Aer Lingus CEO 'optimistic' on recovery hopes despite €347m loss last year

Aer Lingus chief executive Lynne Embleton has said she is already seeing strong booking levels for the key summer season.

Aer Lingus chief executive Lynne Embleton has said she is “optimistic” about the airline’s chances of recovery despite it still showing heavy financial damage from the Covid crisis.

Annual results from parent group IAG show Aer Lingus made an operating loss of €347m last year. This was marginally down on its 2020 loss of €361m, but still a world away from pre-Covid 2019 when the airline generated operating profits of €276m.

Speaking on the back of the results, Ms Embleton said she is “optimistic” about the future and over Aer Lingus’ rebuilding capability. She said the airline has an “ambitious” summer schedule planned but is already seeing strong booking levels for the key summer season.

However, Ms Embleton warned that it will “take time” to repair Aer Lingus’ balance sheet, given the severe damage done to it by two years of pandemic upheaval and travel restrictions. Nevertheless, she said she is currently comfortable with Aer Lingus’ liquidity position. 

That said, the airline is still continuing to have discussions both with IAG and the Irish Government over its liquidity needs and further funding.  Last year, Aer Lingus borrowed €150m from the Ireland Strategic Investment Fund (ISIF), with an open mind over borrowing more.

Ms Embleton, however, said the airline must recover to a position where it can repay its debt and fix its finances. Aer Lingus’ passenger revenues amounted to €308m last year, with cargo revenues at €65m. 

IAG

The airline also showed the lowest passenger capacity compared to pre-pandemic levels within IAG.

IAG – which also owns British Airways and Spanish airlines Iberia and Vueling – said it is 70% hedged on fuel costs for the first quarter of this year and 60% shielded from volatile price movement for the full year.

On a group basis, IAG posted a net loss of €2.97bn for last year, down from a loss of €4.39bn in 2020. The group said it expects to return to profit in the second quarter of this year and to return to 85% of pre-Covid capacity.

IAG boss Luis Gallego said the group has not seen any immediate negative impact from the Russia-Ukraine conflict on consumer travel confidence. Ms Embleton said Aer Lingus is not seeing any impact due to its lack of focus on eastern Europe.

However, Mr Gallego said the conflict could eventually knock general customer confidence, particularly in the American market.

"The point of sale in the US can be affected because the people can be concerned that there is a war in Europe," he said, despite there being no evidence of impacted bookings as yet. "We are confident that a strong recovery is underway," Mr Gallego said. 

He added business travel had started to pick up, especially on transatlantic routes. The group's forecast for a return to profitability assumes no further setbacks related to Covid-19 and travel restrictions or material impact from "recent geopolitical developments."

- Additional reporting Reuters