Aer Lingus to post operating profit on back of yields boost
Published 09/01/2010 | 05:00
Aer Lingus expects to post a "small" pre-exceptional operating profit in the second half of 2009 as its yields, or the average fare paid by passengers, increased during the period, the airline said yesterday.
The carrier also confirmed that it will reduce the number of aircraft at its base in Gatwick from five to three from the end of March. It said the decision to retrench its presence at the London airport was taken as a result of weak consumer demand and "continuing challenges" in the UK operating environment.
Gatwick is the home base for Easyjet, and Aer Lingus has been under competitive pressure from the British carrier.
About half the pilots working for Aer Lingus at Gatwick are understood to be company employees, while the remainder are on contract with Altraeus, an aviation leasing company.
Cabin crew at Gatwick are employed directly by Aer Lingus, but on terms that are more financially advantageous to the airline than the terms its staff in Ireland are currently on.
It's understood that the two aircraft being removed from service at Gatwick will be redeployed rather than grounded.
Analyst Marina Houghton at Goodbody Stockbrokers yesterday welcomed the decision, saying any reduction in capacity will improve yields.
"The overall yield environment hasn't been great, but capacity is being reduced across the industry," she added. Aer Lingus said the operating profit recorded in the second half of 2009 reflected better than expected yields, which had been boosted by the removal of some long-haul aircraft from service last September, and "tactical" route cancellations in November.
It warned, however, that demand will remain soft for the first half of 2010 and that it will focus on "tight capacity management". It's still trying to push through cutbacks to deliver €97m in annual savings.
Goodbody Stockbrokers had pencilled in an operating loss of €8m at Aer Lingus for the second half of 2009, which it has now adjusted to an operating profit of €7m. The broker is also forecasting net cash of €304m at the end of 2010 compared to an estimated €274m at the end of 2009.
Aer Lingus also said yesterday that it has deferred two further orders for A320 short-haul aircraft from Airbus at no financial penalty. Those aircraft were due to be delivered in October and November this year, and won't now be delivered until April and May 2011.
Since last year, the airline has deferred delivery of about six new aircraft, helping it to reduce planned capital expenditure. The airline also said that it carried 766,000 passengers in December, 9pc more than in the same month in 2008. Short-haul passenger numbers were up 13.2pc at 693,000 in the month, while long-haul passenger figures were 19.8pc lower at 73,000.