‘Leaner’ Aer Lingus posts pre-tax loss of €24.5m

Aer Lingus has posted a pre-tax loss of €24.5m for the six months to the end of June during what is typically the airline’s lossmaking portion of the year.

As well as issuing its half-year trading update, Aer Lingus issued a 30-page circular to shareholders outlining why they should reject the Ryanair takeover offer.

In the extensive circular Aer Lingus failed to address the issue of the significant restructuring of the two airlines’ operations that Ryanair would have to undertake in order to get any takeover bid passed by the EU regulatory authorities.

In the first six months of the year, Aer Lingus’s losses before tax increased 79% from €13.7m for the first six months of 2011 to €24.5m for the same period this year.

Aer Lingus CEO Christoph Mueller said that the group’s loss for the last quarter was part of the annual cycle for airlines which sees them make losses in the early part of the year. Mr Mueller was encouraged by the 84% cut in operating losses.

“Aer Lingus has produced a good trading performance in the seasonally weak first half of 2012. The group’s operating loss of €4.4m represents a significant improvement over the prior year. These results clearly demonstrate that our strategy of building a leaner and more efficient Aer Lingus is working,” he said.

The airline said it carried 4,511 passengers in the six-month period, an increase of 3.4% on the same time last year. Average yields per passenger rose by 6.3%.

The airline’s operating costs in the first half of the year rose by 5.8%, mainly due to a 29.6% increase in fuel costs and an 8.1% increase in airport charges.

One of the reasons for the increase in pre-tax losses was the difference in exceptional items. Last year Aer Lingus had received nearly €15m in payments under exceptional items. This year the company was hit with costs of €19.8m under extraordinary items.

As part of implementing Aer Lingus’s cost-saving plan called Greenfield, the airline incurred restructuring costs of €11.7m, most of which was spent on relocating A330 maintenance from Shannon to Dublin.

Mr Mueller said that following on from the code-sharing agreement with Etihad, Aer Lingus is now in the early stages of exploring cost-saving measures with Etihad.

Aer Lingus also incurred cost of €4.3m as a direct result of the Ryanair takeover bid. The company expects further costs due to advisory fees and other costs.

As well as issuing its half-year results Aer Lingus also issued a second circular to Aer Lingus shareholders urging them to reject the Ryanair takeover offer.

The circular restated the former state airline’s position that the Ryanair bid is unlikely to succeed due to regulatory issues and that the offer of €1.30 undervalues the company.

In the circular Aer Lingus outlines that it has turned the company around, delivering savings of €95.8m.

The circular also restates the number of attempts Ryanair has made to buy Aer Lingus that have been blocked by regulators and the ongoing UK Competition Commission investigation which could result in Ryanair being forced to sell their stake in Aer Lingus.

Mr Mueller said that the board is enjoying the support of shareholders because very few shareholders have sold their shares.