Irish flag carrier Aer Lingus Group Plc (AERL.L) Monday reported a 9.7% decline in total revenues for the third quarter from last year, stating that yields continue to reflect poor market conditions and weak economic environment. The airline also said that taking out capacity on underperforming parts has had a positive impact on stabilising load factors and yields. Aer Lingus shares are up more than 8% on the London Stock Exchange.
The Dublin-based airline's flown passenger numbers for the quarter increased by 7% year-on-year to 3.08 million, including a 10.0% increase in passengers on short-haul and a 13.2% decline on long-haul. Average passenger revenue for the quarter dropped by 14.8% year on year.
Short-haul capacity, measured in available seat kilometres, grew 10.5% in the quarter compared to the same period last year. Long haul-capacity decreased by 18.0% from the previous year. Overall flown load factor increased by 1.3 percentage points to 80.4% compared to a year earlier, with short haul flown load factor up by 1.4 percentage points to 82.0%, and long haul flown load factor up by 0.6 percentage points versus 2008 to 77.8%.
Short-haul average fare declined 12.3% year on year, which was partly offset by an increase of 8.5% in ancillary revenue per passenger. Long haul average fare fell by 17.0% year on year. Overall average fare for the quarter declined 17.6% on the same period last year.
As at September 30, net cash was EUR 399.9 million, down 38.8% from EUR 653.9 million at December 31, 2008, due to an outflow of EUR 107 million in respect of restructuring costs, provided for in 2008, the final payments for two new A330 aircraft delivered in the first half, and the net cash flow from operating activities.
Based on an estimated unhedged fuel cost of US$696 per tonne for the remaining two months of the year, Aer Lingus expects its blended fuel rate to be US$864 per tonne for the full year. Aer Lingus has extended its hedging to 53% of the estimated 2010 full year tonnage at a rate of US$778 per tonne and 9% of the estimated 2011 full year tonnage at a rate of US$734 per tonne.
As part of its transformation plan to reduce costs, remove legacy work practices and improve revenue, Aer Lingus said a A330 will be removed from long haul service as part of the change bringing long haul winter operations to five units and Summer 2010 to a maximum of six units. The company said the transformation plan will yield operating costs savings, excluding fuel, of EUR 97 million per annum, consisting of EUR 74 million in staff costs savings and EUR 23 million in non-staff costs savings.
In October, the airline published an RFI for sale or sale and leaseback of a number of its aircraft, and the company said a significant number of expressions of interest have been received as at the closing date and it will seek to pursue the disposal of some units in the fleet should there not be the demand or appropriate cost base to operate them.
Looking ahead, Aer Lingus said that business continues to experience challenging conditions. However, the company said that actions taken to remove capacity on underperforming parts of the network has had a positive impact on stabilising load factors and yields while reducing operating costs.
AERL is currently trading at EUR 0.60 per share, up 8.60%, on the London Stock Exchange.
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