Mueller warns oil prices will hit Aer Lingus profits

Aer Lingus returned to profit last year despite huge disruption to business from the volcanic ash cloud and the crippled economy.

Aer Lingus returned to profit last year despite huge disruption to business from the volcanic ash cloud and the crippled economy.

The airline made €30.4m compared with losses of €154m in 2009.

Chief executive Christoph Mueller warned that continued high oil prices will significantly hit profits this year.

“If current fuel prices persist, we expect that 2011 operating profit will be significantly below that of 2010,” he said.

Aer Lingus described 2010 as a difficult year, noting that the number of passengers at Dublin Airport fell by 10%, on top of a 13% fall in 2009.

It also said it was forced to stall business as the Icelandic volcanic ash cloud shut down airspace over Europe for weeks and the big freeze and heavy snow in December further disrupted business.

Mr Mueller said success last year was down to a new business strategy, with transatlantic services back in profit and €41m saved by restructuring the workforce.

“This result represents a swing in profitability of €138.6m compared to 2009 and has been achieved despite adverse economic conditions in our core Irish market and significant operational challenges caused by volcanic ash and weather related disruptions in 2010,” he said.

He added that he expects the airline to face further tough trading this year as oil prices soar and airport charges impact on demand.

“We expect significant challenges in 2011, with trading for the year likely to be impacted by fuel price inflation and increased airport charges in combination with difficult conditions in our home market.

“We do not expect that improvements in yield performance and ongoing cost savings can offset these increased costs.”

Aer Lingus was last week forced to pay a €52m tax bill over a redundancy scheme negotiated in 2008 and 2009.

The airline had believed it would not have to pay out and had also pledged not to let affected staff take the hit.

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