11 March 2009

Aer Lingus reports a € 120 Million Loss

Aer Lingus has reported a pre-tax loss of almost € 120 million for last year, compared with a profit of € 124.8 million a year earlier.
The profit of Ireland's main commercial airline is particularly affected by a once-off € 140.9 million charge for its controversial cost-cutting and saving programme.

When the restructuring charge is taken out, pre-tax profits fell by almost 84% to € 21.2 million, as fuel costs rose by almost 60%. There was an overall operating loss of € 17.6 million.

Aer Lingus has also lowered its outlook for this year, saying it is "unlikely to make a profit". It states that the weakening economy has reduced its cargo business, while consumer demand has also weakened.

Apparently passengers are increasingly booking later, and lower fares are needed to keep the aeroplanes full. Aer Lingus expects average fares to fall by 10% in 2009.

The 2008 results show that the airline's total revenue grew by 5.6% to € 1.357 billion, while passenger numbers rose by 7.5% to 10 million.

Aer Lingus Chief Executive Dermot Mannion has described last year as "extremely challenging".
"Falling consumer demand in key markets, a weakening of the Dollar and Pound Sterling, and increased competition across the network combined to put sustained and significant pressure on our business throughout the year," he said.

He also stated that while Ireland would "always be a core element of Aer Lingus", diversifying out of the Irish market was key to its success in the long-term.

My personal Comment: It appears that Aer Lingus - like almost all commercial airlines - are still expecting to grow and expand in the future. What they have not yet realised is that the current recession and the rethinking and restructuring of global businesses will actually further reduce air travel. This is also a positive aspect for the environment.

The Emerald Islander

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