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Aer Lingus' assessment for the year ahead pretty downbeat

Aer Lingus back in the black

Mar 01, 2011

LONDON — High fuel prices could significantly depress earnings this year, waned Aer Lingus, even as it reported a return to profit last year.

The Irish carrier reported a net profit of euro46.6 million ($64 million) for the year compared with a loss of euro130 million in 2009. For the fourth quarter to end-December, the airline's loss narrowed from euro118 million in 2009 to euro18 million in 2010.

But the Associated press reports that despite the improving profit picture in 2010, investors focused more on the company's fairly downbeat assessment for the year ahead and Aer Lingus shares were down 1.6 percent at euro0.93.

"We expect significant challenges in 2011, with trading for the year likely to be impacted by fuel price inflation and increased airport charges in combination with difficult conditions in our home market," said Christoph Mueller, Aer Lingus' chief executive.

Mueller said the company did not expect gains in average passenger spend and ongoing cost savings to offset these increased costs. As a result, he said operating profit in 2011 will be "significantly below that of 2010" if current fuel prices persist.

Moreover, the company said it expected "a fairly weak trading result" in the current quarter as it hired in aircraft to continue operations during a cabin crew strike.

According to AP, more detailed look at the 2010 results showed that full year revenue rose 1 percent to euro1.22 billion even though passenger numbers dropped by 10 percent to 9.3 million. Despite the fall in passenger numbers, Aer Lingus reported a 12 percent increase in average yield per passenger.

Aer Lingus said last week that it was taking a euro32.5 million charge on annual earnings to cover the cost of a tax dispute with the Irish government. The dispute involves a restructuring in 2009 when Aer Lingus, in agreement with unions, laid off 913 ground staff and rehired 715 of them at lower wages.

Aer Lingus back in the black
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Source: AP

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