Fuel bill set to knock profits at Aer Lingus
IRISH airline Aer Lingus warned yesterday that its profit would fall this year due to higher fuel costs, and that a growing pension deficit had the potential to spark industrial action that would hurt the company.
The airline beat analyst expectations by posting an operating profit of €49.1m (£41.6m) in the year to December, compared to analyst forecasts of €40.7m.
But it said its fuel bill would increase by €60m this year if oil prices remained at current levels, representing a rise of 20 per cent. That would wipe out the benefit of expected low single-digit growth in passenger numbers and yield, the keenly watched measure showing average revenue gained per mile per passenger.
“We think we will make a decent profit but it will be a little bit lower than this year,” finance chief Andrew McFarland said.
Davy analyst Stephen Furlong said: “The company’s underlying [performance] is good, but they can’t pay for fuel basically.”
“This is going to be the story in the [airline] network earnings season. Revenue is good, but it doesn’t pay for fuel.”
Aer Lingus is in talks with unions over how to fill a hole in a staff pension scheme. The estimated deficit increased to €700m by the end of the year from an earlier estimate of €400m, it said in a statement.