Aer Lingus: We are within 'striking distance of Ryanair’

Irish flag carrier, which came close to bankruptcy in 2009, says its operating profit margins are nearing those of its closest competitor, Ryanair

Aer Lingus has been re-positioning itself as a low cost long-haul airline Credit: Photo: PA

Five years ago Aer Lingus, Ireland’s national airline, was fighting off claims by its aggressive low cost rival, Ryanair, that is was flying at high speed towards bankruptcy.

Those claims were rubbished by the Aer Lingus management at the time, although Christoph Mueller, the carrier’s outgoing chief executive, now admits Ryanair was in fact close to the mark with its observations.

On Wednesday, Mr Mueller declared his “job was done” in reviving Aer Lingus as it posted its best third quarter result since the global financial crisis.

Operating profit in the three months to September 30, covering the key summer months, jumped 19pc to €112.9m (£88m) on revenue 14pc higher at €531.1m. The performance was boosted in particular by Aer Lingus’s long-haul operations across the Atlantic, as the carrier taps into the Irish diaspora in the US and Canada.

Passenger numbers on its long-haul flights jumped 23.8pc in the third quarter to 427,000 while short-haul traffic was also 2.2pc ahead at 2.6m.

Aer Lingus has been re-positioning itself as a budget long-haul carrier and has been seeking to capitalise on travellers from Europe who want to fly to the United States but avoid capacity-constrained Heathrow.

Some 65pc of Aer Lingus’s long-haul tickets are also now sold in the US - an improvement from 20pc five years ago - as the national flag carrier plays on its strong reputation among Irish expats and descendants of Irish immigrants living in America and Canada.

Mr Mueller, who has signalled his intention to step down next year, claimed that Aer Lingus is now “within striking distance” of Ryanair. He pointed to Aer Lingus’s operating margin, which has improved to 21.3pc, up 0.9 percentage points, and its net cash position of €571.6m as evidence of the airline’s revival. Ryanair earlier this week said its net margin for the first six months of its financial year, to September 30, reached 23pc while it has net cash of €618m.

“We are competing very successfully with low cost carriers, very successfully with legacy carriers in short-haul and we have absorbed almost the entire charter market here in Ireland..so I believe overall [my] job’s done,” Mr Mueller said.

Ryanair has tried to buy its Irish rival three times and still owns almost 30pc of Aer Lingus, although it has been told by UK competition authorities to sell down its holding to 5pc - a ruling it is challenging.

Aer Lingus, which was set back in the spring by cabin crew strikes over rosters, on Wednesday upgraded its full-year guidance, saying it now expects operating profit for the full-year to be ahead of 2013’s result of €61.1m.

However that still pales in significant with Ryanair, which said earlier this week that it expects net profit to reach between €750m and €770m for its full financial year.