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Irish airline Aer Lingus warns shareholders it could fall into red because of fuel crisis

Irish airline Aer Lingus warns shareholders it could fall into red because of fuel crisis

Aer Lingus PLC warned its shareholders Friday that record-high fuel prices could drive the Irish airline into the red this year and would require at least one U.S. route to be suspended.
"Based on current fuel prices and the uncertain economic outlook, we expect, at best, to break even for the year 2008," chairman John Sharman said in a statement to the airline's annual general meeting at a north Dublin hotel.
Sharman said the airline would suspend its services to Los Angeles in November and would keep other long-haul routes to U.S. cities under review _ a stunning U-turn following its launch earlier this year of new routes to San Francisco, Washington and Orlando, Florida.
He called the shutdown of the Los Angeles service "a direct consequence of the unprecedented increases in fuel costs, the weak U.S. dollar and slowing economies."
Shares in Aer Lingus _ which the government floated on the Irish and British stock exchanges in September 2006 _ fell to a record low of euro1.53 (US$2.41) after Sharman's statement, but rebounded slightly to close down 4.5 percent at euro1.56 (US$2.46).
Aer Lingus also published its May passenger figures. It said 23.9 percent of its seats went unsold last month, up more than four percentage points over the previous year. The figures were worst on U.S. routes, where 28.8 percent of seats were empty, up 7.8 points.
The airline emphasized, however, that ticket sales were up 10.4 percent overall because of its rapid expansion of routes over the past year.
Aer Lingus' biggest challenge comes from its long-running showdown with its own employees, who constitute the company's third-largest shareholder after rival airline Ryanair and the Irish government.
The company blocked planned pay rises in October to half of its work force because unions rejected a blueprint for shaving euro20 million (US$31.5 million) annually in labor costs.
Sharman said Friday he expected to achieve the planned savings in full this year. But the biggest union, SIPTU, has warned it will strike if the airline imposes its plans without agreement.


Updated : 2021-05-09 16:55 GMT+08:00