The range of cuts in the post-Sept. 11 survival plan, that saw the shedding of 2,000 jobs and cost savings that totaled over 22 percent, is beginning to deliver a major payoff to the airline.
The operating margin on continuing activities was 6.7 percent compared to a negative operating margin of 4.7 percent in 2001.
However, chief executive Willie Walsh said the margin was not big enough for a company the size of Aer Lingus operating in a turbulent industry and he has set a medium-term target of 15 percent.
“We see no reason why we can’t achieve that with ongoing change,” he said. “It is important that we continue to change, continue to address our cost base and actively lower our fares.”
He said the continuing cuts in some of the airline’s extra “frills” didn’t mean Aer Lingus was going down a low budget airline route though fares were being cut and they were committed to them.
Walsh said the company had a “very clear and simple” business strategy.
“It is about the relentless and aggressive reduction in our costs and passing on the results in the form of lower fares,” he said. “Lower costs and lower fares means more people traveling, higher load factors and sustainable profits. This enables us to grow, open more routes and provide direct access to more destinations for our customers.”
After net exceptional charges of euro 25.7 million, the profit for the year was euro 35.3 million.
This compares with a loss in 2001 of euro 139.9 million, after net exceptional charges of euro 104.1 million.
The passenger load factor increased to 79 percent last year compared to 72 percent in 2001.
The airline predicts that capacity this year on U.S. routes will increase by 18 percent and by 17 percent in the continental European markets.
It warns, however, that the war in Iraq will have “a significant effect on travel patterns particularly on trans-Atlantic and long-haul routes.
“While recognizing this reality, Aer Lingus is determined to respond with initiatives designed to stimulate travel and to win business in this adverse environment,” a spokesman said.