Aer Lingus’ cost-cutting drives sharp reduction in first half loss

Aer Lingus H1 loss narrows on cost cutting

LONDON — Irish airline Aer Lingus on Tuesday reported a sharp drop in its net loss for the first half of the year as lower fuel prices and capacity cuts helped the carrier to pare its operating costs.

For the first six months of the year, Aer Lingus said Tuesday that it had a loss of euro18.5 million ($23.2 million), compared with euro73.9 million a year earlier.

Revenue was 3.1 percent lower at euro538 million. Operating costs were down 14 percent to euro557 million, with about half of the improvement due to lower fuel prices.

In the second quarter, the airline reported an operating profit of euro18.8 million, reversing a loss of euro18.2 million a year earlier.

Aer Lingus shares were down 1 percent at 0.92 pence on the London Stock Exchange, but were fractionally higher at euro0.9350 in Dublin.

“For the 2010 full year, we expect to report an operating performance, before exceptional items, of no worse than break even,” said Chief Executive Christoph Mueller.

“This would represent a good performance in difficult market conditions but is predicated on the delivery of committed staff productivity savings and no further significant disruptions to operations from industrial action or airspace closures.”

Operating costs in the first half were down 14 percent to euro557 million. Aer Lingus carried 4.4 million passengers in the first half, a drop of 11 percent. Yield per passenger rose 8 percent to euro98.66.

The company’s improved results came despite a nearly weeklong disruption of service because of the volcanic ash cloud from Iceland.

Short-haul passenger revenue fell 3.8 percent, reflecting a 16 percent drop in passenger numbers and a 13 percent cut in capacity.

Long-haul passenger revenue rose 6.5 percent to euro69 million though passenger numbers fell by 23 percent. Those results reflected Aer Lingus’ decision in the second half of last year to drop service from Ireland to San Francisco and Washington.