as low as €250m by year end.

The Sunday Tribune understands that the idea of separating out its entire long haul division will be examined as part of a review of the company's structure and cost base.

The idea of long-haul no longer being part of a core Aer Lingus operation would be highly controversial with the government which traditionally insists the airline provide air links to vital cities like New York.

However senior management believe the idea could be possible in the "medium term''.

The airline, which last week unveiled a half-year operating loss of €93m, believes that market estimates that its cash could fall to €300m by year end, may be too optimistic. Depending on what pay cuts can be agreed with unions, at least 500 jobs losses are expected before the year ends. However if pay cuts are not agreed to at certain levels, the job losses will be considerably higher.

A senior Aer Lingus source said the company would not do a "full blown Ryanair'' on its choice of airports, but would seek a new mix of traditional hubs and secondary locations where lower landing charges can be obtained. There is no chance of the airline moving out of key destinations like London Heathrow or Paris Charles de Gaulle, but at smaller cities the airline would move to secondary airports.

Complicating this strategy is that Ryanair already has a presence in many of the secondary airports and Aer Lingus has traditionally avoided taking on Michael O'Leary's carrier directly. The cost of airport charges must be addressed, the airline said last week. Airport charges rose by 7% in the first half despite the airline reducing capacity across its network.

As reported by this newspaper two weeks ago, the airline is no longer able to finance aircraft deliveries via traditional aircraft financing deals. As a result it may have to pay in cash for deliveries next year.

It is hoping to convert some A330 orders into A350 orders and in that way delivery times can be pushed back several years.

23rd August 2009 - Aer Lingus unveil huge cuts as banks halt funds
23rd August 2009 - Job cuts bring Aer Lingus back to earth