Industrial action and US market pressures sees Aer Lingus profits fall by €88m

IAG said operating profits at the Irish airline totalled €148m in the three months from July to September, down from €236m in the same period last year

The industrial action had a direct impact of €55m over the second and third quarters, with an additional impact on forward bookings. Photo: Sasko Lazarov/© RollingNews.ie

Industrial action and US market pressures saw quarterly profits at Aer Lingus drop by €88m compared to the same period last year.

In a trading update published on Friday, Aer Lingus owner IAG said operating profits at the Irish airline totalled €148m in the three months from July to September, down from €236m in the same period in 2023. 

"The €88m reduction in operating profit for Aer Lingus was partly due to an industrial dispute with its pilots’ union, which impacted the Aer Lingus operation in late June and July, together with weaker trading," IAG said.

In July, Aer Lingus and its pilots agreed to a Labour Court recommendation on pay, which will see pilot pay increase 17.75% over four years.

The offer was significantly higher than the 12.25% Aer Lingus was offering but still below the 24% that pilots were demanding.

The industrial action had a direct impact of €55m over the second and third quarters, with an additional impact on forward bookings. This was compounded by competitors across the Atlantic increasing their capacity into Ireland by 20% over the summer, putting pressure on Aer Lingus’ long-haul revenues, particularly in the economy cabin.

However, the three months from July to September also saw an underlying strong demand for major sun destinations and European city destinations, the airline said.

Aer Lingus also said it welcomed the recent decision by the High Court to grant a stay on the IAA’s earlier decisions to reduce capacity by removing historic slots at Dublin Airport, noting that the 5% seat reduction that had been proposed by the IAA for Summer 2025 will not now apply.

"In the context of the competitive and cost environment and the uncertainty caused by the passenger cap, Aer Lingus has developed its network plan for 2025," the airline said. 

"This will see an expected six A321 XLR aircraft joining the fleet over 2024/ 2025 and some reduction in A330 and A320 flying."

The confirmation of A321 XLRs joining the fleet has seen Aer Lingus announce new routes to Nashville and Indianapolis commencing in spring 2025 respect. It has also recently commenced its service to Las Vegas, offering a direct flight three times per week until the end of April 2025.

Meanwhile, Aer Lingus owner IAG saw quarterly operating profit jump 15%, beating forecasts following upbeat on travel demand.

For the three months to end-September, its busiest season, IAG posted operating profit of €2bn, well above a consensus forecast of €1.78bn, helped by higher ticket prices and lower fuel prices, with cost savings offseting a higher wage bill.

IAG, which also owns Iberia, Vueling and Aer Lingus, also on Friday announced a €350m share buyback.

"Demand remains strong across our airlines and we expect a good final quarter of 2024 financially," Chief Executive Luis Gallego said in a statement.