Aer Lingus profits soar by 17.8% as chairman pushes for IAG takeover
The board of Aer Lingus restated its backing for a takeover bid by the owner of British Airways (IAG) as it revealed that profits at the airline have soared almost 18%.
The chairman of Aer Lingus has said the company's board is of the "strong belief" that it should now "combine" with IAG.
Colm Barrington was reacting to annual figures released this morning showing Aer Lingus recorded a 17.8% jump in profit last year to €72m.
Mr Barrington said the benefits of a deal with IAG would de-risk the future of Aer Lingus and strengthen its operations.
He said: “Our performance in 2014 was strong, with significant growth in long-haul and resilient short-haul operations,” he said.
“To enhance these excellent results and to accelerate Aer Lingus’ growth, it is the board’s strong belief that the company should now take the opportunity to combine with IAG.
“In this combination Aer Lingus will operate as a separate business while gaining access to IAG’s extensive network and benefiting from its scale.
“These significantly positive benefits will de-risk Aer Lingus’ future, strengthen its operations and enhance the future success of the company.”
The board is proposing increased share dividends from 4% to 5% as a result of last year’s performance.
The Tánaiste Joan Burton is under pressure from within Labour to reject IAG’s takeover offer for Aer Lingus.
It is reported that Labour TDs will bring a motion to the party’s conference calling for the €1.4bn bid to be turned down over fears for jobs in north Dublin, the home of the airline’s headquarters and majority of its employees.
There are also concerns as connectivity for Shannon and Cork Airports.
According to this morning’s Irish Independent, a motion opposing the sale will be put to delegates at the Labour party’s annual conference this weekend in Killarney.
Meanwhile, Aer Lingus' total revenue for 2014 was up 9.2% to €1.55bn compared to €1.42bn in 2013.
Aer Lingus also saw the total number of passengers on its network pass the 11 million mark for the first time.
Average fare revenue per seat was €98.93, up 9.4%.
The airline said long-haul performance was particularly strong with revenue up 28.4% to €490m, passenger numbers up 20.6% and load factor up 0.6 points to 83.7%.
The company said a number of factors contributed to the growth, including a successful transatlantic expansion with additional capacity of 23.8% deployed; the move from Terminal 1 to Terminal 2 in London Heathrow resulting in an improved customer experience; and the resolution of legacy pension funding issues.
Stephen Kavanagh will take over from ou-going CEO Christoph Mueller at the end of this week.
Mr Mueller said: "Commercial initiatives, in addition to cost control, led to the highest operating profit since the financial crisis and 17.8% above last year."
