Aer Lingus today reported a sharp fall in first-half profit due to increased competition and higher fuel costs.
Operating profits at the airline have fallen to €2.6 million in the six months to end-June, compared with €10.6 million last year. Underlying profits before tax dropped from €19.8 in 2006 to €11.5 for the first half of this year.
The carrier also warned the outcome of threatened industrial action was "not yet clear" and said actions by its major shareholders Ryanair were "anti-competitive" and would "destroy shareholder value".
Aer Lingus chief executive Dermot Mannion
But Aer Lingus - which makes most of its income in the second half - reiterated previous guidance for mid-teen percentage growth in operating profit for the full year. The former State carrier blamed increasing competition, staff wages and a 27.9 per cent rise in fuel costs for the profit loss.
Total operating costs (before the employee profit share) increased by 14.8 per cent to €571.5 million. Fuel took a fifth of all costs rising by €25.3 million to €116 million, while staff costs rose by 12 per cent to €150 million. Employee numbers increased from 3,551 in 2006 to 3,770 in 2007.
Chief executive Dermot Mannion said planned capacity from Aer Lingus competitors, including Ryanair, which owns 29.4 per cent of Aer Lingus, had risen 45 per cent on short-haul routes over the same period last year. Revenues rose 12.9 per cent to €574 million.
Early indications of the airline's performance in the second half were "encouraging", he said. Aer Lingus, which was floated on the Dublin and London stock market last year, said its passenger numbers had grown 5.9 per cent in the first half.
Mr Mannion said it was too soon to tell what the impact of potential strike action by Aer Lingus pilots over pay conditions pending its move from Shannon to Belfast would be, but he estimated it had cost the airline €3.5 million. This was largely the result of lost bookings and the committed costs of contingency arrangements.
Defending Ryanair's takeover bid also cost the carrier a further €7.8 million. ""We have successfully defended the company against an unsolicited takeover bid and we have announced the most significant fleet acquisition programme in the history of Aer Lingus," Mr Mannion said.
Mr Mannion said Aer Lingus had till Tuesday to respond to Ryanair's call for an extraordinary meeting of Aer Lingus shareholders, regarding the Shannon move. "The board has taken a robust view that the Ryanair move is anti-competitive [and] will damage shareholder value...," he told RTÉ's Morning Irelandprogramme.
Airline management returns to the Labour Relations Commission tomorrow to try to seek a resolution of the dispute with the Irish Airline Pilots' Association.
Pilots had threatened a 48-hour strike last week. This was averted after both sides agreed to the talks.
Michael Landers, assistant general secretary of the trade union Impact, said after the last series of talks on Monday that he was optimistic about the outcome. However, other sources indicated that the parties were still quite a distance apart on the central issue of whether the union should have a role in negotiating conditions for pilots in Belfast.
(staff reporter and Reuters)