Saturday 24 August 2019

Revenues rise but profits fall at Aer Lingus as fuel bills mount across IAG

Aer Lingus. Stock picture
Aer Lingus. Stock picture
An Aer Lingus plane at Cork Airport
Willie Walsh: Gave green light to more expansion for Aer Lingus. Photo: Bloomberg

Shawn Pogatchnik

Revenues rose but profits fell at Aer Lingus in the first half of 2019 as higher fuel bills increased costs throughout the airline's parent company, IAG Group.

In its first-half 2019 statement published Friday, IAG said Aer Lingus generated operating profit of €78m in January-June 2019, down 25pc from the first half of 2018.

Profits fell despite a steady 8pc gain in sales at Aer Lingus to €971m.

IAG chief executive Willie Walsh said rising fuel prices had sapped profits at the group, which includes British Airways, Iberia and Vueling.

"Despite fuel cost headwinds, we delivered a good performance," Mr Walsh said. "At constant currency, fuel unit costs were up 6.3pc while passenger unit revenue increased 1.1pc, benefitting from the timing of Easter.

"This highlights, once again, that our unique structure and diverse brand portfolio underpins our financial resilience and ability to deliver robust results," he said.

In its trading outlook, IAG said it expects full-year operating profit "to be in line" with the company's 2018 results, presuming no significant deviation from current fuel prices and exchange rates. It expects passenger revenues to improve and non-fuel costs to decrease.

Friday's statement contained few details on Aer Lingus performance, but noted that the airline - acquired by IAG in 2015 - was benefitting from new transatlantic routes to Philadelphia and Seattle launched in 2018.

In the six months to June 30, IAG carried more than 55m passengers, up 6pc, as load factor - the percentage of sold seats - rose by 0.6pc to 83pc. versus last year. Passenger revenue increased 7.2pc.

Fuel costs rose 20.5pc, in part because hedging profits achieved in 2018 have not been repeated this year. Higher fuel prices were partially defrayed by deployment of new aircraft with more efficient engines. The fleet also grew in size from 565 to 588 aircraft.

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