THE FUEL bill for Aer Lingus is likely to rise by $185 million in 2008 as a result of the recent surge in the price of oil. Following the release of full-year results yesterday, the airline estimated that its total fuel cost this year would be $532 million compared with $347 million in 2007.
It said every $5 move in the price per tonne of jet fuel would have a $1.5 million impact on the costs of its unhedged fuel for the remainder of this year.
Aer Lingus has hedged 36 per cent of its fuel needs for this year at $796 a tonne, which equates to about $80 a barrel of crude. Oil is trading at around $110 a barrel, indicating the saving involved.
Despite this, Aer Lingus estimates that its average price per tonne of jet fuel this year will be $893 compared with $680 in 2007.
Aer Lingus chief executive Dermot Mannion said there were no plans to increase its fuel surcharge on transatlantic flights but did not rule it out at some point in the year. "We will keep this situation under review," he said.
Mr Mannion said no surcharge would be levied on short-haul services.
Aer Lingus's full-year results exceeded analysts expectations. Operating profit rose by 16.4 per cent to €88.5 million while revenues increased by 15.2 per cent to €1.28 billion.
Aer Lingus's ancillary revenues, which includes baggage charges, car hire, hotel bookings and travel insurance, rose by 71.5 per cent to €108.7 million.
The airline carried 9.3 million in 2007, up 7.8 per cent on the previous year. Fourteen short-haul routes and three long-haul services were added during the period.
Aer Lingus also opened its first base outside the Republic by starting services from Belfast in December. Nice in the south of France will become its 10th route out of Belfast when it launches on April 1st. Aer Lingus said it was taking more than 12,000 bookings a week on routes from Belfast.
"Since Heathrow launched in January, we've seen a substantial tick upwards in the growth for us at Belfast," Mr Mannion said.
Aer Lingus said deals with the Siptu and Impact trade unions here, which will be put to a ballot of workers shortly, would net it €16 million a year in cost savings.
It said the balance of the €20 million annual cost savings envisaged under the PCI-07 restructuring plan would "conclude shortly". These primarily involve negotiations with pilots.
Aer Lingus recently shaved €20 million a year off its maintenance contracts after a tender process. Its maintenance costs rose to €82.6 million in 2007 from €72.6 million a year earlier.
It also achieved savings of €5 million a year on airport costs by renegotiating handling contracts.
Mr Mannion said it would hold an extraordinary general meeting in April to approve the purchase of new Airbus aircraft.
He said its alliance with American airline JetBlue would commence on April 1st, offering passengers here connections to 40 destinations in the United States.
