Aer Lingus, Ireland's national airline which is negotiating to axe 15 per cent of its staff, today unveiled a 9.7 per cent slide in third-quarter revenues and cautioned that mounting costs and "challenging conditions" meant it would have to make further cuts.

The year-on-year revenue slide in the three months to the end of September came as a 7 per cent increase in passenger numbers was more than offset by average fares per passenger falling 17.6 per cent.

The former state airline has cut the number of long-haul flights and passenger numbers on long haul fell 13.2 per cent while short-haul numbers rose 10 per cent. But long-haul average fares dropped 18 per cent.

The carrier's load factor — the proportion of seats filled per flight — rose by 1.3 percentage points to 80.4 per cent.

The company said: "The actions taken to remove capacity on underperforming parts of the network has had a positive impact on stabilising load factors and yields while reducing operating costs."

Having terminated the lease of one of its A330 aircraft last month it said today that it would take another A330 airline out of long haul service, bringing its winter fleet to five jets and next year's summer fleet would be no more than six-strong.

The airline, which has twice fended off hostile approaches from its arch domestic rival, Ryanair, added: "While the fall in yield year on year continues, the pace of decline in average fares does not appear to be accelerating currently."

It said: "The business continues to experience challenging conditions... Higher fuel prices, airport and navigation charges together with further expected GDP declines and unemployment increases in our major markets, will mean we must continue to reduce any costs within our control."

Its net cash reduced 39 per cent in the nine months to the end of September to €400 million (£356 million).

Christoph Mueller, the new chief executive, who took the controls on 1 September, unveiled plans to axe 676 staff last month and cut the pay of others in a move designed to cut €74 million from its wage bill and further measures to cut €23 million from non-staff costs. Unions have said that they will fight this plan but Mr Mueller's team expect negotiations with staff and unions over the changes to be concluded around November 18.

It has also put a number of its aircraft up for sale or sale and leaseback and said that it had received a number of expressions of interest.

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