Aer Lingus accounts show improvements

AER Lingus published its results for the first half of the year this week, claiming the axing of transatlantic routes from Shannon was a positive for the airline, even though the industrial action by Impact more than negated it.

“Profit comparisons were assisted by the effect of the Greenfield cost savings programme, which began at the end of Q1 2010. The Q1 2011 operating result also benefited from the suspension of Shannon long-haul flying, which had been uneconomic.
“However, these positive effects were more than offset by the substantial losses and disruption caused by the IMPACT cabin crew dispute at the start of this year, as well as difficult demand conditions, particularly on leisure routes from Ireland.”
The beginning of Aer Lingus Regional services to the UK has provided a boost to Shannon and the report stated that Aer Lingus Regional has “continued to trade in line with management expectations”.
The results show Aer Lingus recorded a loss before tax of €14.2 million in the first half of this year, compared to a loss of €20.8m in the first half of last year. It had a strong performance in the second quarter, with an operating profit of €25.9m recorded and a profit before tax of €42.2m. Total passenger numbers were up by over 8% compared to the second quarter of last year but the comparative quarterly performance was helped by the absence of airspace closures similar to those caused by the Icelandic ash cloud in 2010.
Redundancies and other measures to reduce spending made an impact in the first half of the year, according to the financial review.
“Staff costs (excluding the impact of business transformation charges reported within net exceptional items), which represented 21.4% of operating costs, decreased by 5.9% to €127.7m primarily as a result of a decline in headcount and the full period effect of Greenfield measures implemented in 2010. These measures included the flow through from the salary reduction as agreed as part of Greenfield and implemented at the end of Q1 2010.”
Aer Lingus CEO, Christoph Mueller said he is quite optimistic about the rest of 2011, despite the challenging economic climate.
“Although economic conditions in Ireland remain challenging we are pleased with the booking profile for the rest of the year and we are positive about our trading prospects for the remainder of 2011. We expect revenue growth in the second half to be broadly similar to that of the first six months. As a result, we are more positive about the profitability of the business in 2011 than we were at the start of the year.
“Our ability to generate returns in the current environment reflects the changes we have made to our business model over the past two years, including a demand-led network strategy, focus on revenue per seat and implementation of the Greenfield cost reduction programme. We continue to believe that Aer Lingus is a valuable business. We have a strong balance sheet with high levels of cash, a modern fleet and a high quality product. These combine with our relatively low cost base to create profitable short and long haul networks,” Mr Mueller said.