Aer Lingus has recorded its best quarter since the financial crisis. An interim management statement published by the company this morning shows it reported operating profit of just under €113m for the three months to the end of September.
That was up 19% on the same period last year. Growth on long haul routes, primarily to the US, was strong with revenues from long haul passengers up 34% to 176 million.
Christoph Mueller, chief executive at Aer Lingus, says the airline has successfully expanding its long haul business during the past three years with capacity increasing by 25%. The airline's load factor on the North Atlantic network as a whole is increasing and is driving the airline's yields higher. Aer Lingus is developing Dublin as one of Europe's main springboards across the North Atlantic and Mr Mueller says the the airline is planning further expansion next year. Overall the airline is on track, he states.
The Aer Lingus boss says that oil prices continue to fall every day, similar to water prices in Ireland, he jokes. But Mr Mueller says the airline has to remain a little cautious as Aer Lingus has to pay its fuel bill in US dollars. As the airline hedged its oil prices 18 months, the full effect of the cheaper prices are not yet feeding through. He says a balance has to be maintained between the strengthening US dollar and the cheaper cost of fuel so as to further increase margins.
Christoph Mueller says that Aer Lingus is driven mainly by the performance of the Irish economy, which is doing very well with signs of increased consumer spending. Despite the problems in much of the big economies of the euro zone, Mr Mueller says that inbound tourism from the likes of Germany, the UK and the Benelux countries, is still very strong.
On the airline's pensions issue, Mr Mueller says all of the parties concerned have done what had been anticipated in the latest round of the saga. The airline is waiting on the results of a staff ballot - due over the next 48 hours. If the ballot is successful, the company will convene an EGM before Christmas in order to collect shareholders' votes on its contribution to the Irish Airlines Superannuation Scheme (IASS). "Everything is going to plan," Mr Mueller stated. The Irish Pensions Board has to approve whatever resolution is agreed and Mr Mueller says there is a very tight time schedule during which all the parties have to approve the current proposal.
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MORNING BRIEFS - Packaging giant Smurfit Kappa saw its pre-tax profit rise 39% to €321m over the first nine months of the year. That was despite what chief executive Gary McGann described in a statement alongside the results as a weaker macroeconomic backdrop in the three months to the end of September. During that quarter profit fell by 11%.
*** Fashion brand Levi Strauss is rolling out a new initiative aimed at boosting its ethical credentials by helping its overseas suppliers. The jean maker will offer low cost finance to manufacturers in Bangladesh and China provided they hit certain health, safety and environmental standards. The scheme will be operated in conjunction with the International Finance Corporation - a division of the World Bank. Rachel Wilshaw, ethical trade manager for Oxfam, is quoted in the Financial Times this morning saying that while such schemes are to be welcomed their success depends on how rigourously Levi Strauss and the IFC continue to monitor conditions at the factories.
*** Oil prices fell further overnight as investors bet a US report will show supplies remain plentiful amid relatively muted global demand. In New York, the benchmark West Texas Intermediate crude price dropped to its lowest level since December 2011 $77.12. Brent Crude, the benchmark more closely watched in Europe, also fell in Asian trade dropping 33 cents per barrel to $82.49. Cheaper oil prices are already proving a factor in corporate earnings. Earlier this week Ryanair reported a 9% drop in fuel costs per passenger which helped it to a 32% rise in half year profit.
