Aer Lingus reported today, that revenues fell by 16% during the first quarter of 2009 compared to the same time in 2008 and the airline said it was facing an exceptionally tough trading environment.

In response, its shares fell 19% in early trade in Dublin.

In a trading statement this morning, the airline also announced a re-organisation of its senior management structure in an effort to meet what it called the new challenges of a deteriorating outlook for the industry.

In an Interim Management Statement, the airline also announced a re-organisation of its senior management structure in an effort to meet what it called the new challenges of a deteriorating outlook for the industry.

Aer Lingus said its passenger numbers in the three months to the end of March fell by 6.5% year on year to 2.09 million. Its short haul passengers decreased by 5.7% while it also saw a 12.5% decrease on its long haul routes.

At the same time, the airline's short haul capacity fell by 4.5% and its long haul capacity slumped 19.5%.

Aer Lingus also said that its short haul average fares fell by 1.6% in the first two months of the year, but tumbled by 23.6% in March. This brought the quarterly figure down 10.8% year on year. However, this decline was partly offset by the strong increase in ancillary revenues per passenger which rose by 14.5%.

Long haul average fares fell by 14% in January and February and tumbled by 25.7% in March, with the quarter down 18.9% year on year.

Goodbody analyst  Marina Houghton comments:"Aer Lingus this morning released an IMS for the first three months of 2009 (Q1) stating that revenues for Q109 are down 16% yoy. Passenger numbers fell 6.5% yoy to 2.09m pax (comprising a 5.7% decrease yoy in short haul and a 12.5% decrease yoy in long haul). Capacity was down 4.5% on short haul and 19.5% on long haul. Load factors were up 2.4% yoy overall (short haul up 1.4% yoy to 70.1% and long haul up 3.2% to 67.1%), however, total revenue per passenger fell 9.6% yoy. In terms of yields it is clear that there was a significant deterioration in March, which cannot be entirely attributed to an April Easter this year. Yields were down 14.5% yoy overall in Q1. Short haul yields fell 10.8% yoy in Q1, with a marked fall of 23.6% in the month of March alone. Long haul yields were down 18.9% yoy, with a 25.7% drop in March. The company states that “it is clear that the yield environment has worsened, particularly in Ireland, as the year has progressed”. In terms of the long haul operation, we had 17% yoy declines in yield pencilled in, combined with a 14% fall in capacity. We will be reviewing our forecasts following the IMS.

In terms of the balance sheet, the company has net cash of €594m (down 9% on December year end figures), following outflows of €80m on restructuring costs and the final payment on an A330. As previously indicated, Aer Lingus is reviewing both its long haul and short haul operations and as a result will be looking at its long haul capacity requirements in terms of aircraft orders with Airbus and associated capex and will update the market next on 5th June.

Aer Lingus has now hedged 74% of its remaining 2009 requirement at $825 per tonne and 25% of 2010 requirement at $876 per tonne. Based on an un-hedged fuel rate of $500 per tonne the blended fuel rate for FY09 is currently expected to come in at $820 per tonne.

In terms of outlook the company cites the “exceptionally tough trading environment which has progressively deteriorated this year”. Continued pressure on consumer demand is expected to continue and be further compounded by the imposition of the €10 departure tax from Dublin Airport and, as a result, average fares are expected to continue to trend down. The company is expecting a loss for FY09, to come in “materially” below the bottom of consensus range and as a result Aer Lingus will be focusing on the cost base in an effort to stem the expected losses.

In the IMS, Aer Lingus also announced the reorganisation of its senior management structure following the departure of CEO Dermot Mannion at the beginning of April. Niall Walsh has been appointed COO, Sean Coyle (CFO) will also be head of Short Haul operations and Stephen Kavanagh (Corporate Planning Director) will head up Long Haul operations in addition to his current responsibilities."