Aer Lingus today reported pre-tax losses of €154.8m for the year ending December 2009, a 26.8% jump on the 2008 loss of €122.1m.

The former State airline reported operating losses of €81m for last year compared with losses of €20m in 2008. Total revenues for the year dipped by 11% to €1.2 billion, with a strong performance in ancillary revenues offset by reduced passenger fare and cargo revenues.;  total passengers rose 3.8% to 10.4m (2008: 10.0m); average fare for the year declined by 16.8% on 2008, being a 12.0% fall on average short haul fare and an 15.9% fall on average long haul fare; fuel costs fell 17.3% to €331.7m (2008: €401.3m); non-fuel operating costs dropped 1.9% to €955.0m (2008: €973.7m); gross cash was €828.5m (31 December 2008: €1,206.8m) and debt was €492.6m (31 December 2008: €552.9m).

Aer Lingus said that trading in the first three months of 2010 has been ahead of the same time last year but it said that trading conditions remain extremely challenging and it has only limited visibility over the second half of the year.

The airline also said the group's full year performance really depends on the successful implementation of its recently announced cost reduction programme. Last week the cabin crew voted in a second ballot to accept the group's cost cutting plan and Aer Lingus says its expects to get staff cost savings of €40m this year.

Christoph Mueller, Aer Lingus' CEO, commented: "2009 was a very difficult year for the Group with total revenues declining by 11.0% in the face of recession in each of our major markets.  The increase in the operating loss, before exceptional items, to €81.0m reflects the tough markets faced by the Group.

Implementation of the Cost Reduction Programme remains vital to the re-align the cost base of the Group.  We recognise that elements of the Cost Reduction Programme will involve significant sacrifices by our staff and we gratefully acknowledge the support of the five trade union groups that voted to support the Cost Reduction Programme.  We are pleased that we successfully achieved agreement on the crucial measures required to return the Group to profitability without experiencing any disruption to our passengers.

The outlook for 2010 remains uncertain with limited visibility over the second half of 2010 in particular.  However, we are satisfied that we have started the process of improving yields while implementing the necessary Cost Reduction Programme.

Our goal for the remainder of 2010 is to position Aer Lingus for a successful future."

Results detail

Goodbody analyst, Eamonn Hughes, commented:  Green light for Greenfield, look now to the future: "Aer Lingus (AL) has released its full FY09 results, after cabin crew finally accepted the airline’s restructuring plans. AL had previously published a trading update for FY09 on March 10, containing most of the main revenue figures, headline cost items and the gross & net cash position. To recap, AL reported an operating loss of €81m, thereby delivering a €12m profit in H2.

Given all the figures above were already flagged, the main operational disclosures today relating to 2009 were on the cost line. Staff costs were in line with expectations at €312m. Elsewhere, maintenance and airport charges came in a bit lower than anticipated and other income had a stronger benefit from hedging. However, this was balanced by higher than anticipated depreciation, rentals, route charges & ground operations. AL is also providing for €88m of exceptional items in FY09.

AL has provided some additional hedging detail for FY10, moving from 67% hedged at $772 to 75% hedged for the remainder of the year at $772 (which results in a blended rate of 80% at $762 for the full year). In terms of the outlook for 2010, the carrier states that it “remains uncertain, with limited visibility over H2 in particular”. However, management is satisfied that they “have started the process of improving yields”, while also implementing the cost plan.

They comment on marginally higher revenue per pax in Q110, with LH revenue per pax “above prior year”, due to a combination of higher yields and better load factors, whilst SH revenue per pax looks “in line” with the prior year. Our models show LH yields up 5% and SH broadly flat, which looks a reasonable starting position. AL adds that the “trading performance for the first three months of 2010 is ahead of prior year”, which directionally plays to our reduced operating loss estimate this year of €36m, which we are leaving unchanged. The cash cost of the restructuring this year will see the net cash position ease slightly in FY10, but the heavy lifting is now largely done. At first glance, we get reassurance from these results and guidance and as such, we remain comfortable with our Buy call on the stock."