Aer Lingus expects a return to profit as bookings take off
Shares in Aer Lingus jumped nearly 6pc yesterday after the airline said it expects to at least break even this year on the back of a higher spend by passengers and strong bookings for its flights.
That should herald a return to profitability about a year earlier than analysts expected.
In a trading update for the first six months of this year issued yesterday, Aer Lingus said that recent yield performance (the average price per ticket) and the number of passengers flying on its long-haul services exceeded its expectations.
"The forward booking profile suggests that this strength should continue for at least the third quarter," the airline's statement noted.
"As a result, having regard to the committed staff, productivity savings and provided there are no significant disruptions to operations such as were caused by the Icelandic volcano, Aer Lingus now expects that its 2010 operating result (before exceptional items) should be no worse than break-even."
Aer Lingus's chief executive Christoph Mueller pushed through pay and job cuts at the airline over the past number of months that aimed to save as much as €97m a year by 2012. The airline has axed capacity on a number of routes, particularly on its long-haul services.
Analyst Joe Gill, with Bloxham Stockbrokers, said the update was "very encouraging".
He told the Irish Independent that he had been pencilling in a €23m loss at Aer Lingus for 2010 and that he now expects to revise his estimate to a profit of €20m.
He said the carrier's performance is probably even stronger than their figures actually suggest.
In the first half of 2010 the airline has traded ahead of the corresponding period last year, and the performance has been helped by strong unit revenues coupled with reductions in fuel and staff costs.
Aer Lingus added that trading in June in particular was stronger than expected.
In the first half of 2010, its long-haul fares have risen by 17.4pc year-on-year, bolstered by a better performance on its business-class services. The long-haul load factor was 5.9 percentage points higher for the period.
The average short-haul fare per passenger rose 9pc in the period.
Aer Lingus added that it's "too early" to give guidance for 2011 and that further revenue improvements will be "very dependent" on the overall economic environment.
Its shares closed up 5.7pc, or over 5 cent, at 94 cent.