Aer Lingus to review long-haul order as demand collapses

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Aer Lingus admits that it is to review its long-haul aircraft orders as the Irish flag-carrier reshuffles its senior management in order to cope with a severe downturn in its business.

The carrier is forecasting full-year losses for 2009 that will be "materially below" the bottom of the range of current expectations.

"Ongoing cost reduction is critical for the viability of Aer Lingus in the current difficult market environment," it says, adding that the board is reviewing options to generate a "sustained" reduction in operating costs.

Aer Lingus is examining the composition of its fleet and, in particular, is to "review its long-term requirement" for the long-haul capacity on order with Airbus and "any associated capital expenditure".

The airline signed a purchase agreement in 2007 for 12 long-haul Airbus aircraft, including six A350-900s and six A330-300s. It has already started receiving the A330s, while the A350s are due to arrive from 2014.

Aer Lingus, whose long-haul services primarily cover six US destinations, reveals that it transported 12.5% fewer long-haul passengers in the first quarter of this year, and 5.7% fewer on short-haul routes.

As part of its review Aer Lingus is placing these two sides of the business under dedicated management to reflect their "different needs".

Deputy chief executive Niall Walsh extends his duties to chief operating officer. Corporate planning director Stephen Kavanagh is to head long-haul operations while chief financial officer Sean Coyle will oversee short-haul operations. All three managers also retain their current responsibilities.

Aer Lingus is to look at capacity needs for winter 2009-10 in light of possible fleet and route changes and says it will provide an update to the situation around the time of its annual general meeting on 5 June.

"Against the backdrop of a severe deterioration in operating conditions the board is taking the steps necessary to safeguard the long-term viability of the group," says Aer Lingus chairman Colm Barrington, who took charge of the airline after the sudden departure of chief executive Dermot Mannion earlier this month.

In its preliminary first-quarter figures, the carrier says that overall yields have declined sharply since the beginning of the year, down 14.5%.

Aer Lingus has slashed long-haul capacity by 19.5% in the first three months, raising load factor to 67.1%, and cut short-haul capacity by 4.5%, increasing loads to just over 70%.