Aer Lingus raises outlook, cites strong June fares

By SHAWN POGATCHNIK

DUBLIN

Aer Lingus, the former Irish state airline struggling to survive in the shadow of Ryanair, said Thursday it's raising its outlook for 2010 amid a surge in summer fares.

In a trading update for the January-June period, Aer Lingus said it is earning more and spending less than in 2009. It cited lower costs of staff and fuel and surprisingly strong fares and sales on its trans-Atlantic routes in June, the start of the industry's most lucrative summer months.

Aer Lingus shares rose 1.3 percent to euro0.90 -- a new high for the year -- on the Irish Stock Exchange.

Aer Lingus said its average trans-Atlantic fares increased 17.4 percent versus the first half of 2009, while fares on European routes rose 9 percent.

The airline cut nearly a third of its seats on trans-Atlantic services in 2009 as part of an effort to boost capacity, cut costs and make the U.S. routes -- traditionally the key earners for Aer Lingus -- profitable again.

"Recent yield performance and long-haul load factors have exceeded our expectations, and the forward-booking profile suggests that this strength should continue for at least the third quarter," the Aer Lingus trading statement said.

Aer Lingus credited its unionized work force with accepting painful cutbacks that are driving the airline's turn away from deep losses in 2008 and 2009.

It said that -- so long as summertime services are not disrupted by volcanic ash as happened in April and May -- the company's operating profit before any exceptional items "should be no worse than break even." The airline previously had warned of a third straight year of operating losses.

Aer Lingus said it couldn't provide performance guidance for 2011. It plans to publish its first-half results Aug. 24.

Ryanair has been trying to take over its smaller Irish rival ever since the Irish government privatized Aer Lingus in 2006. Ryanair is the biggest Aer Lingus shareholder with a 30 percent stake. But the second-largest owner, the Irish government with a 25 percent stake, has helped to block any merger on competition grounds.