Aer Lingus complies with the requirements of European Union
Regulation (EC) 261/2004 ("EU261") which establishes common rules
on compensation and assistance to passengers in the event of denied
boarding, cancellation or long delay of flights. The Directors note
that the October 2014 decision of the UK Supreme Court in the case
of Jet2.com Limited v. Huzar significantly limits the circumstances
in which airlines can refuse to pay compensation under EU 261 due
to an unforeseeable aircraft technical problem resulting in a
delayed or cancelled flight. Currently, this decision is applicable
in the United Kingdom only and it is not clear whether Courts or
national enforcement bodies in other jurisdictions will adopt a
similar approach. The Directors note that it is possible that
further unforeseen claims could arise, specifically as a result of
this judgement.
The Group has reflected the cost of valid EU261 passenger claims
made to date in its financial statements however no provisions have
been recognised in this regard.
Litigation and claims
The Group is party to various uninsured legal proceedings. The
Group makes provision for any amounts for which it expects to
become liable. At 31 December 2014, these provisions were less than
the total amounts claimed by plaintiffs because the Group does not
believe that it has any liability for the balance and the
proceedings are being defended.
Further disclosure required by IAS 37 is not made as the
Directors believe that to do so could seriously prejudice the
conduct and outcome of these proceedings.
23 Called-up share capital
There was no change in the called-up share capital of the Group
in the six-month period to 30 June 2015. The total number of
ordinary shares of EUR0.05 each in issue at 30 June 2015 was
534,040,090 (31 December 2014: 534,040,090) of which 1,303,384 (31
December 2014: 1,303,384) were treasury shares.
24 Cash generated from operations
Six months ended 30 June
2015 2014
EUR'000 EUR'000
Loss before tax (14,815) (14,142)
Adjustments for:
- Depreciation and amortisation 45,796 44,893
- Net movements in provisions for other
liabilities and charges 11,365 3,611
- Share of profit of joint venture (341) (245)
- Net fair value (gains)/losses on
derivative financial instruments (3,212) 188
- Share awards and options 970 (245)
- Finance income (4,076) (5,153)
- Finance expense 5,741 7,214
- Other losses/(gains) - net 23,745 (2,158)
- Net exceptional items - profit on
disposal of assets (1,298) -
- Post employment benefit obligations
(excluding net exceptional items) (455) 933
- Net exceptional items - post retirement
income streaming (11,340) -
Changes in working capital
- Inventories (4,078) 130
- Trade and other receivables (29,526) (33,835)
- Trade and other payables 268,244 218,543
------------------------------------------ ------------ ------------
Cash generated from operations 286,720 219,734
------------------------------------------ ------------ ------------
25 Financial commitments
(a) Capital commitments
The Group had capital commitments as follows:
As at 30 June As at 31 December
2015 2014
EUR'000 EUR'000
Contracted for but not provided
- Aircraft and equipment 897,380 849,249
- Other 2,297 4,542
-------------------------------- ------------- -----------------
899,677 853,791
-------------------------------- ------------- -----------------
Included within capital commitments in respect of aircraft and
equipment are unhedged amounts denominated in US Dollars of US$820
million (31 December 2014: US$820 million). These have been
translated at the appropriate rate of $1.12 (31 December 2014:
$1.22).
(b) Lease commitments
At 30 June 2015, the Group had commitments, under
non-cancellable operating leases, which fall due as follows:
Property Aircraft
EUR'000 EUR'000
No later than one year 9,317 69,355
Later than one year but no later than
five years 28,558 71,836
Later than five years 25,357 7,285
-------------------------------------- -------- --------
63,232 148,476
-------------------------------------- -------- --------
Included within aircraft lease commitments are amounts relating
to the damp lease agreements executed during the period to 30 June
2015 in respect of Boeing 757 aircraft.
Three of the aircraft which the Group holds under operating
leases are subleased to a third party. The termination of these
subleases has been confirmed for 26 September 2015. Minimum amounts
receivable under the subleases are EUR6 million at 30 June 2015, of
which the full amount is due in less than 1 year.
At 31 December 2014, the Group had commitments, under
non-cancellable operating leases, which fall due as follows:
Property Aircraft
EUR'000 EUR'000
Not later than one year 9,186 70,559
Later than one year but no later than
five years 29,675 93,892
Later than five years 27,906 6,790
-------------------------------------- -------- --------
66,767 171,241
-------------------------------------- -------- --------
26 Related party transactions
Details of related party transactions in respect of the year
ended 31 December 2014 are contained in Note 37 of our 2014 annual
report. The Group continued to enter into transactions in the
normal course of business with its related parties during the
period. Disclosures in respect of contributions and commitments to
the Group's joint venture are described in Note 12. There were no
material transactions with related parties in the first half of
2015 or changes to transactions with related parties disclosed in
the 2014 financial statements that had a material effect on the
financial position or the performance of the Group.
27 Events after the reporting period
As noted in Note 19, 63.4% of waivers (78.9% for active members
and 50.8% for deferred members) have been received as at 24 July
2015. Therefore, the EUR190.7 million provision for the once-off
contribution (as discussed in Note 19 and Note 21) has reduced by
approximately EUR137.3 million to EUR53.4 million.
Update on Offer from International Consolidated Airline Group
S.A ("IAG")
On 19 June 2015 IAG issued the Offer Document containing the
full terms and conditions of the recommended cash offer (the
"Offer") by AERL Holding Limited ("AERL Holding"), a wholly-owned
subsidiary of IAG, for the entire issued and to be issued ordinary
share capital of Aer Lingus. The Offer values each Aer Lingus share
at EUR2.55, of which EUR0.05 was paid as a dividend on 29 May 2015
("the Offer"). The Offer conditions include, amongst other things,
approval from the European Commission ("EC") under the EU Merger
Regulation, acceptance of the Offer by Ryanair Limited and the
Minister for Finance of Ireland, shareholders approving the
connectivity resolutions and a 90% acceptance condition. Full
details of the Offer conditions are set out in Appendix I of the
Offer Document posted to Aer Lingus shareholders. The following
conditions have been fulfilled to date:
-- On 14 July 2015 the proposed merger received competition
approval from the EC under the EU Merger Regulation, following the
EC's initial Phase I review period. IAG offered the following
remedies to the EC as part of the regulatory process:
o Five daily slot pairs to be made available to other airlines
at London Gatwick for flights between the airport and Dublin or
Belfast.
o Specifically, two of the five daily frequencies must be
operated between Gatwick and Dublin.
o One daily frequency must be operated between Gatwick and
Belfast.
o The other two frequencies can be operated between Gatwick and
either Dublin or Belfast.
o Other airlines can apply for seats on Aer Lingus' short haul
network for their transfer passengers, on normal commercial
terms
-- On 16 July 2015 Aer Lingus held an Extraordinary General
Meeting ("EGM") and successfully passed the resolutions in relation
to the Connectivity commitments and received Rule 16 approval from
the independent shareholders.
-- On this date IAG also confirmed the extension of the Offer
until 1pm (Irish time) on 30 July 2015.
-- On 17 July 2015 IAG confirmed the receipt of the valid
acceptance of its Offer by the Minister for Finance of Ireland. The
Minister for Finance's acceptance was a condition of the Offer. At
this date, IAG also announced that on 16 July 2015, AERL Holding
had received valid acceptances of the Offer for 269,902,009 Aer
Lingus shares, representing 50.53 per cent of the existing issued
share capital of Aer Lingus, which AERL Holding may count towards
the satisfaction of the acceptance condition to the Offer.
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