Aer Lingus' total passenger numbers increased by 7.5% to 1,030,000 in June 2009 compared to June 2008, comprising a 10.8% increase on short haul and a 14.2% reduction on long haul.
Aer Lingus' overall load factor in the month decreased by 0.2 points versus June 2008.
Short haul load factor was 82.0%, which was 0.9 points up on 2008, while capacity increased by 12.2% year on year.
Long haul load factor was 80.2%, which was down 1.9 points versus 2008, with capacity decreasing by 16.3%.
Goodbody analyst Anna Lalor commented today on falling fuel prices providing some relief for airlines:"Fuel prices continued their decline yesterday with a $1.85 fall in the price of Brent crude to $63.14. When it last reported, Ryanair was about 70% hedged for the year to March 2010, with 90% of fuel hedged for its first three quarters and 5% hedged in Q4. We have forecast that the cost of unhedged fuel is $70 for the rest of this year. Due to the large amount of hedging in FY10, changes in fuel prices will only have a modest impact on 2010f EPS, with each $5 fall adding an extra 1.4 cent to EPS (c6% improvement in EPS). Looking past 2010, with no hedging in place and where we are forecasting $75 per bbl in FY11 and $80 after that, the impact becomes more significant. A $5 drop in the oil price will add an estimated 6.6 cent (31%) to FY11 EPS, 7.5 cent (20%) to FY12 and 8.2 cents (14%) to FY13. The $6.46 fall in crude over the past week would add a cumulative 23.9 cent (or 17%) to our aggregate EPS estimates over the 2010-2013 period.
The fall in oil could be perceived to be due to weakening expectations over the economic recovery, as demonstrated by falling equity markets yesterday, so it is probably worthwhile looking at the sensitivity of our Ryanair forecasts to our yield assumptions in the event that lower fares are required to fill planes for longer than anticipated. We estimate that each additional one percentage point fall in average fares knocks between 1.6 cent and 2.2 cent off FY10 to FY13 EPS, with the largest impact in FY11 at 8% of EPS and the lowest in FY13 at 4%. We have currently factored in a 14% fall in average fares for FY10, -1% in FY11, with a 6% rise in FY12 and a 4% increase in FY13."
She also commented on difficulties for cost cutting plans at BA and a more novel approach to increasing efficiency: "BA is experiencing continuing difficulties in its efforts to cut costs as staff rejected its plans to reduce costs yesterday, but the Unite union said that its members were prepared to consider a two year pay freeze.
On Wednesday, unions and BA are due to meet under the ACAS mediation service, but the ongoing frictions highlight the difficulties facing flag carriers as they attempt to cut their costs in an environment of falling revenue and volatile fuel costs. In a similar vein, SAS announced yesterday that its negotiations with the 39 trade unions that the Group deals with had ended without conclusion.
For a more novel approach to increasing efficiency, press reports yesterday indicate that Ryanair is considering the possibility of offering lower cost “vertical seating”, where passengers could opt for a bar stool type seat. Ryanair is said to be looking into the idea following plans put forward by Spring (a Chinese airline) and could see four rows (or 12 seats of normal seating) removed to make standing room, according to a Ryanair spokesman. The airline is believed to be in contact with Boeing on aircraft design and the Irish Aviation Authority on obtaining approval."
