The BBC quotes Tomasi as stating that the staff reductions are necessary to make the company "artistically and financially viable in the long term." Salaries and other costs for ENO's current 450 employees amount to Ô£20 million in annual fixed costs, according to The Independent — 72% of the company's total expenditure and more than 1¼ times its annual grant from the Arts Council of England. ENO management fears that the company will face another financial crisis if, as expected, the Arts Council reduces its subsidy.

ENO has faced serious financial crises more than once in the past decade, receiving a three-year, Ô£10 million bailout in 1999 and another Ô£10 million, three-year "stabilization" payment from National Lottery funds beginning in 2003 (at which time the company cut 75 positions). "After two previous bail-outs totaling almost Ô£20 million," said a statement from ENO quoted in the Financial Times, "we are very clear that we will not be bailed out again."

Discussion with the various unions representing ENO employees — over changes in work rules as well as the job reductions — are expected to begin this week.

BECTU, the union which represents technical and support staff, vowed to battle any cuts, with general secretary Gerry Morrissey saying to The Independent, "It seems as if management is wanting to casualise its workforce" [i.e., switch to temporary, per-project staff].

The British branch of the performers' union Equity said that it was "appalled" by the announcement and would rule out no action in response. "The chorus very responsibly agreed to cut back on jobs three years ago in order to sustain the long-term future of the chorus," said an Equity spokesperson quoted by The Independent. "It's astonishing to us that so soon after that, ENO should come back with proposals for further cuts."

A further cost-cutting measure is reportedly on the table: according to The Daily Telegraph, ENO is considering renting out its home theater, the Coliseum in London, to outside performers for an additional five weeks per year. Those five weeks would presumably come out of the company's own season.

The BBC and Independent reports suggest that ENO anticipates reduced funding from the Arts Council in upcoming years, as the British government diverts money from the performing arts to preparations for the 2012 Olympics in London.

At least one observer, however, suggests that the situation is more serious: John Allison, editor of Opera magazine, told the Financial Times that "It's an open secret that the Arts Council has been looking for an excuse to close ENO for a long time, and it's getting dangerously close."