Boom business will never return, says Aer Lingus chief
AER Lingus chief executive Christoph Mueller has warned that the airline won't experience any passenger growth until at least next summer and that he doesn't ever expect the carrier to again witness the type of demand experienced during the boom years.
Addressing a function held by the Institute of Chartered Accountants in Dublin yesterday, Mr Mueller also confirmed that Aer Lingus has formally abandoned the low-cost model.
"We abandoned the low-cost model entirely. We haven't stimulated demand with this since January of this year," he told the audience. Offering fares for nothing "wasn't sustainable". Mr Mueller has previously said the airline will no longer sell seats at any price. It has been instead focusing on improving yields -- effectively the average fare per passenger.
The Irish economy remains significantly challenged and rising taxes and high unemployment will dent demand.
"The disposable income will not be available to reach demand levels we had enjoyed prior to the [financial] crisis," he said, pointing out that last year management had to "zero-base" growth expectations.
Aer Lingus has been unable to capitalise on what he said was an interest-rate "wonderland", but also warned Irish companies that the widening spread between Irish and German bonds will make it increasingly difficult for them to access capital markets.
Mr Mueller (below) and his executive team are in the midst of an investor roadshow and they have been meeting analysts in Dublin this week.
Last week, Mr Mueller was in Germany speaking to investors at an event sponsored by Commerzbank in Frankfurt.
He told German newspaper 'Suddeutsche Zeitung 'that he's considering whether a two-brand strategy is one that could be pursued by Aer Lingus. He has spoken before of a two-tier strategy, with low fares coupled to the full-service model.
Neither customers nor its employees ever wanted Aer Lingus to be a low-cost airline. He said it will continue to support the franchise agreement it has with embattled carrier Aer Arann, which entered examinership this week.
Mr Mueller, who has axed almost 700 jobs as part of a plan to save €97m a year, urged a return to competitive wage levels in Ireland.
General Irish consumer prices were comparable to those in Switzerland, he said.