Aer Lingus made an operating profit of €9 million in the first six months of 2024, down €31 million compared with last year.
Some of this was driven by the industrial action taken by pilots in a row over pay, but only some. In a statement, Aer Lingus said the industrial action resulted in a €55 million direct financial cost to the business over the second and third quarters, before factoring in the intangible impact on forward bookings.
There were five days of disruptions in late June due to the work to rule by pilots while the flight schedule didn’t return to normal until July 17th (its third quarter).
The other key factor in its profit decline was competition on transatlantic routes. American carriers increased their capacity into Ireland by 20 per cent this summer, “putting pressure on Aer Lingus’ long-haul revenues, particularly in the economy cabin”. This is expected to continue into the third quarter.
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Interestingly, Aer Lingus appears to be outperforming its peers in International Airlines Group (IAG) in terms of its business cabin (only offered on transatlantic routes in the case of the Irish airline).
On a conference call with analysts after the publication of its interim results, IAG chief executive Luis Gallego said Aer Lingus’s volumes on business travel were “close to” 100 per cent of the pre-Covid level in 2019 while revenues were at 95 per cent.
This compared with 65 per cent on volume at British Airways and about 80 per cent on revenues. It also outperformed Iberia.
Some of the competition in economy will no doubt have been driven by the entry of JetBlue on routes between Dublin and New York and Boston from March. And as we know from Ryanair, budget conscious customers are increasingly willing to play a game of chicken over air fares.
Aer Lingus was able to buy off its pilots with the offer of a 17.75 per cent pay rise. Seeing off competition with American rivals could prove a longer haul battle, and much more costly.
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