Shares in Aer Lingus nosedived today after the airline announced that it swung to a pre-tax loss of close to €120 million in 2008 and said it was unlikely to meet its previous forecast of a pre-tax profit for this year.
Shares in Aer Lingus were trading down 31 per cent or 25c to 53c at midday following publication of its latest results.
Ireland's second biggest airline posted a €17.6 million operating loss, which it said is expected to increase in 2009 as passenger fares and cargo revenue fall.
The company reported an after-tax loss of €107.8 million,
Aer Lingus said that "unprecedented high fuel prices" last year resulted in a 54 per cent increase in fuel costs.
Overall, fuel represented 29.2 per cent of total operating costs while staff costs contributed a further 24.3 per cent of total operating costs. Airport charges represent 17.7 per cent of operating costs
Aer Lingus delivered a 2008 pre-tax profit of €21.2 million after taking into account a net finance income of €38.8 million and before deducting an exceptional cost of €117.5 million for restructuring.
Total revenue rose by 5.6 per cent to €1.357 million over the year while passenger numbers increased by 7.5 per cent to 10 million.
Average fare prices fell 4.6 per cent over the year overall, falling by 6.4 per cent on short-haul and increasing by 2.6 per cent on long haul flights.
Ancillary revenue from onboard sales, booking fees, baggage charges and car hire, grew 37.7 per cent to €149.7 million.
‘2008 was a year of exceptionally challenging trading conditions for the aviation industry as a whole. For Aer Lingus, falling consumer demand in key markets, a weakening dollar and sterling, and increased competition across the network combined to put sustained and significant pressure on our business throughout the year. Record highs and volatile movements in fuel prices also had a significant negative impact on the business," said Aer Lingus chief executive Dermot Mannion.
Aer Lingus said that while it expects to grow passenger volumes marginally in 2009, forecasting a full year outcome is difficult given the current economic climate.
"Passengers are increasingly booking later and lower fares are necessary to ensure load factors remain stable. In order to maintain volumes, it is now expected that in 2009 average fares will decline by a minimum of 10 per cent as compared to 2008. In addition, and in line with international trends, cargo revenue is expected to fall by up to 30 per cent year-on-year," it said.
"In the current climate we believe that in 2009 Aer Lingus will experience a larger operating loss than in 2008 and that in these circumstances the group is unlikely to meet its previous guidance of a pre-tax profit in 2009," it added.
The trade union Siptu has welcomed today's results.
Additional reporting: agencies
