Aer Lingus Earnings Up But Oil, Economy Cloud 2008

By Andras Gergely

DUBLIN (Reuters) - Irish airline Aer Lingus (AERL.L: Quote, Profile, Research) posted a 16 percent rise in 2007 operating profit but said it could not yet give guidance for this year because of uncertainties about the economic outlook and oil prices.

Operating profit before employee shares came in at 88.5 million euros ($136 million), above an average forecast of 81.35 million euros in a Reuters survey of four analysts. Aer Lingus (AERL.I: Quote, Profile, Research) shares rose by almost 5 percent.

The former state airline said it was well positioned to deal with market pressures due to its cash reserves and low costs, though it added that it was too early to predict earnings for 2008.

"There are so many variables that are out there, the economic performance in our main markets Ireland, the United States and the UK," Finance Director Greg O'Sullivan told Reuters in a telephone interview on Wednesday.

"And the complete unknown is oil, which is a substantial proportion of our costs base, in excess of 20 percent," he said.

The airline said that in the seasonally weaker first half of the year it expected total revenue per available seat kilometer to be lower than last year.

"While it is too early to have a clear view on the second half of the year, forward bookings for the peak summer period as a percentage of capacity are currently tracking in line with last year," it said in a statement.

At the end of February, Aer Lingus had hedged 36 percent of its remaining 2008 fuel requirements at $796 per tonof jet fuel, but the remainder was exposed to market fluctuations, it said.