Aer Lingus makes €1.2 million profit after restructuring costs factored in

ANNUAL profits at Aer Lingus were reduced to just €1.2 million last year after €97m was paid for hundreds of voluntary redundancies.

The airline made operating profits of €107m in 2004, up 29% on the previous year, but when the restructuring charge and other items are stripped out, pre-tax earnings were just €1.2m.

Under a radical business plan devised by former chief executive Willie Walsh to turn the airline into a low- fares carrier, some 734 people left the airline last year and a further 185 have departed since January. Aer Lingus is also seeking extra cuts to its cost base this year and up to 480 jobs could go if changes to working practices and efficiencies are not made.

At operating level, 2004 was the best year for the national carrier for some time with passenger numbers rising for the first time since 2001. The airline flew just under seven million people, a 5.5% increase. Aer Lingus said its focus on new destinations in Europe had paid off with passenger traffic up 25.8%. Since 2001, it has launched 24 new European routes and eight more are planned for this year.

However, the number of passengers to Britain fell 8.6%. Aer Lingus said this was because it cut capacity on those routes to focus on continental Europe. The number of transatlantic passengers increased by 7.2% to 1.2 million. The load factor - seats per flight filled - rose by 1% to 82%.

Turnover for the year was up 2.1% to €906m despite reductions in overall ticket prices. The average fares on the airline’s European routes have fallen by nearly a quarter in the past three years to just under €80, while transatlantic fares have been cut by similar amounts.

Aer Lingus chairman John Sharman said yesterday that 2005 would be a very tough year for the company as competition intensified. He said the other major concern, aside from the ongoing restructuring of the company, was the price of oil. The airline’s fuel bill rose last year as the price of oil soared. It was insulated to much of the increase as it had hedged its jet fuel requirement at lower prices and would continue to do so again this year.