Aer Lingus chief paints gloomy forecast

Aer Lingus is facing its most difficult period in its 73-year history, its chief admitted today.

Chairman Colm Barrington revealed trading conditions nose-dived in the first three months of the year with no indications of any improvement in the near future.

He told shareholders at the company’s annual general meeting in Dublin it is also impossible to make accurate business forecasts for the rest of this year and beyond.

“The impact of a deteriorating economic environment has been felt across the industry, resulting in many airlines reporting significant losses and revising their profit guidance substantially downwards,” said Mr Barrington.

“Trading conditions in each of Aer Lingus’ key markets are exceptionally challenging.

“The Irish air travel market is being impacted by rapidly growing unemployment, rising tax rates and declining consumer confidence and demand.”

Mr Barrington revealed demand for air travel is considerably weaker than last year, which has led to a drop in passenger numbers and lower fares.

Air ticket sales in the UK and US have also dropped by declines in the value of the dollar and sterling relative to the euro.

He said conditions have been further compounded by the imposition of an air travel tax of 10 euro per departing passenger from Ireland.

However, figures released earlier by the carrier – which is part owned by rival Ryanair and the Irish Government – showed it carried more passengers last month than in May 2008, despite a 21.1% drop in long haul passenger numbers during the month.

Shareholders are due to vote on a resolution put forward by Ryanair to drastically reduce the fees paid to directors of the airline.

Mr Barrington told the AGM over the past number of years Aer Lingus has delivered significant incremental improvements in its cost base to meet the needs of an increasingly competitive and challenging environment.

“However, the group is now facing the most difficult period in its 73-year history,” he added.

“The board and management are now finalising a fundamental evaluation of the overall business including the structure of the organisation, current fleet capacity, future fleet commitments, route network, work practices and costs, profitability and cash conservation.”