Aer Lingus records €81m loss

AER Lingus recorded an operating loss of €81 million in 2009, the airline revealed this week.
Some weeks ago the airline’s CEO Christoph Mueller outlined some of the difficulties Aer Lingus was facing from Shannon and stated that it was reviewing its services.
According to the airline’s figures there was a loss of €93 million in the first half of 2009, but there was a profit of €6 million in the second six months.
The airlines passenger numbers increased from 10 million to 10.4 million, but the average fare for the year declined by almost 17%.
In a statement Aer Lingus claimed that its success in the current year is likely to depend on how its cost saving programme goes.
“The group’s full year performance in 2010 is heavily dependent on the successful implementation of the Cost Reduction Programme. The group has commenced implementation of the programme and acknowledges the support shown by all staff unions for the cost saving proposals. Although the group has experienced a slight delay in commencing certain elements of the programme, it nonetheless still expects to achieve staff cost savings of €40 million (exit run rate of €50 million) in 2010 provided there is no disruption to service over the remainder of 2010.”
The start of the year has been promising, it claimed. “Aer Lingus’ operating result for the first three months of 2010 is better than prior the year. It is too early in the year to comment on the full year outlook for 2010. Gross cash balances have increased since the beginning of the year.”
Commenting on the figures, Aer Lingus CEO Christoph Mueller said, “2009 was a very difficult year for the group with total revenues declining by 11% in the face of recession in each of our major markets. The increase in the operating loss, before exception items, to €81 million, reflects the tough markets faced by the group.
“Implementation of the Cost Reduction Programme remains vital to realign the cost base of the Group. We recognise that elements of the Cost Reduction Programme will involve significant sacrifices by our staff and we gratefully acknowledge the support of the five trade union groups that voted to support the Cost Reduction Programme. We are pleased that we successfully achieved agreement on the crucial measures required to return the group to profitability without experiencing any disruption to our passengers.”
In a letter to Tony Killeen in early March, Mr Mueller stated that there were difficulties with services from Shannon and that Aer Lingus is reviewing its operations.
“The Shannon market is an extremely seasonal one and in the case of the New York route, Aer Lingus has lost money every winter for the last 10 years and has made a profit over a full year in only two out of the last 10 years. The performance on Boston has been marginally better. Despite what you may believe to be the case, profitability from Dublin is equally challenging in the current environment. As we set out at a recent investor day, Aer Lingus is a demand led business.
“We must serve the markets where passenger demand exists. In this regard we are currently carrying out a comprehensive review of our long haul and short haul network in the context of our short and medium term schedule planning. This review is expected to be complete within the next six weeks. While I am also cognisant of the importance of connectivity to the region, Aer Lingus must serve market in the most efficient manner.
“We will continue to work closely with the Shannon Airport Authority and the various tourism interests so that we can continue to serve Shannon and the wider region to the benefit of all stakeholders.”