Aer Lingus shows its two-sided approach to contract flying as 1Q2014 profit slips

Aer Lingus saw its losses increase slightly in 1Q2014. This had been anticipated by the company, which attributed it to the timing of Easter and the threat of industrial action. Although pursuing strong growth on the Atlantic and still seeing growth in traffic operated by Stobart Air under the Aer Lingus Regional brand, its short haul main-line business continues to operate in a very price competitive environment.

Aer Lingus' use of contract flying, from both sides, looks sensible. It is hiring capacity from ASL Aviation to help it with its transatlantic expansion, but without loading up on fixed costs. In addition, its provision of short haul capacity to Virgin Atlantic and long haul capacity to Novair makes use of what is a relatively efficient cost base (compared with most legacy carriers) and helps to maintain its fleet utilisation.

However, it does not replace the need for it to ensure it has the right capacity and cost base in its own core markets. Its "CORE" programme, announced in Feb-2014 and still going through more detailed development, will be critical.