AER LINGUS’S share price rose by 9.3 per cent in Dublin yesterday in spite of the airline recording a pretax loss of €14.2 million for the first six months of this year.
This followed an optimistic forecast for the second half of the year – its key trading period.
Aer Lingus said its booking profile into the fourth quarter of the year was strong. Its sales growth in the second half is expected to be similar to the first six months, when revenues rose by 5.8 per cent to €569 million.
Bloxham Stockbrokers yesterday upgraded its forecasts for the airline. It now expects its Ebit (earnings before interest and tax) to be close to €40 million, having previously forecast €25 million.
Aer Lingus experienced contrasting fortunes for the first two quarters of this year. The first three months was loss making but it booked a pretax surplus of €42.2 million for Q2.
An industrial dispute with cabin crew cost the airline €15 million while threatened action by pilots also affected revenues. The number of passengers carried fell by 1 per cent to 4.36 million.
In relation to its Greenfield cost-cutting programme, which was slated to deliver savings of €97 million a year, the airline said it will deliver about €80 million in 2011.
Other initiatives are being examined to secure the remaining savings. These include seasonal aircraft leasing; seasonal working; and improving ancillary revenues.
There was good news on its fuel costs in the period, which declined by 1.9 per cent to €129.6 million.
Chief executive Christoph Mueller described this as a “very positive surprise”.
Aer Lingus had gross cash of €919.4 million at the end of June.
Aer Lingus yesterday flagged a potential issue in relation to its staff pension scheme, which had a deficit of €400 million at the end of 2010. The airline believes it has no obligation to resolve this issue following a deal struck at the time of its IPO.
However, it acknowledged that measures by the trustees to close this deficit could have an “adverse affect on employee relations”.
It added that employees or deferred pensioners could mount a legal challenge to its stance that it has no obligation to plug the pension deficit. A “very significant loss could arise” were a court to find against the airline on this issue.
Mr Mueller said Aer Lingus has decided against joining one of the three global airline alliances at this point. He said the cost to Aer Lingus would be between €30 million and €50 million.
Mr Mueller also moved yesterday to distance himself from industry speculation that he might be in the running for the top job at Air Berlin, which is vacant.
When asked if he has been part of the Air Berlin recruitment process, Mr Mueller, who is German, said: “That’s untrue. Most probably my passport colour suggested that.”