Aer Lingus Lifts Profit Targets as Post-Strike Advertising Helps

Aer Lingus Group Plc (AERL), the Irish airline part-owned by Ryanair Holdings Plc (RYA), lifted its full-year earnings target as marketing and ticket discounts clawed back sales lost because of of a strike.

Operating profit before net exceptional will match last year’s figure of 61.1 million euros ($81.9 million) in 2013, the Dublin-based carrier said in a statement today. The airline had cut its earnings forecast only last month, saying operating profit could fall as much as 20 percent.

An advertising push and discounts targeted at families helped Aer Lingus bounce back from strike action earlier this year, Chief Revenue Officer Mike Rutter said. Under Chief Executive Officer Christoph Mueller, Aer Lingus has targeted a bigger share of the trans-Atlantic market and streamlined its short-haul business. Long-haul passenger numbers gained 15 percent in the first six months of the year to 561,000, accounting for just just over a 10th of the airline’s customers, with the average fare per seat also rising.

“Our business model is hard-wired and rock-solid,” Mueller said on a conference call today. “Going forward it is also scalable so it can provide for further growth.” The 52-year-old executive will step down next year after five years at the Irish carrier.

Stock Gains

Operating profit for the three-month period ended June 30 climbed to 38.7 million euros, the best second-quarter result in four years in spite of a 10 million-euro cost as a result of industrial action, Aer Lingus said. Sales gained 9.9 percent to 437.8 million euros.

Aer Lingus rose 4.1 percent to 1.385 euros at 8:03 a.m. in Dublin. The stock has risen 8 percent this year, valuing the airline at 733.6 million euros.

The strike in May and averted walkout in June centered on cabin crew flight rosters. Employees are also involved in a dispute over the company’s joint pension plan with the Dublin Airport Authority, which has a deficit.

“The parties involved need to realise that the current proposal is the only viable solution available,” Aer Lingus said today in the statement. “Failure to implement the current proposal could significantly diminish the post retirement incomes of past and current Aer Lingus employees.”

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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