American Competition Intensifies Aer Lingus Woes

In the initial half of 2024, Aer Lingus experienced a slip in its operating profit to €9 million, a decline of €31 million from the previous year. Some factors contributing to this drop include the industrial action launched by pilots over salary disputes. Though only a portion of the downfall is attributed to this, the €55 million direct financial impact the company suffered during the second and third quarters was indeed severe. This includes disruptions that spanned five days in late June due to the pilots’ work-to-rule strike and flight scheduling resuming normalcy only by July 17th – a date that fell within the third quarter.

Another significant factor for the profit squeeze was the fierce competition on transatlantic routes. Over the summer season, American carriers boosted their allotted capacities to Ireland by 20%, putting a noteworthy strain on Aer Lingus’ long-haul revenues, particularly affecting the economy class. This trend is anticipated to persist into the third quarter.

Intriguingly, when compared to other International Airlines Group (IAG) members, Aer Lingus seems to be holding its own, especially in its business cabin that it only provides on transatlantic routes. In a conference call following the release of interim results, IAG CEO, Luis Gallego, indicated that the Irish airline’s business travel volumes were almost at pre-Covid levels of 2019 and revenues were about 95 per cent. These figures are notably higher than British Airways and Iberia, which were at 65 per cent and 80 per cent respectively.

The increase in economy competition could also be a result of JetBlue entering the Dublin-New York and Dublin-Boston routes from March. As demonstrated by Ryanair, budget travellers are increasingly prepared to gamble on airfare prices. A 17.75 per cent salary increase pacified the Aer Lingus pilots. However, fending off American competition may be a longer and more expensive struggle.

Written by Ireland.la Staff

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