Bill Hurley says his trip to Ireland is 'the best Christmas present ever.'

Aer Lingus says it is moving closer to its threat of moving its headquarters out of the Republic after it says talks with the pilots' union failed.

The Irish airline has applied for a UK Air Operator’s Certificate, which would allow it to move to cheaper bases in Gatwick and Belfast.

Airline bosses say they will have no choice if pilots and cabin crew refuse to allow pay cuts.

However, corporate affairs director Enda Corneille said the move could take a "number of months."

Speaking to the Times in London, Corneille said: “We are going through the process with the Civil Aviation Authority, which will give us the opportunity to reflag the airlines and fly them from the UK so that Dublin would become somewhere to fly to rather than from.”

Corneille said that this would mean Aer Lingus could pay pilots the same rate which the airline's Gatwick-based pilots are paid at.

Aer Lingus chief executive Christoph Mueller says the pilots union will also be responsible for further job cuts.

Mueller said that the planned lay-off of 676 people could reach more than 1,000 because the Irish Air Line Pilots’ Association and cabin crew are not agreeing to pay cuts for those earning more €35,000 ($53,000).

He said Aer Lingus was already planning lay-offs because they are cutting back their long-haul fleet from six aircraft to four and its short-haul jets by up to five to 28. “It is very likely that these redundancies will commence immediately and will be compulsory,” he said. 

Mueller blamed the pilots’ union for the failure of the pay talks saying that they insisted on temporary wage cuts for a “few short years” and “very high compensation”.

Mueller said he wanted permanent pay cuts. “Our pilot compensation and productivity remain out of line with the compensation and productivity of our competitors," he told the Times.

“I wanted to prove that a unionised airline — Aer Lingus — could be turned around in Ireland ... On this occasion, it has not been possible to reach agreement with all our employee groups and we must now take whatever actions are necessary to stabilise the business, in the interests of Aer Lingus, its customers, the majority of its employees and its shareholders.”

In November, Aer Lingus reported third-quarter revenues down nearly 10 per cent and that long-haul passenger numbers were down 13 per cent while its losses in the first two quaters were $123 million.