Aer Lingus said this morning slowing economies and higher oil prices are having a “negative impact” on its business.
Aer Lingus has hedged 28 per cent of its fuel needs for the rest of the year, with every increase of $5 per ton over the current price adding $1.2 million to costs, the Dublin-based carrier said in a statement today.
The economic outlook in Aer Lingus's main markets is also unclear as the global economy slows, the company said, predicting an operating loss for the first half compared with a year-earlier profit of €2.6 million ($4 million).
Sales increased 10 per cent in the first four months as the airline boosted capacity and operated 12 more routes.
"The business has always been seasonal in nature, with most or all of the profits generated in the second half," Aer Lingus said in the statement. "The current market conditions have magnified this."
The company said it still aims to post an operating profit for the second half.
The airline plans to ride out the slowdown by cutting costs and has been negotiating new maintenance contracts and an agreement with workers that would save €20 million ($31 million) a year. Employees have twice spurned the plan.
"The rejection of the proposals by a number of areas is disappointing in an environment where fuel prices are at record levels and the economic outlook is uncertain,'' Aer Lingus said.
"There is now an even greater imperative for a final conclusion to be reached on staff cost-reduction measures."
The carrier plans to take delivery of four single-aisle Airbus SAS jetliners by 2011, taking the short-haul fleet to 39, together with 12 long-haul aircraft by 2016.
The airline's passenger total increased to 3.2 million in the first four months, comprising an 11.4 per cent gain on short-haul routes and a 9.4 per cent advance on intercontinental flights.
Bloomberg