Aer Lingus aims high as airline drastically cuts losses
Published 25/08/2010 | 05:00
Aer Lingus is planning to introduce new fare formats, bolster efforts to raise ancillary revenue and further develop a US partnership after it moved further towards financial recovery during the second quarter of the year.
The airline recorded a pre-exceptional operating profit of nearly €19m in the three months to the end of June, compared with a loss of €18.2m in the corresponding quarter in 2009, with the performance aided by lower operating costs as the carrier spent less on fuel and staff.
The second quarter is typically one of the strongest for the airline as it moves into the summer season.
Chief executive Christoph Mueller reiterated yesterday that the airline remained on course to deliver at least a break-even performance for the full-year period at an operating level.
However, he added that it was "premature" to forecast the expected performance for 2011, citing a stubbornly high unemployment rate in Ireland that limits overall consumer discretionary spending power.
He also confirmed that the airline was exploring the possibility of expanding its fledgling agreement with US-based United Airlines.
The pair began the joint operation of a Washington DC-Madrid service last March and it has proved successful. A second aircraft is expected to be added to the service next year, while Mr Mueller said a standalone company owned by the two carriers might be established to open further routes between the US and Europe.
During the second quarter, revenue at Aer Lingus slipped 4pc to €308m while the average yield per passenger -- effectively the average fare they pay -- rose 14.3pc to just over €106.
The fall in revenue came even as the airline cut capacity over the past year in light of sharply lower demand as the effects of the downturn persisted.
Revenue from long-haul services was up 6.5pc to €69.3m in the second quarter year-on-year. Capacity on the airline's transatlantic services has shrunk 31.3pc year-on-year. Short-haul revenue was down 3.8pc to €184m, with capacity having been cut 12.8pc.
Mr Mueller stressed again that the company would not deviate from its 'Greenfield' cost savings plan as the Labour Relations Commission last night delivered a fresh arbitration ruling in relation to cabin crew represented by the union IMPACT.
Cabin crew members were due to begin a work-to-rule today amid disagreements over rostering practices.
The cost reduction plan has so far delivered €11.7m in staff savings this year and the figure is expected to amount to €50m by year-end.
A total of €4m in savings from other activities will also be recorded by December.
Mr Mueller said yesterday that he would not return to staff to seek any more cuts but that additional savings would be found on the non-staff costs.
"We are working very hard to save more costs," he said.