The residual risks identified in the 2014 annual report
associated with the implementation of the IASS pension solution are
now deemed manageable. As at 24 July 2015 EUR137.3 million of the
EUR190.7 million had been transferred to individuals' new defined
contribution pension scheme accounts with 63.4% (78.9% for active
members and 50.8% for deferred members) of waivers executed. Part
III ('Risk Factors') of the IASS proposal circular issued to
shareholders on 18 November 2014 sets out a comprehensive
description of the pension risks to which Aer Lingus is
exposed.
The principal risks and uncertainties to which the Group will be
exposed to in the second half of the financial year are set out
below:
Foreign exchange volatility and jet fuel prices: The Group's
principal foreign exchange exposure is to US Dollar and UK
Sterling. These two currencies have appreciated significantly
year-on-year versus the euro. Aer Lingus incurs a greater amount of
US Dollar denominated costs than it generates revenues, while
generating a greater amount of UK Sterling revenues than costs. A
continuing appreciation of the US Dollar and UK Sterling against
the euro may adversely impact certain cost categories for the
remainder of 2015. This risk is mitigated through the generation of
US Dollar and UK Sterling denominated revenues and our hedging
programme.
Jet fuel costs represent around 25% of total operating costs.
Recent jet fuel prices have been volatile, with average spot jet
fuel price declining from US$972 per metric tonne in H1 2014 to
US$583 in H1 2015 (source: Platts). While these fluctuations are
outside of the Group's control, fuel hedging is actively managed in
according with policies and Board approvals.
Competition and cost competitiveness: Aer Lingus operates in an
intensely competitive market across all main route groups. If the
Group fails to adequately respond to that competition, our market
share and financial performance could be eroded. The nature of our
markets can make it difficult to pass costs increases on to
passengers without adverse impact on traffic volumes. Aer Lingus is
actively focused on managing its cost base for the remainder of
2015 with the objective of achieving EUR40 million run-rate savings
by the end of 2016.
Customer focus: Aer Lingus needs to tailor continuously its
proposition to the requirements of its three business sectors (Long
haul, UK & European cities and European leisure / Mediterranean
destinations) and ensure strong service delivery. Failure to do so
may lead to loss of Aer Lingus' customer franchise and return
purchases. Aer Lingus actively monitors its performance and adapts
its service proposition and operations to meet customer
targets.
Industrial relations: Aer Lingus has a largely unionised
workforce and a successful relationship with our staff stakeholders
is vital to our performance. The company actively engages with
staff and partners to ensure a successful relationship and adequate
resolution of disputes.
IT infrastructure: The Group is currently in the process of
implementing a number of new applications and customer interfaces.
Comprehensive testing and implementation plans are devised to
mitigate the risk of disruption.
Fleet management: Following conclusion of our agreement with
Airbus to take delivery of nine A350 aircraft between 2018-2020,
our long haul fleet renewal programme is now entering into its
implementation phase. Short haul fleet replacement is also being
actively monitored with aircraft retirements and replacements being
tactically managed in accordance with growth projections and
requirements. In particular, the increase in demand for leased
aircraft could negatively impact lease costs or demand from lessors
to return fleet assets as leases expire.
People: The Group's future performance is dependent on its
ability to recruit and retain skilled staff in line with the
operational requirements of the Business.
Business continuity disaster recovery: Long term disruption or
the inability to promptly recover from short term disruptions could
have a material adverse impact on the Group's business in terms of
lost bookings, additional cost and damaged customer confidence. Aer
Lingus has a comprehensive business resilience planning process in
place with a team responsible for developing a comprehensive
business continuity disaster recovery plan to complement our
existing emergency response plan and major disruption scenario
plans.
Safety: Failure to operate safely or to adequately respond to an
emergency safety incident could adversely impact the Group's
operation and financial performance.
Enquiries
Investors & Analysts
Aer Lingus Investor
Catherine McGuinness Relations Tel: +353 1 886 2892
Jonathan Neilan FTI Consulting Tel: +353 1 663 3686
Irish Media
Gerry O'Sullivan Q4 Public Relations Tel: +353 87 259 7644
Nuala Buttner Q4 Public Relations Tel: +353 87 1744 275
International Media
Matthew Fletcher Powerscourt Tel: +44 (0) 207 3240494
matthew.fletcher@powerscourt-group.com
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Disclaimer
The Directors of Aer Lingus Group plc accept responsibility for
the information contained in this announcement relating to Aer
Lingus, the Aer Lingus Group, the Directors of Aer Lingus and
members of their immediate families, related trusts and persons
connected with them. To the best of the knowledge and belief of the
Directors of Aer Lingus (who have taken all reasonable care to
ensure that such is the case) the information contained in this
announcement is in accordance with the facts and does not omit
anything likely to affect the import of such information.
The release, publication or distribution of this announcement in
or into certain jurisdictions may be restricted by the laws of
those jurisdictions. Accordingly, copies of this announcement and
all other announcements relating to the combination are not being,
and must not be, released, published, mailed or otherwise
forwarded, distributed or sent in, into or from any restricted
jurisdiction. Persons receiving such announcements (including,
without limitation, nominees, trustees and custodians) should
observe these restrictions. Failure to do so may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law, the companies involved
in the combination disclaim any responsibility or liability for the
violations of any such restrictions by any person.
Under the provisions of Rule 8.3 of the Irish Takeover Rules, if
any person is, or becomes, "interested" (directly or indirectly) in
1% or more of any class of "relevant securities" of Aer Lingus, all
"dealings" in any "relevant securities" of Aer Lingus (including by
means of an option in respect of, or a derivative referenced to,
any such "relevant securities") must be publicly disclosed by not
later than 3:30 p.m. (Irish time) on the "business day" following
the date of the relevant transaction. This requirement will
continue until the date on which the Scheme becomes effective or on
which the "offer period" otherwise ends. If two or more persons
co-operate on the basis of any agreement either express or tacit,
either oral or written, to acquire an "interest" in "relevant
securities" of Aer Lingus, they will be deemed to be a single
person for the purpose of Rule 8.3 of the Irish Takeover Rules.
Under the provisions of Rule 8.1 of the Irish Takeover Rules, all
"dealings" in "relevant securities" of Aer Lingus by IAG or
"relevant securities" of IAG by Aer Lingus, or by any person
"acting in concert" with either of them must also be disclosed by
no later than 12 noon (Irish time) on the "business day" following
the date of the relevant transaction.
A disclosure table, giving details of the companies in whose
"relevant securities" "dealings" should be disclosed can be found
on the Irish Takeover Panel's website at www.irishtakeoverpanel.ie.
"Interests in securities" arise, in summary, when a person has long
economic exposure, whether conditional or absolute, to changes in
the price of securities. In particular, a person will be treated as
having an "interest" by virtue of the ownership or control of
securities, or by virtue of any option in respect of, or derivative
referenced to, securities. Terms in quotation marks are defined in
the Irish Takeover Rules, which can be found on the Irish Takeover
Panel's website. If you are in any doubt as to whether or not you
are required to disclose a "dealing" under Rule 8, please consult
the Irish Takeover Panel's website at www.irishtakeoverpanel.ie or
contact the Irish Takeover Panel on telephone number +353 1 678
9020; fax number +353 1 678 9289
Note on forward-looking information
This Announcement contains forward-looking statements, which are
subject to risks and uncertainties because they relate to
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends, and similar expressions concerning
matters that are not historical facts. Forward-looking statements
include, but are not limited to, information concerning the Group's
possible or assumed future results of operations, business
strategies, financing plans, competitive position, potential growth
opportunities, potential operating performance improvements, the
effects of competition and the effects of future legislation or
regulations. Forward-looking statements include all statements that
are not historical facts and can be identified by the use of
forward-looking terminology such as the words "believe," "expect,"
"plan," "intend," "project," "anticipate," "estimate," "predict,"
"potential," "continue," "may," "should" or the negative of these
terms or similar expressions. Forward-looking statements involve
risks, uncertainties and assumptions. Actual results may differ
materially from those expressed in
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