Aer Lingus profits up 19% on last year

AER LINGUS has posted a strong set of third-quarter results with revenues and operating profit well ahead of last year, although analysts warned that concerns about the pensions issue remain.

Operating profit in the third quarter was €94.6 million, an increase of 19.4 per cent on the previous year, despite higher fuel costs and airport charges.

Revenue was up 5.9 per cent on the previous year, while total capacity deployment increased by 1.2 per cent. Overall yields per passenger were up 4 per cent during the quarter.

Aer Lingus’s share price closed up 7.5 per cent at 72 cents yesterday, as the company said it expected to report full-year results at the upper end of current expectations. However, Aer Lingus reported “no developments” in relation to pension risks and uncertainties, although chief executive Christoph Mueller said progress should be made in early 2012.

The scheme’s trustees are due to provide an update of the deficit before the end of the year.

“Unfortunately the operational side of things is only one part of the story in Aer Lingus,” NCB stockbrokers said in a note. “The pensions issue continues to overhang the stock.”

On Wednesday, Ryanair, a 29 per cent shareholder, called on Aer Lingus to hold an egm to discuss Aer Lingus’s €30 million settlement with the Revenue in relation to the controversial “leave and return” scheme.

It is also calling on Aer Lingus to publish the Deloitte/McCann Fitzgerald report on the scheme.

At the announcement of the creation of 150 jobs by Dublin Aerospace at Dublin airport yesterday, Mr Mueller said the report would not be published at this time. “The board has received legal advice not to publish that report at this point.”

He said Aer Lingus’s strong third-quarter results had been “primarily revenue-driven”, but had also benefited from the cost-saving programme.

Revenue from short-haul routes during the quarter increased by 7.6 per cent to €268.3 million, with passenger volumes up 2.3 per cent, and the short-haul yield per passenger up 5.2 per cent.

Long-haul passenger fare revenue increased by 2.6 per cent to €100.4 million.

Quarter three fuel costs increased by 8.7 per cent in euro terms. As of September 30th, Aer Lingus had hedged 84 per cent of its forecasted quarter four fuel requirements at an average of $921 per metric tonne.