Long-haul effort appears to be paying off for Aer Lingus

Airline told the markets it now expected to ‘at least’ equal its 2013 performance

Aer Lingus told the markets it now expected to “at least” equal its 2013 performance and deliver a surplus of €61 million. Photograph: Getty

Aer Lingus told the markets it now expected to “at least” equal its 2013 performance and deliver a surplus of €61 million. Photograph: Getty

 

It is seven weeks to the day since Aer Lingus warned its profits would be between 10 per cent and 20 per cent lower than last year as a result of industrial action at the airline. Yesterday, it told the markets it now expected to “at least” equal its 2013 performance and deliver a surplus of €61 million. It’s a turnaround worthy of a Ryanair flight.

It delivered its new guidance along with a set of first-half results its chief executive said were the best it had delivered for some time.

The airline normally loses money between January and the end of June and relies on the second half of the year to deliver a profit.

This year its operating losses tumbled by 40 per cent to €9.9 million, while its pre- tax deficit was down 50 per cent at €14 million. Operating profits in the second quarter were 33 per cent ahead of last year at €38.7 million.

It now looks like Aer Lingus was being extra prudent when it warned the markets in mid-June.

A month earlier it had said it was maintaining its original guidance that operating profits would be in line with last year.

A cabin crew strike had intervened ahead of the June bank holiday: the direct cost of that was €10 million.

Chief executive, Christoph Mueller, who was otherwise clearly happy with yesterday’s results, said it would cost the airline a further €10 million in lost business.

The profit warning followed the strike and after sufficient time to allow the company to assess its impact.

A chunk of the growth flagged yesterday came from transatlantic services, which the airline expanded this year. They generated €22 million in extra revenues. About one third of passengers on Aer Lingus’ North American flights are now connecting from Britain or the continent.

Attracting these travellers was a critical part of the long-haul strategy. Mueller yesterday said it took about four years to get everything in place in order to give this a chance of working. He must be relieved the effort now appears to be paying off.

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