Aer Lingus Bolsters First-Quarter Sales as IAG Talks Proceed

Updated on

Aer Lingus Group Plc reported increased first-quarter sales amid growth in its long-haul business as British Airways owner IAG SA continues talks with the Irish government to take over the airline.

Sales gained 7.9 percent from a year earlier to 280 million euros ($307 million) as long-haul fare revenue climbed 40 percent to 82.5 million euros, the Dublin, Ireland-based airline said in a statement on Wednesday. The operating loss before net exceptional items was little changed at 48.4 million euros.

Aer Lingus is “hopeful” that talks between IAG and lawmakers will be completed shortly, Executive Counsel Donal Moriarty said on a conference call with journalists today. The Irish government, which controls a 25 percent stake in the carrier, rejected an indicative bid in February, saying IAG needs to provide a guarantee on maintaining routes to London for longer than the five years it initially proposed.

“We are focused on building Aer Lingus and improving our return on invested capital,” said Chief Executive Officer Stephen Kavanagh, who took over on March 1. The executive reiterated that a combination with IAG offer would “deliver significant benefits.” He previously said that Aer Lingus was already considering the need for a partnership when it received the approach from IAG.

Aer Lingus shares climbed 1.7 percent to 2.39 euros at 8:13 a.m. in Dublin.

Convincing

Aer Lingus is seeking to boost long-haul traffic by exploiting it’s geographic position and the fact that people can clear U.S. customs and immigration in Dublin. The airline increased long-haul traffic by more than 23 percent in the quarter and plans to ramp up frequencies on key North American routes including New York and San Francisco this summer, as well as recommencing flights to Washington, D.C.

The expansion drove up operating costs by 6.7 percent in the quarter, Aer Lingus said. Falling fuel prices will “be more evident” in the second half, the carrier said.

Appearing before a parliamentary hearing in February, IAG Chief Executive Officer Willie Walsh sought to convince Irish lawmakers, voters and workers that his bid for the airline won’t result in the loss of jobs and flights to London. The executive, an Irishman who once ran Aer Lingus, has stipulated that both the state and 29 percent investor Ryanair Holdings Plc must back a deal for it to go ahead.

The Irish transport minister is due to answer questions on various issues in parliament today.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE