Aer Lingus has reported an operating loss before exceptional items of €347m for the 2021 financial year, during which the airline operated at less than a quarter of its pre-pandemic capacity.
The result is an improvement on the €361m loss recorded by the Irish airline in 2020, and the IAG-owned carrier made an operating profit of €276m in 2019.
Passengers revenues for the 12-month period totalled €302m while revenues from cargo were €65m, but Aer Lingus had the lowest passenger capacity of any of the airlines within IAG, which also owns British Airways, Iberia and Vueling.
In the first quarter of 2021, Aer Lingus operated at just 15.2% capacity, falling to 10.9% in Q2, rising to 27.1% in Q3 and again to 44.3% in Q4 following the reopening of US borders. IAG said Aer Ligus had the lowest available seat kilometres (ASKs) of any of its brands in 2021 at 24.4%.
The group said it expects capacity for 2022 of around 85% of 2019 levels, with an Omicron-related reduction in bookings for January and February giving way to strong returns for Easter and summer.
In Association with
Overall, IAG made a net loss of just under €3bn for the fulll year, an improvement on the €4.4bn lost in 2020, and it expects to make a "significant" operating loss for the first quarter due to Omicron, the cost of rebuilding capacity and normal seasonality.
The company said it expects to be profitable from the second quarter onwards and for operating profit and net cash flows from its activities to be "significantly positive" for the full year.
"We are confident that a strong recovery is underway. Our teams across the Group are taking every opportunity to develop our business while capitalising on the surge in bookings when travel restrictions are lifted," Luis Gallego, CEO of IAG, said.
"All our airlines continued to show improvements in the fourth quarter, optimising their performance and further improving their operating results."
Gallego added: "Prior to Omicron, long haul traffic had seen the highest booking activity in October and November at over 80 per cent of 2019 levels. This was driven by the re-opening of the North Atlantic corridor and the strength of long haul leisure markets and travellers visiting families and friends.
“Demand slowed down for very near-term trips following the emergence of Omicron in late November. However, bookings have remained strong for Easter and summer 2022 having picked up in the New Year. We expect a robust summer with IAG returning to around 85% of its 2019 capacity for the full year."
IAG agreed a three-year, $1.8bn revolving credit facility available to Aer Lingus, British Airways, and Iberia that was not drawn down in 2021, and Aer Lingus also received a €75m loan from the state-managed Ireland Strategic Investment Fund (ISIF), adding to the €75m it borrowed in 2020, to be repaid next year.
Employee costs at IAG fell some €214m or 7.4% on the back of major job cuts made the previous year, including 10,0000 or 25% of British Airways workforce and 500 or 10% of the workforce at Aer Lingus.
At Aer Lingus, costs were cut across the board, with the airline spending €89m on fuel and emissions (-69%), €180m on staff (-17%), €305m on suppliers (-18%), and ownership €140m (-11%).
Aer Lingus also took delivery of four aircrafts, although no new agreements were made in 2021, and it has three Airbus A231-200 aircraft valued at €20m ready to be sold this year. The airline expects available seat km as a proportion of 2019 levels to be 84-115% in 2022.
Shares in IAG have fallen 22% over the past year and 6% in Thursday following the spike in oil prices caused by Russia's invasion of Ukraine and fears of disruption of global energy supply.
Gallego confirmed that IAG airlines would avoid Russian airspace for overflights following the decision taken by British Prime Minister Boris Johnson to ban Russian flag carrier Aeroflot from the UK.
"The impact for us is not huge because right now we are only flying to a small number of destinations in Asia and we can reroute our flights," Gallego added.
(Pic: Getty Images)
