AER LINGUS confirmed yesterday that it will scale back its presence at Gatwick airport in London, less than a year after establishing a base there.
The cost-cutting move will be coupled with an agreement to defer delivery of two new aircraft from this autumn to next year, as Aer Lingus tries to manage its capacity and improve yields.
In a statement to the Irish Stock Exchange, the airline said its money-saving efforts to date would result in a “small operating profit” for the second half of last year, before exceptionals.
It attributed the performance, which is likely to be just above break even, to the removal of a long-haul aircraft in September and to “tactical” route cancellations. The result followed an operating loss of €93 million in the first half. Aer Lingus also highlighted an improvement in its December traffic, with load factor and passenger numbers ahead of a year earlier.
The update was welcomed by investors, boosting Aer Lingus shares by almost 9 per cent. It closed at 67.5 cent, up 4.5 cent on the day. The airline warned, however, of challenging times ahead, pointing to “soft” demand for the first six months of this year.
It is in this context that the Gatwick downsizing will occur, as Aer Lingus focuses strictly on maximising yields. The airline will cut five aircraft at the base down to three, eliminating 10 routes to locations including Tenerife, Warsaw, Bucharest and Faro from the end of March. Three existing routes to Dublin, Knock and Malaga will be retained, while a route to Cork will be added.
Suggestions from Michael O’Leary, chief executive of Ryanair, which is Aer Lingus’s biggest shareholder, that the airline was reviewing the future of its base in Belfast were yesterday dismissed.
“Belfast is performing well and there are no plans to change capacity,” said Enda Corneille, Aer Lingus commercial director.
Aer Lingus said the Gatwick curtailment reflected “weak consumer demand and continuing challenges in the UK operating environment”.
Among the principal difficulties facing the airline at Gatwick has been aggressive price competition from EasyJet, which yesterday said it would add three new aircraft to its Gatwick base, bringing its fleet there to 43.
When Aer Lingus launched the base in April last year, it said it would invest £100 million at the London airport.
The airline also confirmed the deferral of delivery of two Airbus aircraft from October and November this year to April and May 2011. This came in addition to a number of delivery deferrals flagged last year.
These measures come as the airline negotiates a restructuring package with staff to save €97 million per year. It also signalled a shift in strategy with this week’s announcement of discussions with Aer Arann over a new code-share alliance involving UK cities.
