11 March 2009

Big losses for Aer Lingus

Aer Lingus has issued a profit warning for 2009 after reporting a loss of Ã¢'š~¬119.7 million 2008, compared to a profit of Ã¢'š~¬124.8m in the previous year.

The airline, which has just fought off a takeover bid from rival Ryanair, warned that a "rapidly deteriorating" market would increase its losses this year.

"In the current climate we believe that in 2009 Aer Lingus will experience a larger operating loss than in 2008 and that in these circumstances the group is unlikely to meet its previous guidance of a pre-tax profit in 2009," the airline said.

"Since the start of the year, the continued and accelerating flow of negative economic data from the Irish and international markets, together with the increasing numbers of people out of work, has weakened consumer demand.

Ã¢â¬ÅâœPassengers are increasingly booking later and lower fares are necessary to ensure load factors remain stable.Ã¢â¬~

Aer Lingus is already cutting 1,500 jobs and warned that capacity might also be reduced on some of its long-haul operations.

CEO Dermot Mannion said: "2008 was a year of exceptionally challenging trading conditions for the aviation industry as a whole.

Ã¢â¬ÅâœFor Aer Lingus, falling consumer demand in key markets, a weakening dollar and sterling, and increased competition across the network combined to put sustained and significant pressure on our business throughout the year.

Ã¢â¬ÅâœRecord highs and volatile movements in fuel prices also had a significant negative impact on the business.Ã¢â¬~

He said although Ireland will always be a core element of the Aer Lingus operating platform, in the long-term the airline would have to diversify revenue streams out of the Irish market in order to succeed.

Meanwhile, Lufthansa reported a dramatic fall in profits today. See separate story.

By Bev Fearis