Aer Lingus profits expected to rise

AER LINGUS is expected to announce a strong turn- around in its trading position when it announces results for 2002 today.

The national airline currently taking the shamrock off the tailfin of some of its planes is due to produce operating profits of over 60m well up on earlier forecasts, it is understood.

This will be a major turnaround from 2001 when the group lost a total of 139m that included exceptional charges of 104m covering redundancy and other rationalisation costs at the airline.

Chief executive Willie Walsh who took over as boss of the troubled airline in October, 2001 is due to have his day in the sun tomorrow.

But analysts say his company along with other airlines will face a very tough 2003 given the state of the global airlines sector.

Standard & Poors has cut the British Airways rating to junk bond status and this is indicative of where the sector is at the moment, analysts said.

Already Mr Walsh has the unions snapping at his heels seeking a 17% hike in pay.

They were hit with over 2,000 redundancies since the cost-cutting programme was implemented and it is believed the cut in payroll, costs will be a significant factor in the turnaround presided over by Mr Walsh.

The profits are better than had been earlier anticipated. At one point the group was hinting that profits would be around 45m for the year, but the full impact of the cost cutting has yielded better than expected results in the year just gone.

If the success is maintained in 2003 prospects of a sell-off or part sale of the airline has not been ruled out in the not too distant future.

Earlier plans were mothballed after the Eircom fiasco when fund managers lost their appetite for another semi-state sell-off.

In its trimmed down state and its part adoption of the Ryanair low-fares no-frills model the group is seen to be moving in the right direction.

However the big imponderable at this stage is how the world travel market will shape up in the current year.

Airlines have had a rough time since 9-11 and the fear factor has been escalated with the impending war on Iraq just hours away.

Not only has S&P downgraded BA as a credit risk, buy South West Airlines., the inspiration behind Ryanair has also been downgraded by the credit rating agency.

In 1999 and 2000 the profits at the airline were 71.6m and 80m respectively.