Aer Lingus loss almost quadruples as passenger numbers fall
Aer Lingus has said its first-half loss almost quadrupled as it cut ticket prices amid the slump in demand for air travel.
The operating loss of €93m compared with a shortfall of €23.4m a year earlier, the carrier said in a statement today. Sales fell 12pc to €555m, with average fares down 17pc.
The carrier cut non-fuel costs by 5.1pc through a pay freeze for workers and by cutting some services.
It’s also deferred delivery of aircraft and is trying to boost revenue by establishing a second base at London’s Gatwick airport.
“While traffic volumes have stabilised, consumer confidence remains weak and we see no sign of any improvement in the near term,” Chairman Colm Barrington said in the statement.
“We must now take difficult but necessary steps to address our business model and cost base.” The airline said it will undertake a “wide-ranging examination” of its operations to help return it to profit.
Aer Lingus is following airlines including SAS Group and Deutsche Lufthansa AG in pursuing strategies to slash costs to cope with the slump in demand.
Global airline losses may total $9bn this year, and sales may fall 15pc, the International Air Transport Association said.
Fuel costs
The airline’s loss after tax widened to €73.9m in the six months from €21.6m, it said.
Average fares on short-haul routes fell 13pc, with long-haul fares dropping 19pc. Fuel costs rose 10pc and the airline’s net cash fell to €440m from €654m at the end of 2008.
The carrier has deferred delivery of the first of three Airbus SAS A330 planes and six A350s to 2013 to help conserve cash. Deliveries were scheduled to start this year.
It is seeking to reduce its reliance on its Dublin base by opening one at Gatwick last December. Aer Lingus is flying from the UK airport to destinations including Malaga, Spain, and Nice, France, using slots acquired from British Airways.
Aer Lingus announced July 17 that it hired Christoph Mueller as chief executive officer, replacing Dermot Mannion, who left in April. Mueller, 47, is the airline’s first non-Irish chief and will join the company on October 1.
Mannion resigned after a four-year tenure during which he successfully fended off two takeover bids from Ryanair.
(Bloomberg)
- Steve Rothwell and Fergal O’Brien
