Aer Lingus reports new drop in revenues

Author: By Holly Williams, Press Association

The Dublin-based carrier, which last month unveiled plans to cut a fifth of
its workforce, announced it was stripping out another plane from its
long-haul service, to trim winter and summer 2010 capacity further.

Revenues fell 9.7 per cent year on year in the third quarter, although the
number of passengers rose 7 per cent and the group said it was filling its
planes better, with the load factor up across long and short haul flights.

Fares plunged by 17.6 per cent on average in the three months to September 30
as the airline struggled against the consumer spending slump.

But Aer Lingus said the pace of decline in fares had levelled off and an 8.5
per cent hike in sales per passenger on extra charges for short haul
flights, such as checked-in baggage and advanced seat booking, also helped.

The group’s recently appointed chief executive Christoph Mueller, who joined
in September, is leading a major overhaul and cost-cutting drive to steer
the firm back to profit.

About 676 staff are being let go and the group is also changing its pension
arrangements under the first phase of his turnaround plan, over which it is
currently in talks with unions – a process it hopes to resolve by about
November 18.

In total, Aer Lingus aims to shave about 97 million euros (£86.5 million) off
its annual cost base.

It signalled today that the focus would remain on cost cutting as recession
pressures were also hampering the sector’s recovery.

“Cost increases in the form of higher fuel prices, airport and navigation
charges together with further expected gross domestic declines and
unemployment increases in our major markets, will mean that we must continue
to reduce any costs within our control so that we can cope with continued
falling fares, compete and maintain balance sheet strength,” said Aer Lingus.

However, it added that “actions taken to remove capacity on underperforming
parts of the network has had a positive impact on stabilising load factors
and yields while reducing operating costs”.

“While the fall in yield year on year continues, the pace of decline in
average fares does not appear to be accelerating currently.”

Aer Lingus has been hit by falling fares as it competes with rivals such as
Ryanair to attract passengers, while rising fuel costs have also impacted

The group reported losses of 93 million euros (£83 million) for the first half
of 2009 – almost four times the figure for the same period last year.

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