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2Q15 sees Aer Lingus’s long-haul endeavour take off

Whilst Aer Lingus’s mainline passenger numbers for the second quarter of 2015 which ended on 30 June (2Q15) only grew by 1% overall in comparison to the same quarter last year – from 2,782 million to 2,809 million – the airline has reported a 7.1% increase in revenue from €437.8 million to €468.9 million across the respective periods.This revenue increase comes on the back of total passenger numbers including Aer Lingus Regional growing by just 0.4%, as regional flights saw an 11% decrease in passenger numbers from 364,000 in 2Q14 to 324,000 in 2Q15.2Q15 revenue passenger kilometres grew by 4.9% over 2Q14, whilst capacity only rose by 2.8%. The primary factor behind these figures is the expanding success of Aer Lingus’s long-haul routes: long-haul fare revenues grew by 24.4% from €138.7 million to €172.5 million, whereas short-haul revenues only increased by 3.2%.During 2Q15, the airline introduced long-haul services between Dublin and Washington in May as well as additional frequency to New York and additional capacity on other destinations, including San Francisco.Average fare revenues per seat and per passenger both increased during the period, meaning the carrier’s ancillary services are also performing well. Aer Lingus continued to roll out its new ‘Smart Flies Aer Lingus’ brand platform, consolidating the introduction of the new Aer Lingus long-haul business class service on its A330 fleet. Business class passengers are up 21.1% for the first half of the 2015, which includes the first three months of the new business class service. This meant a business-class load factor increase of 3.2 percentage points to 73.1% in comparison with 2Q14’s figure.“I am pleased to report a profitable second quarter with Aer Lingus well positioned to deliver an improved operating performance in the key Q3 trading period and for the full year,” commented Aer Lingus’s CEO, Stephen Kavanagh. “Passenger, retail and cargo revenues all grew strongly in the quarter. The continued investment in our transatlantic business was rewarded with strong growth in unit revenues. The volume-active strategy employed in our short-haul business delivered stable unit revenue performance in an intensely competitive marketplace.”The load factor for short-haul flights increased slightly more – by 1.9 percentage points from 76.4% in 2Q14 to 78.3% in 2Q15 – than the long-haul load factor increase of 0.9 percentage points across the same periods, due to a slight decrease in short-haul capacity. However, the average load factor across Aer Lingus’s total operations grew by 1.6 percentage points from 80.6% to 81.7%, once again showing the impact of a rewarding long-haul network, which boasted a load factor of 86.2% for 2Q15.Despite these positive results, 2Q15 operating costs also rose by 8.8% to €434.4 million, driven by higher transatlantic activity in the quarter relative to the previous year, but this was offset by lower US dollar fuel prices. Aer Lingus expects the benefits of lower priced fuel hedging contracts to be more evident in the second half of 2015 and also expects the stronger US dollar to favourably impact the Q3 results.“The adverse effects of unfavourable FX movements on performance which were evident in this quarter will moderate in the second half of the year as a result of a higher proportion of US dollar denominated revenues. Both short and long haul capacity are set to expand into the peak season and we are very satisfied with forward yield and load factor profiles at this time,” added Kavanagh.Aer Lingus has still been left with a healthy 17.7% increase in net cash from €545.4 million in 2Q14 to €641.6 million in 2Q15.“Finally, I would like to reiterate the view of the independent directors of Aer Lingus that the combination with IAG will strengthen Aer Lingus and will grow our airline and contribute to growth in the tourism sector and wider Irish economy,” Kavanagh concluded.

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