has defined what now looks like the final version of its long-haul fleet strategy.
The airline plans to take delivery of a mix of-900s and A350-900 Regionals between 2018 and 2020. That represents a delay of up to three years compared to earlier scenarios.
The carrier’s widebody planning has undergone several iterations. At some stage, Aer Lingus had ordered a mix ofand A350s before switching to the new model entirely. In an earlier agreement, Aer Lingus and Airbus had settled on initial A350 deliveries in 2015. But CEO Christoph Mueller says the two sides have spent months negotiating a new schedule which now sees the first aircraft arriving three years later. The airline’s order is for nine A350-900s.
Mueller did not elaborate on why the changes were made. But Airbus is eager to accommodate the needs of larger customers as soon as possible, whereas Aer Lingus has a relatively young fleet of A330s. Mueller has also said in the past that the A350 range capabilities are more than what the airline needs, therefore explaining the interest in at least an A350 Regional subfleet. Most of its North American destinations are on the East Coast, but the airline is adding new services to Toronto and San Francisco in the summer.
The airline significantly grew capacity last year on long-haul services (11.6%) while reducing short-haul flying by 4.6%. The increase was mainly due to the integration of one additional A330 previously used on a wet-leased contract for United (Washington-Madrid). As Aer Lingus was successful in selling the additional seats, long-haul capacity is going to be up an additional 20% in 2014 as a result of the introduction of threeon lease from ASL Aviation. Two of the aircraft are based in Shannon for services to Boston and New York.
Mueller says the arrangement will likely continue until the company figures out how the 757s can be replaced by a more modern aircraft. Aer Lingus has been looking at operating the Airbuson trans-Atlantic routes, but is still not yet convinced the type is operationally capable of the required missions.
Aer Lingus last year posted a €61.1 million ($83.7 million) operating profit, in line with its latest guidance, but lower than the €69.1 million achieved a year earlier. The lower than hoped for result was mainly due to the competitive pressures in the short-haul arena, where its main competitorhas been pricing even more aggressively than usual. Revenues were up 2.3% to €1.36 billion.
To counter the trend toward lower operating margins, Mueller is launching a “Cost Optimization and Revenue Excellence (CORE)” program, which aims to cut costs by €30 million in the next two years. As part of CORE, the airline plans to reduce head count and wants to negotiate more flexible labor deals to reflect the seasonality of its business. On the revenue and product side, Aer Lingus will introduce lie-flat seats in its long-haul business class next winter and Wi-Fi access on short-haul flights.
All of its U.S. flights are to be pre-cleared in Dublin, with aircraft parked at domestic U.S. terminals and baggage automatically transferred to connecting flights with no need to pick it up. Aer Lingus also plans to relaunch its website.
Mueller says any mergers and acquisitions will likely be held up by the uncertainty surrounding the stakes of Ryanair and the Irish government. Ryanair has appealed a decision by the U.K. competition authorities requiring it to reduce its shareholding from 29.8% to 5%. The Irish government also has a 25% stake in the airline. The government has said it wants to sell in principle, but left open when and how it might do so. As part of the investigation into the effects of Ryanair’s shareholding in Aer Lingus, the competition commission revealed earlier that Aer Lingus planned to merge with another airline, but that was eventually abandoned.