AER LINGUS EYES HIGHER FUEL COSTS WITH CAUTION - Aer Lingus has reported that its operating profits increased 16.4% in 2007 to €88.5m. The profits figure, which is before the employee profit share is taken out, was better than expected. The airline also says its revenues grew 15.2% to just under €1.286 billion. Aer Lingus CEO Dermot Mannion says the airline had been through a year of further progress but he added the currency weakness, high oil prices and fears of reduced growth in the airlines major markets in 2008 meant that cost cuts would have to continue.
Mr Mannion says that 2007's performance confirms the airline's status as the most successful flag carrier in Europe as a result of its ability to 're-engineer' the business in recent times to operate on low cost principles. He says the company had achieved much in 2007 in the areas in which it can control - staff costs and maintenance costs. He believes a high liquidity airline like Aer Lingus is very well placed for the future, he adds.
However, the surging oil prices of recent weeks is sending shivers down his spine, Dermot Mannion admits. He says the problem is not unique to Aer Lingus and has created tremendous uncertainty for the rest of the industry. He says that the airline has a 'decent' level of hedging for 2008, with Aer Lingus covered for 36% of its fuel at a price of around $80 a barrel.
'Clearly we and the rest of the industry are exposed to high fuel prices for the rest of the year, and it is difficult for that reason to say what's going to happen next,' he states.
***
MORNING BRIEFS - Oil exploration company Tullow has reported pre-tax profits of £114.2m sterling for 2007 - that is a 57% decrease on the 2006 figure. Revenues rose by 10% to £639.2m in a year in which the company said it had recorded its largest ever discovery, the Jubilee field offshore Ghana.
*** There was a surge in share prices after the world's biggest central banks said they would co-ordinate their efforts to put momentum back into the credit markets.
The US Federal Reserve is leading with $200 billion worth of loans to the banking system. The European Central Bank is making €15 billion available and the the Bank of England and Swiss National Bank are also supporting the action.
*** On the currency markets this morning, the euro is worth $1.5306, while it is also worth 76.3 pence sterling.
