Aer Lingus issues heatwave profit warning

Irish airline Aer Lingus has joined rival Ryanair in issuing a profit warning after demand for short-haul holidays dried up during the recent heatwave.

Christoph Mueller said Aer Lingus would cut capacity. Picture: AP

The carrier said it has embarked on “aggressive” discounting in a bid to tempt more travellers, but this will not be enough to make up for lost sales during July and August.

As a result, the firm expects to deliver an operating profit of about €60 million (£50.2m) for the year to December, down from last year’s €69.1m figure.

Along with cutting ticket prices, Aer Lingus chief executive Christoph Mueller said the airline would reduce its short-haul capacity by at least 3 per cent in the fourth quarter, but long-haul bookings for the remainder of 2013 were ahead of last year.

Ryanair, which was recently ordered to slash its 29.8 per cent stake in Aer Lingus to 5 per cent, last week warned its profits could miss its forecasts because of weak autumn ticket sales.

The no-frills airline, which abandoned a third takeover bid for Aer Lingus earlier this year, is responding to the worsening outlook by reducing its winter capacity and rolling out heavy promotions in the UK, Ireland, Scandinavia and Spain.

This strategy will cut Ryanair’s annual traffic by about 500,000 to just under 81 million passengers, while its annual profits are expected to come in at the lower end of its forecast range of €570m to €600m.

Investec analyst Gerard Moore said the alert from Aer Lingus showed that Ryanair’s warning “wasn’t just a company-specific issue and there’s an impact on the broader market”.

Aer Lingus also said it had seen significant weakness in the number of UK travellers to Ireland and expects currency fluctuations to cost it around €10m over the course of the year.