Aer Lingus battles fuel costs, weak economy
Uncertain markets, record fuel prices, dollar and sterling weakness and growing competition will force low-cost airline Aer Lingus into an operating loss for the first half of 2008.
"The unprecedented cost of fuel and the difficult operating environment are having a negative impact on the financial performance of the business," said the Irish group in a trading statement Thursday.
Most of the firm's profits have always been generated in the second half of the year, but it admitted that current market conditions have magnified seasonality in 2008, leading to operating losses in the first six months and profits in the second half.
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It said revenues rose 10.3% during the first four months of 2008 on the previous year, while passenger numbers jumped 11% to 3.2 million.
But, with 28% of its estimated fuel requirements for the eight months to December 2008 hedged at $775 per tonne, each $5 a tonne rise in fuel costs over current rates will result in fuel costs of $1.2m.
The budget carrier's proposal to slash €20m off the staff cost element of its cost reduction programme has been rejected by some angry employees.
