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Abu Dhabi, UAESaturday 15 December 2018

Etihad partner Aer Lingus sounds optimistic note over profit

The state-backed Irish airline, in which Etihad owns a 4.9% stake, reported a 32.9 per cent year-on-year rise in second-quarter operating profit.

Etihad Airways’ equity partner Aer Lingus has lifted its profit outlook for the full year on the back of an encouraging summer in Europe.

The state-backed Irish airline, in which Etihad owns a 4.9 per cent stake, expects an operating profit of €61.1 million (Dh300.7m), about the same it made last year. Just last month, the Dublin-based carrier said its operating profit could plunge by 20 per cent.

The airline reported a 32.9 per cent year-on-year rise in second-quarter operating profit to €38.7m – its highest since 2010. This came despite losing €10m during a strike in May.

“Tactical aggressive pricing to recover bookings in the months ahead” helped it to regain some lost profits, said John Strickland, the director of London-based JLS Consulting.

“It is also seeing a strong response to expanded North Atlantic capacity, a core market for the airline where it enjoys access to a large expat Irish population in North America as well as US pre-customs clearance in Ireland, which is a key selling point in Europe.”

In the first six months of the year, Aer Lingus carried 561,000 long-haul passengers, or 12 per cent of its total. The passenger figure in this segment went up by 15 per cent year-on-year. The average fare per passenger in the long haul also went up by 3.3 per cent to €352.42.

During the period, about 66 per cent of the group’s total trans-Atlantic bookings were from the US market, up from 65 per cent last year. More than half of its total ticket sales were generated outside of Ireland, compared with 48 per cent last year.

Meanwhile, Etihad and Emirates Airline are increasing their frequencies to the Aer Lingus home base in Dublin. Etihad this month increased its service to double daily flights from 10 a week. Emirates plans to double its service to twice daily in September.

“Longer term, the big three Arab airlines will eat into that profit margin and Aer Lingus is acutely aware that one-off gains are no substitute for long-term strategic pricing,” said Saj Ahmad, the chief analyst at StrategicAero Research.

Another stakeholder in Aer Lingus, the low-cost Irish airline Ryanair is interested in expanding its services to the Middle East, especially to Lebanon and Egypt, the Telegraph quoted the company’s chief executive Michael O’Leary as saying. Ryanair owns 29.8 per cent in Aer Lingus.

“Ryanair won’t start any low-cost carrier immediately as they will likely want the 737MAX in their fleet which gives them added range and connectivity options,” Mr Ahmad said. “That said, Ryanair is branching out and the Gulf has huge low-cost airline potential, but it’s interesting they won’t yet go head to head with flydubai.”

The UAE’s budget carriers flydubai and Air Arabia have been expanding aggressively in the short-haul sector. This year, flydubai has announced 11 destinations. It flies to 75 cities.

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