AER LINGUS FIRST QUARTER RESULTS BETTER THAN EXPECTED - Aer Lingus has posted a €36.1m operating loss for the first three months of the year - a big improvement on the same time last year. Industrial action cost the company €15m in lost revenues in the first quarter of 2011. But ticket sales, revenue per passenger and cash balances are all up this time around.
Gerard Moore, an analyst with Merrion Stockbrokers, says today's first quarter results from Aer Lingus are very good and are significantly stronger than had been expected. He says that as well as increasing revenues, the airline is also managing to keep costs under control. The analyst says that all airlines tend to loss money in the first three months of the year and points out that Lufthansa yesterday reported bigger than expected net losses of €387m as it said that the soaring price of jet fuel more than offset a rise in passenger numbers.
On the low current market value of the airline, Mr Moore says that all airlines tend to trade below their book values as they are companies which are prone to lose money. He says an issue especially affecting Aer Lingus is its pension overhang. Investors are concerned about the pension situation at the airline because no-one knows how much it will finally amount to. The airline gave no real update on the situation in today's results statement, he added. He says that investors will quiz the airline at its conference call later today about the near 3% stake in the airline recently acquired by Etihad and at what stage the code-sharing talks with the airline are at. They will also seek more clarification about the airline's dividend and when payments will resume.
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MORNING BRIEFS - The European Central Bank holds its monthly governing council meeting in Barcelona today in a change of scenery from its usual home in Frankfurt. Spain IS probably quite a fitting venue as it Is now the focus of investor concern amid its budgetary and banking problems. Interest rates are expected to be left unchanged at today's meeting and the main question is whether the bank needs to introduce further emergency measures to help euro zone banks and member states contain the debt crisis.
*** Talks between European finance ministers aimed at agreeing new rules to govern the amount of capital EU banks should hold to guard against losses broke down without agreement this morning in Brussels. British chancellor George Osborne was particularly exercised at the meeting. Britain has been pushing for quite stringent rules on capital for banks. It also wants more flexibility for national regulators to impose additional buffers on their banks. George Osborne was insistent the rules not be watered down as some member states appeared to be suggesting merely to achieve consensus. He told the Ecofin meeting he was not going to go outside and tell the waiting press something that would make him "look like an idiot five minutes later". Those talks broke up early this morning after 16 hours and no agreement in sight.
