Aer Lingus ‘to remain profitable’ as profits fall 6%

Aer Lingus has said it will remain significantly profitable this year, despite seeing operating profits fall by well over 6% in 2011.

The airline’s latest set of annual results, published yesterday, show a decent performance for 2011 — with revenue up by 6%, to €1.29 billion and pre-tax profits up by over 210% at €84.4 million. The 6.4% fall in operating profits — from €52.5m to €49.1m — was attributed to higher fuel and airport costs.

“Our expectation, for 2012, is that the group will remain significantly profitable, albeit below 2011 levels,” management said yesterday.

“This will require Aer Lingus to drive increased passenger volumes and to also generate a higher average yield per seat across the network.”

The airline’s chief financial officer, Andrew McFarlane, said that fuel costs remain the biggest challenge to profitability, warning that the company’s fuel bill could rise by €60m in 2012.

Last year also saw a 1.8% annual increase in passenger numbers at the airline, with 9.51 million people carried; that upward trend continuing on into January of this year.

Chief executive Christoph Mueller said the airline’s balance sheet remains “robust”, with a gross balance of nearly €895m.

However, Mr Mueller said any talk of a dividend payment to shareholders — as has been called for by its main shareholder, Ryanair — is “hypothetical” at this time, but management would be “open to discussion” on the matter when the balance sheet is further strengthened.

He added that there was no question of the group making payments to fill its pension deficit hole — which should please its main shareholder — but said that management remains “optimistic” the problem can be sorted.

Mr Mueller also said that management would welcome Ryanair selling its stake in the airline too.

Aer Lingus’s share price was down by over 7% yesterday, with its market value at about €465m.