Long-haul gains help get Aer Lingus back on target

A near 40% slashing of first-half losses has led Aer Lingus to reinstate original full-year guidance, after having downgraded its forecasts following strike action in May.

The company yesterday reported an operating loss (before net exceptional items) of €9.9m; down 39.6% on the €16.4m losses made in the same period last year.

Revenue for the first six months of 2014 rose by 6% to €697.2m, with net cash levels up nearly 17% to almost €586m.

Last month, Aer Lingus said that the effects of May’s industrial action would lead to a fall of 10%-20% in full-year operating profits, having previously stated that it expected 2014 figures to be in line with last year’s.

However, on the back of the strong first-half showing — heavily driven by success in the long-haul space — it has reverted to its initial expectation that profits will be, at least, in line with 2013’s tally of €61.1m.

Management added that even with the May strike action, the pre-exceptional operating profit of €38.7m for the second quarter was the best showing in that period for five years at least.

It said without May’s strike, the traditionally loss-making first-half operating result would actually have been close to break-even levels.

Chief executive Christoph Müller said Aer Lingus’s pre-exceptional annual profitability can be sustained.

“During the past two years we have invested selectively in carefully chosen opportunities, such as increased transatlantic flying, contract flying on UK domestic routes and an aircraft leasing joint venture.

“We are now seeing returns from our investments in these new services and areas and the positive impact of these returns on our business,” he said.

While passenger volumes increased 1% in the first half, to 4.6m people, Mr Müller said challenges remain on short-haul. He added that while the airline managed to partially recover forward bookings for late summer, it is still carrying “an estimated negative booking gap of €10m into the second half of 2014, with some limited potential for further recovery.”