Aer Lingus profits soar 72pc to €124m as IAG eyes growth
Published 27/02/2016 | 02:30
Profits at Aer Lingus surged 72pc to €124m last year, with the airline targeting more long-haul growth and poised to generate a strong performance in 2016.
Acquired last August by British Airways' owner IAG, revenue at Aer Lingus jumped 10.4pc to €1.71bn last year, meaning it's likely to breach the €2bn revenue milestone in 2017.
The airline generated the growth in profits as it added more passengers but its overall relative costs declined.
Group 2015 results at IAG, which also owns Spanish airlines Iberia and Vueling, were at the higher end of expectations, with operating profit before exceptional items increasing 68pc to €2.33bn, and revenue rising 13.3pc to €22.8bn.
Aer Lingus accounted for €35m of IAG's operating profits from the date of acquisition.
Aer Lingus had about 90pc of its 2015 fuel prices hedged at the end of 2014. This suggests it could be on track to report much stronger profits for 2016 given the sharp fall in oil prices and the fact that it now benefits from the procurement muscle of IAG, which also owns Spanish airlines Iberia and Vueling.
IAG chief financial officer Enrique Dupuy said that Aer Lingus had provided "very positive surprises" since its €1.3bn acquisition, and that improvements in its metrics had happened sooner than expected.
Aer Lingus chief executive Stephen Kavanagh said that the 2015 profit improvement was down to the "dynamics of the airline business".
"The top line grew strongly," he said. "Unit revenue was strong and costs were under control, so that incremental margin that was generated was significant.
"We had very strong growth across the Atlantic - we not only grew the business, but we increased margin. That was a strong contributor. On short-haul, we added close to three points of load factor, effectively for the same cost."
Aer Lingus is launching three long-haul routes this year from Dublin: to Newark; Hartford, Connecticut; and Los Angeles. It has also benefited from a rise in premium traffic, with the figure up 35pc last year, albeit off a low base, said Mr Kavanagh.
He said that Aer Lingus continues to eye cities such as Miami for growth.
IAG chief executive Willie Walsh said he hopes that regulatory approval will be secured within the next two to three months for Aer Lingus to join the alliance British Airways and Iberia already have with American Airlines.
Mr Kavanagh said he welcomed plans for a second parallel runway at Dublin Airport "at an appropriate cost".