AER LINGUS’S share price fell by 6.5 per cent in Dublin yesterday in spite of the company reporting a halving of its operating losses for the first quarter of this year.

Aer Lingus said its operating losses between January and March amounted to €37.8 million compared with €74.8 million for the same period in 2009.

Its total revenues declined by 1.8 per cent to €181.3 million but the company managed to increase its average fare by 3 per cent for short-haul flights and 12.4 per cent for transatlantic services.

This followed a significant reduction in capacity and a “disciplined approach to yield maximisation”.

Aer Lingus carried just more than 2 million passengers in the first quarter, down 3.2 per cent year on year.

Its gross cash balances have been boosted by €90.4 million since the end of December to €918.9 million although it remains below the €1.1 billion level of March 31st 2009.

Aer Lingus’s debt reduced to €514.5 million at the end of March compared with €566.9 million a year earlier.

The biggest impact on Aer Lingus’s cost base was a €40.7 million saving on its fuel bill. The airline also shaved €6.2 million off its staff costs.

Aer Lingus chief executive Christoph Mueller said he was “encouraged” by first quarter trading but it was “nonetheless appropriate to remain cautious on full-year 2010 performance”.

In relation to its Greenfield restructuring programme, Aer Lingus said it achieved cost savings in the quarter of €2.8 million, relating to pay reductions implemented on March 1st. This amounts to €18.2 million on an annualised basis.

The airline said it awaits a determination from the Labour Relations Commission on measures affecting cabin crew productivity and rostering.

“There is a risk that these delays may reduce the in-year benefit of staff savings targeted at €40 million by approximately €5 million,” the company stated.

Non-staff savings “remain on track”, it added.

Aer Lingus said early indications on second quarter revenues are “positive”. The Icelandic volcanic eruption would result in a cash cost of about €20 million.

“The final cost will depend on the actual level of customer claims,” the airlines added.

Aer Lingus said it had “limited visibility” on future bookings and its key markets “remain subdued”.

In a conference call with analysts yesterday, Aer Lingus said its joint venture with United Airlines, which began flying from Washington DC to Madrid in March, had performed in line with expectations.

The airlines are targeting a load factor of 75 per cent for the first year of operation.