Aer Lingus profits soar

Aer Lingus expects to hire its new chief executive shortly despite failing to announce the successful candidate's name at its annual results briefing yesterday.

Executive chairman John Sharman said he hoped to make an announcement soon and he denied that Government indecision over the airline's future had put off certain candidates.

It is understood the frontrunner remains Dermot Mannion who holds the position of president (group support services) with Dubai-based airline Emirates.

Some sources suggest Mr Mannion does not wish to have his name disclosed until the Government provides official clarification on the ownership issue. This may happen at next Tuesday's Cabinet meeting.

However, another explanation provided by senior sources is that Mr Mannion needs time to finish his work at Emirates.

The airline recently finished its half year end and these figures are currently being compiled. A senior source last night said: "It is a timing issue at this stage."

Mr Sharman for his part refused to discuss in any detail the process to find a replacement for former chief executive Mr Willie Walsh, although he denied suggestions he had taken too much time find a successor. He also disclosed that the Government has asked him to serve on as chairman until March 2006.

Mr Sharman said a failure to change work practices at the airline and rising oil prices posed serious dangers to the airline's profitability in the year ahead. He said it was too early to say whether Aer Lingus in 2005 could beat the profits produced by the management team led by Willie Walsh.

He was speaking after announcing the company's 2004 results. These showed operating profits rising by 29 per cent to €107 million. However restructuring costs and other charges reduced this to an after-tax profit of €1.2 million.

Turnover was up by 2.1 per cent to €906.8 million. The airline now boasts one of the best operating margins in European aviation at 11.8 per cent, but aviation analysts believe further cost cutting will be necessary to improve on this. The company has set aside over €97 million for restructuring and severance payments.

Costs on continuing operations fell by €5.5 million (or 1 per cent) to €799.8 million. Mr Sharman said costs had been reduced by 30 per cent since 2001. However, he said payroll costs actually rose in 2004, despite 734 employees leaving the airline. He said this was because salaries had gone up by 12.3 per cent, leaving the average salary at €65,000. Mr Sharman delivered a strong warning that fuel prices continued to be a major drag on the company's performance, even though about 70 per cent of its fuel this year is hedged.

Mr Sharman steered clear of giving a view on the best way for the Government to sell shares in the airline, simply saying there were several models possible. He said by the summer the airline would have a good idea of its capital requirements would be. He said it would then submit this to Government.