High fuel prices, increased airport charges and a weak domestic market are expected to hit this year’s performance by Aer Lingus as the Irish carrier returned to profit in 2010 following extensive cost cutting.
The airline posted an operating profit of €57.6 million (£49 million), an improvement of €139 million, despite bad weather conditions and the Icelandic volcanic ash cloud which severely disrupted flights. Aer Lingus posted full-year revenue of €1.22 billion but 2011 is expected to be a tougher year.
Chief executive Christoph Mueller said: “We do not expect that improvements in yield performance and ongoing cost savings can offset these increased costs. If current fuel prices persist, we expect that 2011 operating profit will be significantly below that of 2010.”
Capacity is to remain flat this year because of its difficult home market which has been hit by a severe economic downturn and is reliant on a European Union and International Monetary Fund bailout. The 2011 fuel bill is also likely to be substantially higher than last year.
“While we expect to see the benefit in 2011 of the flow-through of actions taken in 2010 and some benefit from further cost saving measures, these upsides will not be sufficient to deal with the twin increases in cost in airport charges and fuel,” the airline said.