Aer Lingus records Q1 revenue increase to €280m
Airline says board remains “strongly” in favour of beneficial AIG combination
Aer Lingus announces revenues of €280 million, a 7.9 per cent increase on 2014’s first quarter figure of €259.4 million. Picture: Frank Miller, Irish Times
Aer Lingus has recorded increased revenues for the first quarter of 2015 and says operating losses of €48.4 million are in line with seasonal expectations and match the same period last year.
The airline announced revenues of €280 million, a 7.9 per cent increase on 2014’s first quarter figure of €259.4 million.
The improved performance has been attributed to long haul activity; demand led short haul capacity decisions and a year-on-year growth in retail, cargo and other revenue generators.
The board and management of the airline said they remain “strongly” of the view a combination of it and AIG offers a “compelling strategic rationale”.
“The increase in our operating costs reflects a higher fixed cost base,” chief executive Stephen Kavanagh said of the results published on Wednesday.
“Given our forward hedging of fuel, the benefit of lower fuel prices was limited this quarter. Fuel cost decreases will become more evident in subsequent periods.”
Mr Kavanagh also said the company’s US dollar based costs had increased due to “unfavourable” movement in the exchange rate.
Long haul growth strategy delivered a 39.6 per cent increase in long haul fare revenue, rising to €82.5 million from €59.1 million in the first quarter last year. Capacity on these flights increased by 21.6 per cent and was converted into a 23.3 per cent rise in passenger numbers.
This marked a 20.6 per cent improvement in yield per seat.
In short haul business, passenger fare revenue for the quarter was €132.2 million, as compared to €138.8 million last year.
The carrier said the implementation of its demand led short haul strategy resulted in a 1.2 per cent increase in short haul revenue per seat and an increase in short haul load factor of 2.1 per cent.
However, it said, the first quarter of the year is seasonally loss making, explaining an operating loss of €48.4 million, in line with the same period last year.
Higher operating costs of €328.4 million compared to €307.9 million reflect the impact of increased fixed costs in the off-peak season.
The first quarter saw investment in the new Aer Lingus long haul business class service, the opening of new lounges in JFK and Dublin and the launch of the new brand platform “Smart Flies Aer Lingus”.
“The IAG offer to acquire 100 per cent of Aer Lingus will deliver significant benefits for all Aer Lingus stakeholders,” said Mr Kavanagh.
“In the coming quarters we will focus on capitalising on peak demand opportunities, while aggressively managing our cost base.
“On short haul we will continue our demand-led strategy to drive occupancy, manage per available seat yield and retail revenue per passenger. On long haul, we will see the commencement of the new Washington route as well as increased frequencies on New York, San Francisco and Orlando routes. Overall our forward trends are positive.”
The airline has net cash of €650.7 million at 31 March 2015, €97 million higher than the net cash position of €553.7 million at end March 2014. Gross cash of €1,034.8 million by the end of the first quarter was also higher, up from €1,017.9 last year.