Transport

Aer Lingus aims to break even in 2022 as IAG hails ‘strong return’ of business travel

Irish airline’s owner becomes latest aviation group to signal recovery from pandemic

Aer Lingus owner IAG said it expected to be profitable in the second quarter and for the year. Photograph: Alan Betson

Fri May 6 2022 - 07:45

Aer Lingus has warned of a "challenging" 2022 as the airline looks to recoup a €110 million loss in the first quarter by breaking even for the year as a whole.

The airline’s loss over the first three months is almost triple the losses it recorded in the same period in 2019.

Lynne Embleton, Aer Lingus chief executive, said leisure travel is performing well although business travel has not recovered as quickly, although Aer Lingus's parent, International Airlines Group, (IAG) said a strong recovery in this segment is under way.

Over the first quarter Aer Lingus carried 52 per cent of the passengers it managed in the same period in 2019, while generating 48 per cent of the revenues. Its load factor – a measure of how well its capacity was utilised – was 58 per cent, versus 73 per cent in 2019.

READ MORE

Aer Lingus aims to get back above 90 per cent of its pre-pandemic capacity this year.

The airline also agreed a new €200 million financing package with the State-backed Ireland Strategic Investment Fund, on top of €150 million in Isif funding it had previously negotiated.

IAG, the owner of Aer Lingus that also reported first-quarter results on Friday, said it expects to return to profit this quarter as the travel industry recovers from the worst impact of the coronavirus pandemic and airlines rush to scale up operations to meet demand for flying.

IAG, the owner of carriers including British Airways, Aer Lingus and Iberia, on Friday welcomed the "strong" return of business travel, which has hit its highest levels since the start of the pandemic. There was "no noticeable impact" from the war in Ukraine on bookings, it said.

Forward bookings have been running at a rate of about 90 per cent of 2019 levels in March and April, the airline said.

The company said it expected to report an operating profit in the second quarter and for the full year, which would put two years and more than €10 billion of losses behind it.

"Demand is recovering strongly," said Luis Gallego, IAG's chief executive.

The aviation industry has struggled to restart operations and BA has been forced to cancel hundreds of flights and thin out its schedules until June as it faces staff shortages.

Mr Gallego blamed “global” challenges, but said BA’s focus was on “improving operations and customer experience and enhancing operational resilience”.

Increased schedules

IAG has slightly slowed its recovery plans because of its operational problems. It now plans to increase its schedules to 80 per cent of pre-pandemic levels this year, down from the 85 per cent guided in February, including restoring almost all its normal capacity on transatlantic routes this summer.

"This downgrade is mainly driven by a slower capacity ramp up at Heathrow to manage operational issues at the airport better," said Alex Irving, an analyst at Bernstein.

The airline group reported an operating loss after tax and exceptional items of €787 million in the first quarter, down from a €1.1 billion loss the year previously. Revenue rose to €3.4 billion from €968 million, and cash rose slightly to €8.2 billion.

IAG shares fell nearly 7 per cent in London trading on Friday after the company reported a wider loss than analysts had forecast. The group’s shares have shed about a third of their value over the past 12 months.

The losses reflected weak winter demand, the impact of the Omicron coronavirus variant and costs of resuming operations, Mr Gallego said.

IAG became the third of Europe's network airlines, which run a mix of short and long-haul flights, to point to a strong summer following similar buoyant updates from Air France-KLM and Lufthansa this week. – Copyright The Financial Times Limited 2022

LATEST STORIES