Air Transport World

Aer Lingus broadening its market horizons.

Dublin--The trend among major airlines in Europe over the past few years has been to find ways to show a profit despite slumping traffic and pressures for higher costs. It hasn't been easy, but in 1983 the efforts began to show some results. Despite almost no traffic growth, this group of airlines managed to show a profit for the year, generally their first for the 1980s.

Ireland's national airline, Aer Lingus, could be called perhaps the trend setter in this European effort. Over ten years ago Aerr Lingus began a program to develop a group of ancillary businesses, some airline related, some not, as a profit hedge against anticipated losses for the air transport sector of the company. Aer Lingus, mostly under the leadership of its Chief Executive David Kennedy, has been very good at it.

In fact, for the financial year ended March 31, 1984, the combined company of Aer Lingus showed net a profit for the first time in the 1980s.

Unfortunately for airline fans most of the profit resulted for the ancillary businesses, comprising numerous hotels, financial services, airline maintenance, servicing and training, etc. The combined Aer Lingus group produced pounds sterling 457,353,000 in the financial year ended March 31, 1984, with the Irish pound worth about $1.15 (U.S.) at the time. It is currently about an even one dollar. In any case that represented a 13% gain in revenue for the year. All this produced a nice pounds sterling 20,713,000 operating profit leaving Aer Lingus with a $8.5 million net.

North Atlantic loss

The difficulty is that the ancillary activities which generate 43.7% of the operating revenue produced $23.3 million operating profit while the combined airline operations of Aerlinte (North Atlantic) and Aer Lingus (Ireland and Europe) suffered a $2,587,000 operating loss (see chart). The European operation actually showed $2,274,000 operating profit, but as usual the North Atlantic operation took a drubbing suffering a $4,861,000 loss. This was helped somewhat by a $4,000,000 government equity investment contribution cutting the loss to less than one million pounds. …

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