Aer Lingus shares plunge amid fears over its fuel bill
AER Lingus shares plunged close to 10pc at one point yesterday as investors worried about its rising fuel bill and the potential for pension issues to ignite damaging industrial action.
The fall came despite the carrier posting a strong set of financial results for 2011.
The airline's operating profit fell 6.4pc to €49.1m last year, but that was better than the €40.7m that had been expected by analysts.
Revenue climbed 6pc to nearly €1.3bn. Its fuel bill is expected to rise over 20pc, or by €60m this year, to €349m. The stock closed down 7c at 87c.
Aer Lingus chief executive Christoph Mueller also said that it remains the "Government's call" in terms of how it proceeds with a disposal of its 25.1pc share in the airline.
The Government confirmed last week that it will seek to sell its Aer Lingus holding, probably in 2013.
But Mr Mueller said he did not believe another airline buying the Government's stake while Ryanair remains a stakeholder would be the "most usual" outcome.
"We sometimes have difficulty in believing that a second airline sitting next to Ryanair on our share register is the most usual thing to expect," said Mr Mueller.
Ryanair owns nearly 30pc of Aer Lingus. Its chief executive Michael O'Leary has previously said he would be prepared to sell the stake if a suitable offer emerged.
Mr Mueller also said he would not like to see existing partnerships that Aer Lingus has with carriers such as US-based Jet Blue compromised by any trade sale of the Government's holding.
He insisted that he didn't have a preference for the stake being either sold to another carrier or being placed with institutions.
However, he said there had been strong interest expressed by US institutions. The chief executive of Abu Dhabi-based airline Etihad, James Hogan, has also expressed an interest.
Mr Mueller said he wasn't concerned that the Government would simply seek the best price for its stake, regardless of whether the outcome would result in a conflict with the airline's own strategy.
"We are closely aligned with the Government in understanding that it is in the Government's interest that Aer Lingus maintains the maximum connectivity to and from Ireland," he added.
While the airline did not indicate yesterday that any special dividend would be paid to shareholders in respect of 2012, the Government has said it would like one to be paid before it sells its stake.
Mr Mueller said the issue remained "hypothetical" until it received almost-certain court approval to reduce its capital, enabling it to boost its reserves distributable to shareholders to as much as €500m.