(Tuesday, 12th May 2009) eircom today announced that it has reached an accord with the eircom union representatives regarding stage one of the company’s restructuring programme.

The agreement includes a group wide freeze on base pay for two years until June 2011, reductions in the order of 25% for certain staff allowances such as in subsistence and mileage rates and the elimination of other traditional arrangements.

There will be no performance related annual bonus payments this year and the next two years. This will be reviewed at the end of the financial results on 30th June 2010. Other performance related bonus/commission payments are also under review.

In addition, headcount will be reduced by 1,200 by 30th June 2011. This will cover employees as well as contract staff.

 The accord was shared with staff today.

 Further engagement on additional costs saving measures will commence immediately. eircom is seeking cost savings of €130m per annum by 2010/2011. This includes the changes secured or acknowledged under the accord and other initiatives underway.

 Stage two cost reductions have a target completion date of 1st July 2009.

 Commenting on the agreement, Cathal Magee, Acting Group CEO said, "The company and the union representatives have demonstrated the willingness to make difficult but necessary decisions to ensure the long term competitiveness of eircom. Today’s announcement is an important first step. Management recognises the very significant impact of the current economic environment and is committed to securing far reaching cost reductions, and an overall vision and strategy framework for the business."

ENDS