Aer Lingus profit rebounds despite ash cloud
Irish airline vows to defend its independence by cutting costs further into next year
Dublin: Irish airline Aer Lingus swung to profit in the second quarter after cost cuts more than offset the revenue hit from a volcanic ash cloud, and vowed to defend its independence by cutting costs further into next year.
Aer Lingus has cut unprofitable US routes, reduced staff and fuel costs to survive in Ryanair's shadow but also acknowledged it would be fruitless to insist on undercutting the prices of its much bigger and leaner former suitor.
After reporting full-year losses for both 2008 and 2009, it reiterated a projection yesterday to at least break even on an operating level before exceptional items in 2010, barring major action by its employees against the cost cuts.
"This operating performance, together with the very strong balance sheet, shows a company undergoing a fast recovery from the depths of 2009," Bloxham Stockbrokers said in a note.
Aer Lingus, which is more reliant than Ryanair on the Irish market, said it was too early to give a forecast for 2011 in such an uncertain economic climate.
With "plenty of cash" on hand and good shares of some key routes to Ireland it could stand its ground, Chief Financial Officer Andrew Macfarlane said, adding it would probably join one of the global airline alliances over the longer term.
"‘There is no reason why we shouldn't be able to remain independent," Macfarlane told reporters.
It posted a pretax profit of 15.4 million euros in the second quarter versus a 13.8 million euros loss a year ago, making progress towards its goal to reduce costs by 97 million euros by next year.
In the first half, Aer Lingus had an operating loss of 24 million euros after accounting for the cost of disruption caused by a volcanic ash cloud, narrower than the 93 million euros loss a year ago and the 40 million euro loss expected by in-house broker Goodbody.
Its shares, 70 per cent of which are controlled by Ryanair, the Irish government and employees combined, reversed early gains to trade 1.2 per cent lower at 0.9190 euros by 0930 GMT, outperforming the broader Irish market, down 3.8 per cent after a profit warning from its biggest constituent, CRH.
