Aer Lingus has increased operating profits by 30 per cent to €83 million and now has the "strongest balance sheet in its history", the company has said.
The company's turnover for 2003 was down 7.3 per cent to €888 million because of reduced fares, but it still managed to increase pre-tax profits from €36 million to €79 million.
Earnings per share increased by 96 per cent to 27 cents. The company said the performance was very strong considering the airline industry experienced a flat first half due to the Iraq war and the SARS outbreak.
Chief executive Mr Willie Walsh said passenger numbers were up 6.2 per cent to 6.6 million and passenger load factors rose 3 per cent to 81 per cent. He said continental passenger numbers were up 27.6 per cent, with trans-Atlantic business up 19.4 per cent.
Mr Walsh said trans-Atlantic business was especially buoyant, with load factors averaging at 86 per cent, up 3 per cent. He said this business was now generating 38 per cent of its total passenger revenues.
Chief financial officer Mr Brian Dunne described the company as producing the "strongest balance sheet in its history" with net cash of €226 million to the end of 2003 and shareholder's funds of €322 million.
He said 2003 was another year of significant cost reductions with €89.5 million taken out of the business. He said an operating margin of 9.3 per cent was produced in 2004, compared with 6.7 per cent in 2002. Mr Walsh said the ultimate aim was to get to 15 per cent.
Earlier predictions put the company's operating profit at €79 million, but Mr Walsh said a strong final quarter pushed this to €83 million. He warned that despite the excellent results there was no room for "complacency". He said global downward pressure on fares meant Aer Lingus needed to trim its costs further.
He declined to specify the job losses which might arise from this, but admitted the change to a single short-haul Airbus fleet would create a surplus of employees in certain areas. He said this would be dealt with via a voluntary severance scheme. About 4,000 people are currently employed by Aer Lingus.
Despite recent cost reductions, staff costs actually increased during 2003 to €12.4 million. This was because the airline had to pay several pay awards postponed during the company's cash crisis of two years ago. The average cost of an Aer Lingus employee is now €58,400.
Mr Walsh emphasised that the restrictive nature of the Ireland-US bi-lateral continued to hold back the airline's development, confining it to five airports: New York, Boston, Chicago, Los Angeles and Washington.
The annual report reveals that directors' emoluments rose from €836,000 to over €1 million. Mr Walsh's total remuneration came to €498,000 including performance related payments of €18,000. In 2002 Mr Walsh's total remuneration package came to €361,000. The difference was mainly explained by a rise in basic salary from €254,000 to €296,000.
