AER LINGUS confirmed yesterday that it has reached agreement with Airbus to defer the delivery of new aircraft for its long-haul fleet.
The move was flagged by the airline some time ago as one of a number of possible cost-saving measures it was likely to introduce to counteract a decline in average fares and revenues.
Colm Barrington, Aer Lingus chairman, is reported to have told the airline’s pilots that it needs to achieve cost savings of €130 million to have a viable future.
Under the terms of the agreement with Airbus, Aer Lingus will take delivery of one new A330-300 aircraft in April 2010 as planned. However, it has deferred delivery of three A330s and two A350 planes until between 2013 and 2015.
Aer Lingus has also terminated lease agreements for two A330 aircraft up to 18 months ahead of schedule. It has already returned two leased aircraft in 2009 ahead of schedule.
Aer Lingus said the deal with Airbus had been reached at “no additional cost” to the airline.
The airline said the move would reduce its planned capital expenditure for the next three years and boost its net cash position “during the current challenging trading environment”.
This deal with Airbus means Aer Lingus will operate eight long-haul aircraft in 2010.
Seven of them will operate on routes from Ireland to the United States, with the other earmarked for a joint venture with United Airlines for a service between Washington DC and Madrid.
The announcement was welcomed by analysts.
“It gives them some breathing space and helps them reshape their fleet from 2010,” Bloxham aviation analyst Joe Gill told The Irish Times.
“But it doesn’t get around their trading difficulties or the challenges of a big restructuring.”
Mr Gill estimates that Aer Lingus’s capital spending will reduce from about €160 million in the current year to below €100 million in 2010 as a result of this deal.
Davy analyst Stephen Furlong estimated that Aer Lingus’s net cash balances would improve from about €124 million to about €240 million as a result of the deal with Airbus.
“While trading is obviously very difficult we would view the long-haul fleet deferral announcement as a very positive development,” Mr Furlong said in a note to clients yesterday.
Aer Lingus’s shares closed up 1 per cent in Dublin yesterday at 47 cent.
