SHARES IN Aer Lingus rose by more than 4 per cent in Dublin yesterday in spite of the airline announcing an 18 per cent increase in total losses for 2009.

Aer Lingus, which is 25 per cent owed by the Irish Government, made a total loss of €130.1 million last year, compared with €109.9 million in 2008.

At an operating level, the loss for the year was €81 million – four times the level of 2008.

The airline made an operating profit of €12 million in the second half of 2009 to offset against a deficit of €93 million in the first six months of the year.

The airline said trading in the current year remained “extremely challenging”, and it had “limited visibility” on the outlook for the crucial second half of the year, which is traditionally the busiest time for airlines.

“We have visibility for the second quarter of 2010 but almost no visibility for the second half of 2010,” Aer Lingus chief executive Christoph Mueller said yesterday.

He said Aer Lingus would provide a trading update for the first quarter of 2010 at the end of next month.

Stockbroker Davy has pencilled in an operating loss of €20 million for this year, and an operating profit of €17.1 million for 2011.

“It’s still early days,” analyst Stephen Furlong said, in a reference to future trading and the successful implementation of the airline’s cost-reduction plan.

Aer Lingus’s revenues fell by 11 per cent to €1.2 billion even though passenger numbers rose by 3.8 per cent to 10.4 million.

Practically all of the operating losses incurred in 2009 related to its long-haul operations. Aer Lingus told analysts that its short-haul services operated at close to break-even.

Aer Lingus has scaled back its operations at Gatwick from five to three aircraft after incurring “unacceptable losses” on routes to continental Europe.

The airline closed loss-making long-haul routes and reduced capacity on other transatlantic routes.

On a more positive note, Aer Lingus said its long-haul revenue per passenger in the first three months of this year was “above the prior year”.

“Long-haul operations benefited from a combination of higher yields and better load factors than we had expected at the start of the year,” the airline said.

Aer Lingus’s losses for the year were increased by net exceptional items of €88.6 million relating to its 2009 cost-reduction programme, and early retirement, voluntary severance and migration schemes in 2008.

The airline made redundancy payments of €124.2 million in 2009.

Against this, Aer Lingus had net finance income of €14.8 million and booked an income tax credit of €24.7 million.

This left it with an overall loss of €130 million.

The company’s gross cash at the year-end was €828.5 million, down from €1.2 billion a year earlier. Its debt was €492.6 million at the end of 2009, down from €552.9 million.

Mr Mueller said the €97 million cost-reduction plan just agreed with its union has started to be implemented.

This involves pay cuts of 10 per cent across the board, about 670 redundancies and changes to work practices.

He said the plan would result in staff cost-savings of €40 million this year, with an “exit run rate” of €50 million in 2010.

In relation to operating costs at Aer Lingus, Mr Mueller said the increase in passenger charges at Dublin airport this year would cost the airline up to €35 million.

He said that “€20-35 million [is what] we will have to absorb”.

“It is approximately 30-40 per cent of the savings we’ll address in Greenfield [the cost-cutting plan, which] will just go out the door to the airport authority.”

AER LINGUS 2009 RESULTS

Turnover: €1.2 billion (-11%)

Operating loss: €81m (+305%)

Net loss: €130.1m (+18.4%)

Basic loss per share: 24.6c (20.7c)

SUMMARY

These results were well flagged by the airline in recent weeks. Its operating losses were almost entirely related to its long-haul operations to the United States. These services have since been curtailed along with loss-making short-haul routes, particularly out of Gatwick.

On the plus side, Aer Lingus saved about €70 million on its fuel costs last year and has locked in most of its requirements for 2010, so there should be no nasty shocks on that front.

A return to profitability relies on a turnaround in the Irish economy and the successful implementation of its cost-cutting plan.