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Despite reporting a loss for the first quarter of the year, Irish airline Aer Lingus Group (LSE:AERL) was upbeat in reporting a €36.1 million operating loss, saying it is normal for this time of the year, and they are expecting operating profit to be at par with the 2011 performance.
Encouraging Start
“Aer Lingus experienced an encouraging start to 2012,” said Christoph Mueller, Chief Executive Officer of Aer Lingus Group. They also stated they are reaping the benefits of the strategy they put in place two years ago, despite an “intensely competitive” and “contracting market”.
The first quarter loss posted by Aer Lingus was in fact an improvement of 35.4% over last year’s loss of €55.9 million, as revenues from both short-haul and long-haul flights increased, as well as retail services increased by 15.6% to €239.1 million.
Aer Lingus, who carried nearly 1.9 million passengers between January and March this year increased its cash from advanced bookings to have a little over €1 billion enough to cover the gross debt of €556 million, which was reduced by €21.1 million during the three-month period.
Stiff Competition
The 43-aircraft fleet airline faces stiff competition on 72% of its short-haul routes, which make up two-thirds of the airline’s revenue per passenger kilometres (RPK), at €1.7 billion.
“Notwithstanding recent changes in European airline ownership, Aer Lingus is confident that it can retain or improve current levels of connecting passenger traffic in all major gateways, Dublin, London and New York,” Aer Lingus’ statement on the quarterly report released Thursday.
Last March, the European Union Commission approved the acquisition of British Midlands Limited by International Consolidated Airlines Group, the parent company of British Airways. This sale, however, was not met with satisfaction amongst the industry, as it was “condemned” by another airline group, Ryanair.
Ryanair had offered to buy Aer Lingus in 2006, but was rejected by the EU Commission.
2012 Outlook
Aer Lingus did not provide figure estimates for the second quarter performance but instead stated the management remains “focused on Aer Lingus’ cost base and continue to explore measures to protect the Group’s profitability for the remainder of 2012 and beyond.”’
CEO Mueller commented:
“We now share the more upbeat view on industry trends expressed in IATA’s April 2012 airline business confidence survey and if current trends continue, Aer Lingus’ operating profit for 2012 should match that achieved in 2011.”
Company Spotlight
Aer Lingus Group is an Ireland-based low-cost low-fares airline group providing flights out of Ireland to destinations in the United Kingdom, Continental Europe, and the United States.
Established in 1936 by the Irish Government, which still owns 25% of the airline group, Aer Lingus is publicly traded on the Irish and the London Stock Exchanges under the tickers “EIL1” and “AERL”, respectively.
In London trading today, shares of Aer Lingus were down 0.5% to 98 Euro cents, at 11:00 GMT, a third of their value five years ago in 2007.
References
↑ Company Website Profile
↑ European Commission Approval of BMI-IAG Merger
↑ Aer Lingus Investor Relations
