Pre-tax profits at Irish Aviation Authority fall €1.3m to €5.7m

The downturn in the airline industry and wage inflation combined to push down pre-tax profits at the Irish Aviation Authority (IAA) last year.

Despite growing turnover by 15 per cent to €87.1 million, the authority recorded a profit before tax of €5.7 million in 2001, down from €7 million in the previous year. The IAA's revenue mainstays - North Atlantic air traffic and communications operations - suffered a considerable downturn in the final quarter of 2001 due to a dramatic fall in traffic in that region, it said.

En-route traffic - aircraft overflying Ireland - grew by 3.1 per cent to 256,000 movements, while terminal traffic was static at 284,000 movements due primarily to a fall-off in transatlantic traffic at Shannon. Dublin Airport recorded a slight growth in traffic. Airspace communications traffic fell by 3.2 per cent to 331,000 contacts.

"Our difficulty is that over 80 per cent of our revenue comes from North Atlantic traffic and that is the key," said Mr Brian McDonnell, chief executive of the IAA. "But our forecasts are looking towards a slight return to growth this year and normal growth of around 5 per cent next year."

Before 2001, traffic levels had been growing by 4-5 per cent on an annualised basis for the previous 10 years, said Mr McDonnell.

"The aviation industry is cyclical and the cyclical downturn was gradual enough and then September 11th happened and it went through the floor," he said.

"We have had this pattern before at the time of the Gulf War and it picked up fairly rapidly. The trend upwards is beginning to take place after the first quarter."

But he said the uncertain situation in the Middle East could have an effect on air traffic.

"But it is totally out of our hands," he said. "At the moment, the airlines are quite bullish. People are returning to flying, certainly in Europe."

Wage rises also impacted on profitability, he said. "Our costs went up considerably because of wage agreements we had to conclude under the PPF and then the local bargaining clause in Partnership 2000," said Mr McDonnell.

However, last October, the IAA announced plans to cut its costs by 8.5 per cent - €7 million - this year through a combination of early retirements, outsourcing and the cutting of all non-essential expenditure.

"It's just hands-on recovery of costs until the recovery happens," said Mr McDonnell. He said the EU Commission's proposal for a "single European sky" was strongly influencing the future direction of the authority.