Aer Lingus posts loss on fuel costs

28-08-2008

Aer Lingus posts loss on fuel costs
Fuel costs have hit Aer Lingus, plunging the Irish airline into a €22.3 million (£17.9 million) operating loss for the first half.

Aer Lingus said fuel costs increased by 48.7 per cent, or €56.5 million, over the last six months, wiping out gains in passenger revenue.

Last year, Aer Lingus made an operating profit of €2.6 million in the first six months.

The company's chief executive, Dermot Mannion, warned conditions are not expected to improve this year and a full-year loss can be expected.

"It is clear that the unprecedented cost of fuel and the difficult operating environment will continue to have a significant effect on the financial performance of the business and that there will be sustained fare pressure over the medium and longer term," Mr Mannion said.

He added: "Even with the reduction in fuel prices over the last few weeks, competitive pressure on fares and volumes will continue and we are at best expected to break even in the second half, delivering a loss for the full year."

Fundamental changes in the airline's operating cost base will be needed to ensure Aer Lingus' long-term viability, the company said.

The loss makes Ireland's national carrier Aer Lingus a potential takeover target as the industry consolidates, with Ryanair the most likely candidate.

Ryanair already owns 29.9 per cent in its rival, although there could be anti-trust concerns to overcome in the event of a tie-up.

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