Major Job Cuts in Store for Buzz

Low-cost Irish airline Ryanair today said that as many as a fifth of the workforce at newly acquired Buzz would lose their jobs, as it reported record profits for the third quarter of last year.

Ryanair's passenger numbers increased 46% to 3.9 million, boosted by an 8% cut in fares and a million free seats promotional offer in October. Revenues increased by 37%, while operating costs fell 28%. As a result, net profit increased by 50% to 43.2m euros (£28.5m).

But there was unsettling news for the staff at Buzz, which is being bought for £15m, from KLM, the Dutch flag carrier. Ryanair's deputy chief executive, Howard Millar, disclosed that as many as a fifth of the Buzz workforce would go, following a re-organisation of the 570-strong company.

Earlier, Ryanair chief executive Michael O'Leary confirmed that Buzz would not be integrated into Ryanair after next month's completion of the takeover - the company's first - but would continue to fly its 12 aircraft under its own name. However, Buzz would cut its fares by between 50% and 60% and be marketed through the Irish airline's website.

Ryanair's spectacular growth, underlined last week by its decision to buy new Boeing aircraft, has aroused concern that it is courting trouble by expanding so fast.

But the outspoken Mr O'Leary brushed aside those concerns. He said Ryanair was continuing to limit any risks associated with capacity growth by spreading it across its network, launching new bases, new routes from existing bases, and increasing frequency on existing routes.

Directly addressing City warnings of overweening ambition, Mr O'Leary said: "We are aware that some commentators fear that we are biting off more than we can chew. We are conscious of this but one cannot always control the timing of opportunities that present themselves."

Mr O'Leary said that he expected to become the largest international scheduled airline by passenger numbers in the next two years.

"In the coming year, we expect to carry 24 million international passengers," he said, "which means we will pass out Air France as the third largest international scheduled airline. And in the following year, we will be running neck-and-neck with Lufthansa and BA... There's a scary thought. We are going to borrow the BA advertising slogan as 'the world's favourite airline', put a line through BA and say 'Oh no you are not - the Paddies are'."

In buying Buzz, Ryanair has recaptured the top spot in the discount airline market, which was taken by EasyJet last year when it bought Go from BA for £374m.