Aer Lingus Group PLC H1 2015 Results -4-
July 29 2015 - 2:02AM
UK Regulatory
With regard to hedging activity, Aer Lingus should benefit from
maturing FX gains which are weighted towards H2 rather than H1
2015. In Q1 and Q2 2015, the Group sold forward surplus US Dollar
arising from strong North America originating sales in the
period.
FX hedging position as at Q2 Q1 2015 Q2 2015 H1 2015 Q3 2015 Q4 2015 H2 2015 Full
2015 year
2015
-----------------------------------
Act. Act. Act. F'cast F'cast F'cast F'cast
----------------------------------- ------- ------- ------- ------- ------- ------- ------
USD spot and forward purchases
(US$ million) 16.5 27.0 43.5 77.0 46.0 123.0 166.5
Average USD spot/forward purchases
rate (US$ to euro) 1.32 1.35 1.34 1.26 1.25 1.25 1.28
USD spot and forward sales
(US$ million) 30.0 62.0 92.0 n/a n/a n/a 92.0
Average USD spot and forward
sales rate (US$ to euro) 1.06 1.12 1.10 n/a n/a n/a 1.10
----------------------------------- ------- ------- ------- ------- ------- ------- ------
GBP spot and forward sales
contracts (GBP million) 22.5 23.0 45.5 18.0 11.0 29.0 74.5
Average spot and forward sales
hedged rate (GBP to euro) 0.83 0.81 0.82 0.80 0.80 0.80 0.81
----------------------------------- ------- ------- ------- ------- ------- ------- ------
H1 2015 financial review
Irish economic context
The recovery of the Irish economy has gained momentum over the
past year:
-- The latest Irish Department of Finance latest estimates
forecasts GDP growth of 4.0% in 2015.
-- Employment increased by 2.2% in Q1 2015 (source: CSO).
-- Dublin Airport, Aer Lingus' main hub and the largest airport
on the island of Ireland, experienced 15% increase in passenger
numbers in the first six months of 2015 (source:
www.dublinairport.com).
Summary revenue
Total revenue increased by 7.4% in H1 2015 to EUR749.0 million
compared with EUR697.2 million in H1 2014, with strong growth in
passenger fare, retail and cargo revenue. Aer Lingus estimates
that, the year-on-year appreciation in the US Dollar and UK
Sterling rates positively impacted total revenue by approximately
EUR33 million or 5% in H1 2015.
Passenger revenue
In H1 2015, passenger fare revenue increased by 7.7% mainly
driven by increased capacity deployed on our long haul routes and
improved yields.
Passenger revenue H1 2015 H1 2014 % increase/
(decrease)
------------------------------------- ------- ------- -------------
Passenger fare revenue (EUR million) 606.3 563.0 7.7%
------------------------------------- ------- ------- -------------
Passenger numbers ('000s) 4,627 4,615 0.3%
------------------------------------- ------- ------- -------------
ASKs (million) 9,834 9,551 3.0%
------------------------------------- ------- ------- -------------
Load factor (%) 78.3% 76.1% 2.2 ppts
------------------------------------- ------- ------- ----- ------
Fare revenue per seat (EUR) 97.75 89.18 9.6%
------------------------------------- ------- ------- -------------
Fare revenue per ASK (EURcent) 6.17 5.90 4.6%
------------------------------------- ------- ------- -------------
Mainline short haul revenue
Aer Lingus achieved short haul revenue of EUR351.3 million in H1
2015, representing a decrease of 3.8% compared with prior year (H1
2014: EUR365.2 million). Short haul capacity fell by 4.2%
reflecting planned adjustments to capacity. Short haul management
actions resulted in a 2.0 ppt improvement in load factor and
stabilisation of yields. Aer Lingus' demand led capacity management
will continue into H2 2015, with a 3.3% increase in short haul
mainline ASKs over the peak Q3 summer season.
Short haul revenue H1 2015 H1 2014 % increase/
(decrease)
---------------------------------- ------- ------- -------------
Short haul passenger fare revenue
(EUR million) 351.3 365.2 (3.8%)
---------------------------------- ------- ------- -------------
Short haul passenger numbers
('000s) 3,986 4,053 (1.7%)
---------------------------------- ------- ------- -------------
ASKs (million) 5,533 5,775 (4.2%)
---------------------------------- ------- ------- -------------
Load factor (%) 75.4% 73.4% 2.0 ppts
---------------------------------- ------- ------- ----- ------
Fare revenue per seat (EUR) 64.75 65.05 (0.5%)
---------------------------------- ------- ------- -------------
Fare revenue per ASK (EURcent) 6.35 6.32 0.5%
---------------------------------- ------- ------- -------------
Mainline long haul revenue
Aer Lingus continued to successfully expand its long haul
business with a 13.9% increase in capacity, supported by the launch
of the new Washington route in May 2015, increases in frequencies
on a number of routes and the impact of a full six months trading
for San Francisco and Toronto (both launched in April 2014). This
additional capacity was successfully converted into 14.1% higher
passengers, a 1.7 ppts increase in load factor and 15.9% increase
in yield per seat. Combined these factors drove a EUR57.2 million
increase in long haul passenger fare revenue, with all long haul
routes contributing to this performance.
Long haul revenue H1 2015 H1 2014 % increase/
(decrease)
------------------------------------ ------- ------- -------------
Long haul passenger fare revenue
(EUR million) 255.1 197.9 28.9%
------------------------------------ ------- ------- -------------
Long haul passenger numbers ('000s) 640 561 14.1%
------------------------------------ ------- ------- -------------
ASKs (million) 4,301 3,776 13.9%
------------------------------------ ------- ------- -------------
Load factor (%) 82.1% 80.4% 1.7 ppts
------------------------------------ ------- ------- ----- ------
Fare revenue per seat (EUR) 327.80 282.88 15.9%
------------------------------------ ------- ------- -------------
Fare revenue per ASK (EURcent) 5.93 5.24 13.2%
------------------------------------ ------- ------- -------------
Aer Lingus' business cabin continues to perform strongly. The
investment in our long haul fleet has been well received with the
A330 fleet now fully operational with fully horizontal "lie flat"
seats. Business class load factor increased by 3.2 ppts in the
first six months of 2015 to 73.1%.
Aer Lingus expects to continue to expand its long haul business
for the remainder of the year. The Group will increase capacity
deployed by 16.4% in Q3 2015. In addition, frequencies will be
increased on Washington, New York, Boston, Chicago, San Francisco
and Toronto routes over the key winter 2015/2016 holiday periods
contributing to a 13% increase in winter capacity compared with
prior year.
Retail revenue
Retail revenue increased 4.5% in H1 2015 to EUR94.5 million (H1
2014: EUR90.4 million). Retail revenue per passenger increased 4.3%
reflecting increases in on-line booking fees, baggage and seat
selection fees.
Retail revenue H1 2015 H1 2014 % increase/
(decrease)
----------------------------- ------- ------- -----------
Retail revenue (EUR million) 94.5 90.4 4.5%
----------------------------- ------- ------- -----------
Retail revenue per passenger
(EUR) 20.42 19.58 4.3%
----------------------------- ------- ------- -----------
Cargo revenue
Total cargo revenue increased by 19.0% in H1 2015 to EUR 25.7
million (H1 2014: EUR 21.6 million) driven by an 11.4% increase in
flown cargo tonnes mainly as a result of the growth in
transatlantic services both ex Ireland and ex North America. Sales
originating in UK and Continental Europe increased strongly. Gross
flown freight yields also positively contributed to
performance.
Cargo revenue H1 2015 H1 2014 % increase/
(decrease)
---------------------------------- ------- ------- -----------
Total cargo revenue (EUR million) 25.7 21.6 19.0%
---------------------------------- ------- ------- -----------
Cargo tonnes flown - scheduled
('000s) 14,662 13,162 11.4%
---------------------------------- ------- ------- -----------
Other revenue
Other revenue mainly comprises income from our contract flying
business and franchise fees relating to Aer Lingus Regional,
operated by Stobart Air. Other revenue of EUR22.4 million was
broadly flat compared with H1 2014.
Virgin Atlantic announced in October 2014 that "Little Red"
services would be discontinued on a phased basis over the period to
September 2015 and in January 2015 Aer Lingus was informed that
Novair contract flying will cease in winter 2015. These factors
will impact this revenue category in the latter part of the year
2015.
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