Business Irish

Monday 18 December 2017

Mueller predicts profitable 2012 despite difficulties

John Mulligan

John Mulligan

"We view the aircraft as essentially corner shops," said Aer Lingus chief commercial officer Stephen Kavanagh yesterday.

The only problem is, of course, corner shops regularly have fatal encounters with much bigger rivals.

But despite the difficult environment for many airlines, Aer Lingus has managed to hold its own. So far, at least. Bigger players from Air France-KLM to Lufthansa are also struggling to maintain earnings.

Even as it reported strong 2011 results, Aer Lingus acknowledged that its overall fuel bill will jump 20pc in 2012.

It is a cost that airlines can really do little about and it is hugely damaging to the bottom line. Still, Christoph Mueller said he expected Aer Lingus to remain "significantly profitable" this year.

Davy Stockbrokers said it was slashing its 2012 operating profit forecast for Aer Lingus to about €35m from €61.7m, largely on the back of higher fuel prices.

The tough backdrop and those higher fuel bills are just two of the reasons why Aer Lingus shares plummeted yesterday. The other is the outside danger it will get sucked into potentially deadly industrial action over a troubled pension scheme.

Mr Mueller insisted again yesterday that Aer Lingus had no legal obligation, and no intention, to inject any more funds into the Irish Airlines Superannuation Scheme, which is carrying a €700m deficit. The scheme also serves workers at the Dublin Airport Authority.

The airline has said it will vigorously defend its legal position, but unions could snap -- and if staff walk out the end result could be catastrophic for Aer Lingus.

A separate pension scheme for pilots has a €170m deficit, but again Aer Lingus has no liability.

Meanwhile, Mr Mueller ruled out taking a stake in Aer Arann, the airline that operates the Aer Lingus regional brand, but confirmed he was interested in buying more slots at Heathrow if available.

Irish Independent

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