Aer Lingus profits soar to €69m despite fuel and airport costs hike
Published 07/02/2013 | 04:00
Aer Lingus has generated its best financial performance since its 2006 stockmarket flotation, delivering a €69.1m operating profit for 2012 – a near 41pc increase in 2011.
The results – twinned with an 8pc rise in revenue to just under €1.4bn – come as the European Commission nears its final decision on whether rival Ryanair should be allowed to pursue a takeover of its smaller challenger.
Aer Lingus chief executive Christoph Mueller said the airline had managed to lure traffic away from bigger rivals including Ryanair and British Airways and that forward bookings for 2013 are so far "very strong".
He added that the results served to validate the carrier's business model.
The results for 2012 were achieved even as Aer Lingus said its fuel bill jumped 24.2pc in 2012 to €358.6m, impacted by currency exchange rates. In dollar terms, fuel costs were 13.4pc higher.
It also saw airport charges rise 7.1pc to €295.3m. Its charges at Dublin Airport, where it's the single biggest operator, were 7pc higher at €92.5m, while at Heathrow they were up almost 12pc to €50.7m.
The airline also said that annual savings achieved under its 'Greenfield' restructuring plan are ahead of target at €104.2m last year. Just over €62m of that was achieved via staff cost savings.
Speaking to the Irish Independent, Mr Mueller said the firm would have to continue to look for opportunities to control its cost base, especially as largely uncontrollable expenses including fuel and airport charges creep up.
Mr Mueller also said that Aer Lingus has "put skin in the game" by intensifying its relationship with Aer Arann. The smaller airline – now owned by UK transport group Stobart – has inked a 10-year extension to an agreement where it operates its dozen or so aircraft under the Aer Lingus Regional brand.
Aer Arann has ordered eight aircraft from manufacturer ATR to replace its existing fleet. Aer Lingus has a 33pc stake in a firm that is acquiring the aircraft, which will in turn be leased to Aer Arann.
Aer Lingus has agreed to pay an initial $14.2m (€10.5m) for its stake in the firm and may boost that if a further two aircraft are acquired. Mr Mueller has always ruled out a direct equity investment in Aer Arann for fear it would expose itself to increased financial exposure to the operation.
He added that a significant proportion of the one million-plus passengers carried by Aer Arann under the 'Regional' brand last year are now routing through Dublin to the United States.
Aer Lingus incurred €26.5m in exceptional costs in 2012, which drove its pre-tax profits 52pc lower to €40.6m for the year. Those charges included €10m in professional and legal fees related to its defence of Ryanair's effort to buy the airline. Most of an additional €17.2m charge related to the relocation of an aircraft maintenance operation from Shannon to Dublin.