Aer Lingus reports dip in 2013 profits, but revenues rise

Monday 24 February 2014 17.27
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Aer Lingus  proposing to pay a dividend of four cent per share for 2013
Aer Lingus proposing to pay a dividend of four cent per share for 2013
Aer Lingus CEO Christoph Mueller  says industrial action not the right course of action to bring the pensions issue to a satisfactory conclusion
Aer Lingus CEO Christoph Mueller says industrial action not the right course of action to bring the pensions issue to a satisfactory conclusion

Aer Lingus has reported an operating profit of €61.1m for 2013 - in line with its stated guidance, but down 11.6% from the €69m reported last year.

Total revenue for the 12 months to the end of December rose by 2.3% to €1.425 billion. Pre-tax profits for the year fell by 2.2% to €39.5m from €40.4m

The airline said its average fare revenue per seat was up 2% to €90.43.

Aer Lingus said that based on its "strong performance", its board is proposing to pay a dividend of four cent per share for 2013.

This is in line with the previous year, and the airline said it expects to maintain dividends at this level for the foreseeable future. 

The airline said its long haul routes performed especially well last year with revenue up over 11% and passenger numbers up over 12%.

But its short haul revenue was down 3.3% due to the good weather in Ireland and Northern Europe last summer as well as more competitive pricing.

Aer Lingus shares closed 2.7% lower in Dublin.

"2013 was the first year of significant growth for Aer Lingus since the global economic downturn. We added 11.6% additional capacity to our mainline long haul network and more than sold this," commented the airline's chief executive Christoph Mueller. 

"We also successfully commenced contract flying operations and as a result, increased our short haul fleet by four aircraft. While we faced challenges in short haul markets in the second half of the year, we took effective corrective action to protect margin and in this way delivered a creditable profit", he added. 

The company's chief executive said the absence of progress on pension matters at the airline inhibited developments on several other key matters for the business. 

Mr Mueller has said he was not aware of any legal action against the unions who are threatening to go on strike at the airline over pensions.

Reports on Friday said the airline had written to SIPTU to warn it that the company could take all steps, including legal action, to prevent industrial action.

Mr Mueller said he was not aware of "speculation of that nature".

The Aer Lingus CEO said industrial action was not the right course of action to bring the pensions issue to a satisfactory conclusion and that a solution could only be brokered at the negotiating table.

"We have so many different parties, I have doubts about whether a parliamentary solution can be found. Even if that is not the case, a strike is not accelerating that process," he said.

Aer Lingus to launch new CORE programme

He said the airline will launch its Cost Optimisation and Revenue Excellence programme in the first quarter of 2014, which aims to reduce costs by €30m from further job cuts and increased productivity. 

As part of this new programme, Aer Lingus will relaunch its website and improve its mobile app. It will also upgrade its long haul business class offering including the introduction of fully horizontal lie-flat seats.

Aer Lingus will also offer US border pre-clearance from Dublin Airport Terminal 2 for all of its summer flights, while it also plans to move to the new terminal in London Heathrow.

Looking ahead, Mr Mueller said that he expects the first quarter of 2014 will be weaker than 2013 due to market conditions and the timing of Easter.

"Based on current trading, we expect our operating result for 2014, before net exceptional items, to be broadly in line with 2013," he added.