Aer Lingus considers further State loans as losses hit €347m

Airline expects to offer 90% of pre-pandemic seat by the summer

Aer Lingus could borrow more cash from the State following almost two years of government Covid-19 curbs that have left it with losses of €700 million.

The Irish carrier’s operations lost €347 million last year, around 5 per cent down on the €361 million it shed in 2020, figures published on Friday show.

Lynne Embleton, chief executive, confirmed that Aer Lingus was in continuing talks with the Irish Strategic Investment Fund about borrowing cash from the State-backed lender. Aer Lingus has already borrowed €150 million from the fund.

Ms Embleton has signalled several times in recent months that it could add to this. She said on Friday that the carrier was also in talks with its owner, International Airlines’ Group (IAG), about its “liquidity options”.

Ms Embleton blamed the government’s travel restrictions, which she dubbed “Europe’s most stringent”, and US restraints for Aer Lingus’ losses.

"For almost two years the national narrative in Ireland was intensely anti-travel, compounded by the enforcement of mandatory hotel quarantine," she said. "As a result passenger numbers in 2021 were less than 25 per cent of 2019 levels."

Seats boost

On Friday she predicted that Aer Lingus would boost available seats on its aircraft to 90 per cent of pre-pandemic levels by the summer.

“Today EI061 departed for San Francisco, the first regular service to west coast US since March 2020,” she said.

Ms Embleton added that Aer Lingus would be the only airline serving the US west coast from the Republic this year.

She revealed that Aerlingus. com had its busiest day since March 2020 when the Government lifted travel restrictions on January 9th.

IAG said on Friday that it cut losses in 2021 to €2.9 billion from almost €7 billion the previous year.

Aer Lingus lost almost €1 million a day through 2020 and 2021, while it added to its debt. Ms Embleton warned that the company would have to carefully manage costs to repair the damage and to allow it buy new aircraft.

IAG acknowledged that travel restrictions in the Republic and the UK hit Aer Lingus and its sister airline British Airways harder than the group's Spanish carriers Iberia and Vueling.

Aer Lingus ended the year with €228 million in cash, €38 million less than the €266 million it held at the end of 2020.

Total capacity

IAG’s figures show that Aer Lingus was flying at just 15 per cent of capacity in the first quarter of last year, when restrictions were tightest. This rose to 44.3 per cent in the final three months of 2021.

“The emergence of the Omicron variant impacted demand, mainly in December, as governments introduced stricter travel requirements and border restrictions in response,” said IAG.

Luis Gallego, IAG chief executive, confirmed that a strong recovery was under way. "All our airlines continued to show improvements in the fourth quarter, optimising their performance and further improving their operating results."

IAG believes the Russia-Ukraine war will push up fuel prices, potentially leading to higher fares for passengers. However, the group says it has hedged 60 per cent of its likely fuel needs for this year.

Mr Gallego said that up to Friday none of the group's airlines had noticed any impact on bookings since Russia invaded Ukraine on Thursday.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas