AER LINGUS chairman Colm Barrington told shareholders yesterday that trading remained “extremely challenging” due to a “deteriorating economic environment”. The airline was facing its “most difficult period” since it was launched 73 years ago, he said.

Speaking at the airline’s annual general meeting in Dublin, Mr Barrington said demand in Aer Lingus’s key markets of Britain and the United States was “weak” due to a decline in the value of their currencies against the euro.

“The trading environment and outlook remain highly uncertain and it is not possible to accurately forecast demand and yield for the remainder of 2009 and beyond,” he said.

In a bid to cut its capacity, Mr Barrington said Aer Lingus had agreed the early termination of one aircraft lease for long-haul services and was working with Airbus to “reduce near-term fleet commitments”.

Aer Lingus is due to take 11 new aircraft from Airbus up to 2018.

He said the board was also finalising “a fundamental evaluation” of its overall business to determine the appropriate organisational structure and cost base for the airline and “eliminate outdated legacy work practices”.

He declined to say when this restructuring plan would be unveiled, how much it would cost and whether it would involve compulsory redundancies. “I’m not going to give any guarantees . . . We will do what’s in the best interests of Aer Lingus,” he told journalists after the agm.

“We are working on a programme and we will announce it when we are ready to,” he added.

Earlier in the day, Aer Lingus said its total passenger numbers in May had increased year on year by 2.7 per cent to 972,000. This comprised a 6 per cent rise on short-haul services and a 21.1 per cent reduction on long-haul flights to the US.

Mr Barrington informed the meeting that one in every four of its flights to the US was effectively flying empty, given its declining load factors.