Crisis at Aer Lingus - Slash costs or write the obituary

AER LINGUS yesterday published results that are unsustainable and unless the company can reverse its fortunes its long-term future must be questionable.

In the first six months of this year the company, once one of the brightest and most heavily subsidised symbols of a newly independent and ambitious Ireland, made an operating loss of €93m, a figure that represents 16.7% of sales. Those figures don’t tell the full story though, as they do not record that the business also lost money before paying for leased aircraft or charging for the depreciation of its own aircraft. Cash — the reassuring and long-trumpeted war chest — has been flittered away and reduced to €440m, 45% below last year’s comparable figure. If present trends continue the war chest will contain less than €300m before Christmas.

In the simplest of terms this means that the company lost nearly €20 — €18.80 to be exact — for every passenger it carried in the first six months of the year. This implosion has had an impact on the share price which has collapsed from over €1.40 to less than €0.50.