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Aer Lingus posts first-half loss

Irish airline Aer Lingus Group PLC said Thursday its net loss more than trebled in the first half of the year after it slashed fares to entice passengers amid the economic downturn, prompting talk the carrier may yet succumb to a takeover by rejected suitor Ryanair.
/ Source: The Associated Press

Irish airline Aer Lingus Group PLC said Thursday its net loss more than trebled in the first half of the year after it slashed fares to entice passengers amid the economic downturn, prompting talk the carrier may yet succumb to a takeover by rejected suitor Ryanair.

The carrier posted a net loss of euro73.9 million ($105.5 million) for the six months through June, down from euro21.5 million for the same period a year ago. Revenue fell 12 percent to euro555 million from euro632 million.

Chairman Colm Barrington said Aer Lingus would push ahead with a "wide-ranging" business review to return the airline to profitability.

"We must now take difficult but necessary steps to address our business model and cost base," Barrington said in a statement.

"While traffic volumes have stabilised, consumer confidence remains weak and we see no sign of any improvement in the near term," he added.

Average fare prices were 17 percent lower over the first half. Fuel costs rose 10 percent. The company also said it was impacted by the imposition of a euro10 passenger departure tax in Ireland.

The results put more pressure on incoming Chief Executive Officer Christoph Mueller, who takes over the top job at the start of next month.

Mueller, 47, for the past two years has been aviation director at Anglo-German travel group TUI Travel PLC, where he managed charter airlines with 160 aircraft and 11,000 employees.

Aer Lingus has twice rejected hostile bids from Ryanair, but chief financial officer Sean Coyle said Friday he had "no idea" if the airline would resist a third approach.

Ryanair Holdings PLC, which holds an almost 30 percent stake in Aer Lingus, did not make any immediate comment on a renewed offer, but repeated calls for regulators to investigate a December 2008 document issued by Aer Lingus as a defense against takeover that said reduced fuel prices and cost reduction plans would "enhance profitability in 2009 and beyond."

Ryanair Chief Executive Officer Michael O'Leary, who has accused Aer Lingus of misleading shareholders to protect its independent status, said Aer Lingus should be forced to explain the document to shareholders, who have watched the carrier's share price plunge in recent months.

Immediately after the Irish government offloaded 75 percent of Aer Lingus equity on to the Irish and British stock exchanges in September 2006, Ryanair began buying up its Irish competitor, a move that caught both Aer Lingus and the government off guard.

Its strategy is to buy out the government's pivotal 25 percent stake eventually. The government of Prime Minister Brian Cowen has repeatedly rejected the idea of a Ryanair-Aer Lingus merger, but it also is battling the worst budget deficit in Irish history, making it desperate for cash.