Aer Lingus investment stalled amid pay dispute with pilots

The airline also called for Dublin Airport passenger cap to be addressed urgently

Aer Lingus saw operating profit soar to €225m in 2023. Picture: Larry Cummins

Investment in Aer Lingus will be limited until the ongoing pay dispute with pilots is resolved, the chief executive of its parent company IAG has warned.

This comes as the latest financial results for the company shows the operating profits at the Irish airline increased by over 400% to €225m in 2023 compared to the previous year.

A pay dispute between the Irish Airline Pilots Association and Aer Lingus has been ongoing for several weeks and is now set to be adjudicated in the Labour Court.

Aer Lingus pilots are seeking a pay increase of more than 20% to cover inflation. They have also said they have not received a pay rise since 2019.

IAG chief executive Luis Gallego said until negotiations with the pilots were concluded “we will be limiting investment in Aer Lingus”.

He added the negotiations were “very difficult” and the parties are far apart. A date has not yet been set for the Labour Court.

The passenger cap at Dublin Airport was also cited by the airline group as an issue which may influence where it places its newer aircraft.

The airline group has also called for an interim planning application to be submitted in order to immediately raise the passenger cap at Dublin Airport from its current 32 million a year.

In December, Dublin Airport operator Daa submitted a planning application to Fingal County Council seeking to increase the limit to 40 million by 2030. However, IAG is concerned this will take too much time.

Aer Lingus chief executive Lynne Embleton said the passenger cap needed to be “addressed urgently”.

“We’ve had plenty of dialogue with Daa. We’ve made our views clear. Our schedules for the summer are committed. We’ve got no intention of changing our near-term plans,” Ms Embleton said.

However, with a number of the airline's short-haul fleet due to retire, Ms Embleton said the “passenger cap could influence how we think about fleet renewal”.

When asked if the airline would consider increasing flights to regional airports like Cork or Shannon in light of the passenger cap, Ms Embleton said it does not see “growth would simply move from Dublin to the regions”.

“It’s a very different dynamic in the market,” she said.

According to the company’s financial results, last year Aer Lingus generated €2.27bn in revenue. The airline flew 10.7m passengers last year, however, a rise in operating costs resulted in a lagging of profits in the period.

Business travel in 2023 also lagged behind pre-pandemic levels but the airline noted it was showing "some signs of recovery" in early 2024. Overall, IAG generated nearly €29.5bn in revenue and €3.5bn in operating profit.

Aer Lingus operated its largest-ever North American network and added more routes and capacity to European destinations, with revenue largely driven by demand for summer travels across these regions.

For this year, the airline said it would be expanding its network to 21 routes to the US and Canada, including the restarting of Minneapolis and a new route to Denver.

While Aer Lingus’s 2023 results show a health return to profit, the airline is still lagging behind pre-pandemic levels.