Morning business news - July 31Wednesday 31 July 2013 10.44
AER LINGUS CONFIDENT ON GOOD RESULTS FOR 2013 - Aer Lingus has reported operating profits of €29.1m for the three months to the end of June, down just over 8% on the same time last year. Revenues were up 6.2% to €398.2m for the three month period. Average fare revenue per seat was up 4.8% with growth on both its short haul and long haul services. But the airline reported an operating loss of €16.4m in the first half of the year on revenues of just below €658m. A number of exceptional factors were behind the loss including its new wet-leasing arrangement with Virgin's UK operations, Little Red.
"We have a very strong frontloading of costs in the first half of the year but we will totally recover form that by the end of the year. We'll show another very good result for 2013," Christoph Mueller, Aer Lingus chief executive said.
He believes there are advantages to the wet leasing arrangements, where one airline provides an aircraft, crew and maintenance to another airline which pays for the service. "We use wet-leasing ourselves. We'll have three boeing 757s next year that will be operated by ASL contractors in Swords. The practice is attributable to strong seasonality. It improves our asset utilisation so it's a win-win for both sides."
Mr Mueller said he was optimistic that Aer Lingus's new west coast US route would be successful. "The California route is a very volatile market. The main reason we weren't successful in the past was that we couldn't fill an entire aircraft with local traffic. We have built connectivity so we can fill part of the craft with passengers originating in Europe,'' he explained.
Christoph Mueller described the recent letter from the Pensions Board on the pension gap in the company as an ''informal, preliminary opinion'' and not a final rejection. He said the judgement of the Labour Court, which would see Aer Lingus inject €140m into the scheme which it shares with the Dublin Airport Authority, still applied and it would not change.
MORNING BRIEFS - Food group Greencore has reported revenue of just under £306m sterling for the third quarter to the end of June - up just over 2.5% on the same period last year. Trading was in line with expectations but conditions in the UK convenience foods market was tough with poor weather affecting performance. The US market is performing very strongly after a number of acquisitions there.
*** New figures show hotel room rates and occupancy rose in 2012 compared to the previous year. But something of a two speed market is developing with Dublin outpacing the rest of the country. Average occupancy at just below 64% in 2012 was around 2.5% higher that the previous year, according to consultants Crowe Howrath. Average rates are up just over €2 to €74.72. The survey calculates average profit per room across the country at €6,500. However, the Hotels Federation says those numbers do not take into account the interest being paid on outstanding debt, which stands at around €7 billion across the sector.
*** The US Federal Reserve concludes its policy meeting today after which it is expected to announce a continuation of its $85 billion a month bond buying programme. The statement is unlikely to spell out exactly when it intends to scale back on quantitative easing, which markets had been expecting in September. Fed officials would prefer to see more evidence of a recovery in the jobs market first. Figures out today are expected to show that the US economic growth struggled to hit 1% in the second quarter - down from 1.8% in the previous 3 month period.
*** Facebook shares are bouncing back after their fairly rocky IPO last year. The stock came within striking distance of its flotation price of $38 in trading yesterday, hitting $37.96 in afternoon trading before closing at $37.61 - up 6.2% or $2.18 in the day. The share price has been gathering momentum since the company reported stronger than expected earnings last week, particularly in the area of mobile advertising.