Pilot strike threat 'to cost Aer Lingus millions'

The threat of strike action by Air Lingus pilots is expected to cost the airline in the region of €3.5m.

Defending Ryanair’s takeover bid cost Aer Lingus a further €7.8m.

The airline’s interim results for the first six months of the year revealed that higher fuel prices, salaries, and airport charges led to a substantial fall in profits.

It reported pre-tax profits of €11.5m, down from €19.8m during the same period last year.

Aer Lingus chief executive Dermot Mannion said that despite the drop, the airline delivered a solid financial performance with an operating profit of €2.6m.

“This was achieved in a keenly competitive marketplace where the planned capacity from our competitors in our home bases to continental routes increased by 45% in the first half of 2007 over the equivalent period last year,” he said.

“We operate in a seasonal business, with the majority of our profits earned in the second half of the year.

“With the substantial increases in fuel prices in 2007, this seasonality influence has had a more pronounced impact on our financial performance in the first six months.

“Early indications of our performance in the second six months of the year are encouraging.”

The airline said passenger revenue grew by 10.5% to generate almost €500m with a total of 4,398,000 passengers carried up to June 30, up 5.9% on the same period in 2006.

Total short-haul passengers carried increased to 3,853,000, while long-haul passengers jumped to 545,000.

Ancillary revenue – mainly from sales on board, baggage charges, booking fees, excess baggage and car hire, hotel and insurance commissions – rose by 68.6% to €50.4m.

Total operating costs (before the employee profit share) increased by 14.8% to €571.5m.

Fuel took a fifth of all costs rising by €25.3m to €116m, while staff costs rose 12% to €150m.

Employee numbers increased from 3,551 in 2006 to 3,770 in 2007.

Mr Mannion said the airline would continue to operate in a highly competitive environment, where a continuing and unrelenting focus on cost reduction, efficiency and change is necessary for success.

“To date in 2007, we have commenced flights under Open Skies, we have announced our first base outside of the Republic of Ireland, in Belfast, we have expanded both our long and short-haul fleets,” he said.

“We have successfully defended the company against an unsolicited takeover bid and we have announced the most significant fleet acquisition programme in the history of Aer Lingus.”

Meanwhile, the airline continues to be embroiled in controversial disputes over its decision to axe its Shannon-Heathrow service and open a hub in Belfast.

The move prompted a two-day work stoppage by 500 members of the Irish Airlines Pilots Association (Ialpa), but the action was called off at the 11th hour when all parties agreed to resolve outstanding issues at the Labour Relations Commission (LRC).

“While the dispute was ultimately averted, the impact of lost bookings and the committed costs of contingency arrangements is expected to be €3.5m,” said Mr Mannion.

“The company and Ialpa are working under the auspices of the Labour Relations Commission to seek a resolution of this dispute. The outlook for this industrial action is not yet clear.”

While all parties return to the LRC tomorrow, mayors and chairmen from 11 local authorities in the west of Ireland will meet in Shannon over the airline’s plans to axe the Heathrow service.

Sinn Féin representatives are also holding talks with the Shannon Action Group to discuss the impact of the cuts at the mid-west airport.