Shares in Aer Lingus fell sharply in Dublin today after a gloomy trading update revealed that its revenue had fallen by 16% in the first quarter of 2009 compared with a year earlier. The shares ended down 13 cent - or 19% - at 56 cent.
The Aer Lingus statement said it was facing an exceptionally tough trading environment.
Ryanair chief executive Michael O'Leary described the Aer Lingus figures as 'appalling' but ruled out another Ryanair bid for the airline.
Aer Lingus also announced a re-organisation of its senior management structure in an effort to meet what it called the new challenges of a deteriorating outlook for the industry.
Aer Lingus says the management overhaul has been taken to reflect the different needs of its short haul and long haul operations.
Niall Walsh, currently deputy CEO, has been appointed the airline's chief operating officer. Sean Coyle, its chief financial officer, has been appointed as head of its short haul operations. Stephen Kavanagh, corporate planning director, has been named head of the Aer Lingus long haul operations. Mr Coyle and Mr Kavanagh have assumed their new responsibilities in addition to their existing roles.
In today's trading statement, it also warned that the losses it makes this year will be bigger than the lowest expectations the market has already forecast for the airline.
'Ongoing cost reduction is critical for the viability of Aer Lingus in the current difficult market environment, and the board is reviewing the range of options to deliver a sustained reduction in operating costs to align its cost base with the group's current and expected revenue stream,' the airline said.
It added that it will update the market with further progress on this in 'due course'.
Q1 passenger numbers down 6.5%
Aer Lingus said its passenger numbers in the three months to the end of March fell by 6.5% year on year to 2.09 million. Its short haul passengers decreased by 5.7% while it also saw a 12.5% decrease on its long haul routes.
At the same time, the airline's short haul capacity fell by 4.5% and its long haul capacity slumped 19.5%, as it cut back on flights and routes.
Aer Lingus also said that its short haul average fares fell by 1.6% in the first two months of the year, but tumbled by 23.6% in March. This brought the quarterly figure down 10.8% year on year. However, this decline was partly offset by the strong increase in ancillary revenues per passenger which rose by 14.5%.
Long haul average fares fell by 14% in January and February and tumbled by 25.7% in March, with the quarter down 18.9% year-on-year.
Aer Lingus stated that it is currently reviewing the 'sustainable' shape and size of both its short haul and long haul business. It added that it will review its long-term requirement for its long haul capacity currently on order with Airbus.
Looking ahead, Aer Lingus said the airline industry is facing an 'exceptionally tough trading environment which has progressively deteriorated this year'.
It says the industry has seen a rapid deterioration in the prospects for many major carriers and this is set to be exacerbated by current concerns about the outbreak of swine flu.
'Falling consumer demand in Aer Lingus' key markets is, and will continue to contribute to sustained and significant fare pressure,' it stated. 'This dynamic and very challenging environment contributes to a highly uncertain outlook'.
Aer Lingus Chairman Colm Barrington said that with the severe deterioration in operating conditions, the board was takings steps to safeguard the company's long-term viability.
'In addition to today's management changes, the board remains resolute in its objective of reducing operating costs and retaining a strong capital structure,; Mr Barrington said in today's trading statement.
Mr Barrington took over executive responsibility for Aer Lingus earlier this month after Dermot Mannion resigned as CEO.
Aer Lingus shares slumped 19% cent to 55 cent in Dublin this afternoon.
Ryanair chief rules out third Aer Lingus bid
Ryanair chief executive Michael O'Leary described the Aer Lingus figures as 'appalling' but ruled out another Ryanair bid for the airline.
He was speaking in London where he announced a new licensing agreement for websites set up to compare airline ticket prices.
Mr O'Leary has accused the Aer Lingus board of misleading investors when - he said - they had promised increased profits at the airline three months ago. That was at the time of Ryanair's second bid for control of Aer Lingus. Ryanair still owns just under 30% of Aer Lingus, but Mr O'Leary ruled out a third bid, saying the Government would have to ask Ryanair to rescue Aer Lingus.
Mr O'Leary also said Ryanair's decision to close all its check-in desks at the airports it uses by October will result in between 40 to 50 job losses in Ireland.
Ryanair today also announced it would allow price comparison websites to access its fare information but would continue to block websites from re-selling Ryanair tickets. Under the agreement, for a charitable donation of €100, websites which provide fare comparison and seat availability information will be allowed to use Ryanair's website.
