10773 AirlingPDF - Aer Lingus

AER LINGUS GROUP PLCOPERATING AND FINANCIALreviewSummaryGroup operating profit (before Employee Share Participation Scheme and Exceptional items) was€79.9 million (€74.2 m in 1999), an increase of 7.7%. Group operating profit on continuingoperations, before Employee Share Participation Scheme and Exceptional items, was up 11.6%to €79.9 million (€71.6 m in 1999).Strong positive cash flows are represented by net cash and liquid resources at 31 December 2000of €235.6 million.Shareholders’ funds rose to €363.3 million (€290.0 m in 1999).Operating Review:Key business issuesThe operating results of the business were positively influenced by increases in capacity of over13%, new route developments on European and Transatlantic networks and continuedinvestment in the brand.In Europe, new routes were inaugurated in 2000 between Ireland and London Gatwick,Stockholm and Munich. On the transatlantic, a new scheduled service linking Ireland withBaltimore/Washington International was commenced in September 2000.This route development was facilitated by the acquisition of two new aircraft, anAirbus A330-200 for transatlantic operations and an Airbus A320 for shorthaul servicesAer Lingus carried a record 6.9 million passengers, an increase of 5.9%. This increase was reflectedin Business and Economy class traffic with growth of 15% and 3% respectively over 1999.While the economic climate in the major markets in which Aer Lingus operates was largelypositive, the operating environment was dominated by continuing difficulties associated withcongestion, both on the ground and in the air and significant fuel cost increases.The continuing rises in fuel costs throughout 2000 impacted the business significantly. Averagemarket prices per tonne rose to $294 during 2000, an increase of 62% on 1999 market pricesof $181.Congestion issues, mainly caused by airport infrastructure and the problems associated withairspace management in Europe, led to a disimprovement in punctuality performance andincreased costs associated with aircraft delaysDuring late 2000 a number of industrial relations issues resulted in a disrupted schedule andserious inconvenience for our customers. To date in 2001, pay settlements have been reachedwith Cabin Crew, Clerical and Operative groups while discussions with Pilots are ongoing.7