Airline Code [EIN]
View More Aer Lingus News
Tags :Continental Europe, Aer Lingus
Aer Lingus Group issued (28-Apr-09) an interim management statement covering the period from 01-Jan-09 to 31-Mar-09, representing the first three months of the Group’s financial year. Aer Lingus also announces a re-organisation of its senior management structureas part of its approach to meet the new challenges of a deteriorating outlook.
Total revenues decreased by 16.0% during the first three months of 2009 compared to the same period in 2008. Flown passenger numbers decreased by 6.5% year-on-year to 2.09 million. This comprised a 5.7% decrease in passengers on short-haul and a 12.5% decrease on long-haul. Total revenue per passenger in the period fell by 9.6% year on year.
Capacity, measured in available seat kilometres (ASKs), decreased substantially in the period. In the three months to 31-Mar-09, short-haul capacity decreased by 4.5% and long haul-capacity decreased by 19.5%. Overall flown load factors have increased by 2.4% with short haul flown load factor up by 1.4 percentage points versus 2008, to 70.1 %, and long haul flown load factor up by 3.2 points to 67.1%.
Yields reflected the poor market conditions and weakening economic environment. Short-haul average fare fell by 1.6% in the two months to end February, but by 23.6% in March with the quarter down 10.8% year on year. This decline was partly offset by the strong increase in ancillary revenue per passenger of 14.5%. Long haul average fare fell by 14% in the two months to end February but fell by 25.7% in March with the quarter down by 18.9% year on year. While the March yield can be attributed in part to the effects of Easter moving to April, it is clear that the yield environment has worsened, particularly in Ireland, as the year has progressed. Total yields, for the first quarter, declined14.5% on the same period last year.
The Group maintains a strong balance sheet with net cash of EUR593.6 million as at 31-Mar-09. This represents a decrease of 9.2% since 31-Dec-08 (EUR653.9m), and reflects an outflow of EUR80 million in respect of restructuring costs –provided for in 2008 –and a final payment for a new A330 (financing for which will be put in place later this year).
On 11-Mar-09, Aer Lingus indicated that it had hedged 72% of its fuel requirements for the remaining months of 2009 at USD856 per tonne, and 22% of expected requirements for 2010 at USD876 per tonne. The Group has extended its hedging for the remainder of 2009 to 74%, at a rate of USD825 per tonne and holds 25% of the estimated full year 2010 tonnage at a rate of USD876 per tonne. Based on an estimated unhedged fuel cost of USD500 per tonne for the remaining 9 months of the year, Aer Lingus expects its blended fuel rate to be USD820 per tonne for the 2009 full year.
Management are currently reviewing the sustainable shape and size of both the long haul and short haul businesses and in that context Aer Lingus will review its long-term requirement for the long-haul capacity on order with Airbus together with any associated capital expenditure. Decisions on the capacity deployed for Winter 2009/10 will be made to reflect that process. A further update in relation to capacity and capital expenditure will be provided to the market at the time of the AGM on 05-Jun-09.
As part of the Group’s approach to meeting the new challenges of a deteriorating outlook, it has completed a re-organisation of its senior management structure to reflect the different needs of its short haul and long haul operations. The re-organisation is intended to better align the management structure with the Group’s objective of maximising revenues and of reducing costs in an exceptionally challenging operating environment.
Niall Walsh has been appointed as Chief Operating Officer. Sean Coyle, Chief Financial Officer, has been appointed as Head of the Group’s Short Haul Operations. Stephen Kavanagh, Corporate Planning Director, has been appointed as Head of the Group’s Long Haul Operations. Sean Coyle and Stephen Kavanagh have assumed these responsibilities in addition to their existing roles. Further details on each of these individuals and their new roles are set out at the end of this announcement.
The airline industry is facing an exceptionally tough trading environment which has progressively deteriorated this year. The industry has seen a rapid deterioration in the prospects for many major carriers, and this is likely to be exacerbated by current concerns about another negative impact on demand due to swine flu. Falling consumer demand in Aer Lingus’ key markets is, and will continue to contribute to sustained and significant fare pressure. Further pressures have been put on demand from Ireland through the imposition of a tax of EUR10 per departing passenger and by the recent supplementary budget. This dynamic and very challenging environment contributes to a highly uncertain outlook.
Aer Lingus expects the average fare trend for full year 2009 will be worse than previously expected and, consequently, it is currently expected that the loss for the 2009 full year will be materially below the bottom of the range of current market expectations. Ongoing cost reduction is critical for the viability of Aer Lingus in the current difficult market environment, and the Board is reviewing the range of options to deliver a sustained reduction in operating costs to align its cost base with the Group's current and expected revenue stream.
Aer Lingus will update the market with further progress on this in due course. Colm Barrington, Aer Lingus Chairman commented, “against the backdrop of a severe deterioration in operating conditions, the Board is taking the steps necessary to safeguard the long term viability of the Group. In addition to today’s management changes, the Board remains resolute in its objective of reducing operating costs and retaining a strong capital structure”.
(c) Centre for Asia Pacific Aviation. Date posted: 29-Apr-09
|
Aer Lingus releases interim management statement 
