Business travel boosts Aer Lingus

Revenue from Aer Lingus’s long-haul routes jumped by almost a quarter in the first quarter of 2012 compared to last year.

Aer Lingus’s earnings on its long-haul routes, most of which serve the US, grew to €52.7m from €42.3m. The airline noted that performance was ahead of expectation. The long-haul business class offering was particularly popular representing 28% of long-haul revenue.

Aer Lingus chief executive Christoph Müller said the company had experienced an encouraging start to what is usually the loss-making phase of an airline’s year by focusing on delivering for business travellers.

“Aer Lingus experienced an encouraging start to 2012 and the group’s Q1 2012 operating loss of €36.1m represents a 32.8% improvement over Q1 2011. This result is mainly due to strong yield growth, particularly on long haul. We have deliberately compensated for the continuing decline in private Irish consumer demand with an increased focus on serving time-sensitive traffic, which comprises a higher proportion of business travellers,” he said.

Aer Lingus has returned to profitability by refocusing its fleet away from delivering Irish holidaymakers to beaches and ski slopes and towards inbound travel from higher growth areas in continental Europe and sales of higher-price last-minute tickets.

Despite strong growth in long-haul revenue, short-haul flights were weaker than expected. Short-haul passenger fare revenues rose 12.6% to €148.9m.

Operating expenses increased 5.9% with lower aircraft hire charges helping to offset a fuel bill that was 31% higher than the year before.

In a conference call with investors yesterday, Aer Lingus chief financial officer, Andrew MacFarlane said there was no resolution expected on the €700m hole in the pension scheme.

Mr MacFarlane sounded a note of caution on the good start to the year. “Although we got off to a positive first quarter, the year is by no means in the bag. We have limited visibility into the second half. For example our April traffic was a little bit lower than we expected,” he said.


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