Aer Lingus 2012 Annual Report Download

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Annual Report 2012

Table of contents

  • Page 1
    Annual Report 2012

  • Page 2
    CONTENTS Financial highlights Chairman's statement Chief executive officer's review Operating and financial review Principal risks and uncertainties Board of directors Executive management team Safety and security statement Corporate social responsibility statement Directors' report Report of the ...

  • Page 3
    ... Aer Lingus Group Plc FINANCIAL HIGHLIGHTS For the year ended 31 December 2012 2012 Results Revenue EBITDAR 1 Operating profit before net exceptional items Net exceptional items Operating profit after net exceptional items Net finance (expense)/income Share of loss of joint venture Income tax...

  • Page 4
    ... an On Time Performance of 88%, ranking us ahead of our significant competitors. Our value carrier strategy, combining the best elements of low fares with the option to upgrade to the features of a full service airline, is working well and we continue to capture share in our Irish home market. In...

  • Page 5
    ... customers between those who want to avail of low fare travel with limited "frills" and those who are prepared to pay for added benefits such as seat selection, baggage check, lounge access, etc. In 2012, our research indicated that 96% of our passengers were satisfied with their overall Aer Lingus...

  • Page 6
    CHAIRMAN'S STATEMENT Aer Lingus Group Plc Finally, I would like to thank our customers, our employees, my fellow directors and our shareholders for their support during the year. The past year was a tough one for all of us as we operated in difficult market conditions. In the case of Aer Lingus, ...

  • Page 7
    ... airline, to the benefit of customers, shareholders and staff. Aer Lingus continues to gain profitable market share from legacy and low cost carriers by offering a combination of competitive intra-European point-to-point services, a profitable long haul business focused on our key markets in Europe...

  • Page 8
    ... from Belfast to London Heathrow / London Gatwick. Also during 2012, Aer Lingus and JetBlue agreed that Aer Lingus will move the Group's New York flight operations from Terminal 4 at John F. Kennedy International Airport to JetBlue's acclaimed Terminal 5 at JFK with effect from early 2013. The move...

  • Page 9
    ... new transatlantic services from Dublin and Shannon to the US commencing in Summer 2013. The new United Airlines flight from Chicago to Shannon during the Summer and the United Airlines service from Dublin to Washington will, however, carry the Aer Lingus code and will be available to our customers...

  • Page 10
    CHIEF EXECUTIVE OFFICER'S REVIEW Aer Lingus Group Plc As previously mentioned we now generate approximately 60% of our total long haul bookings from the US. This has the added advantage of reducing our annual requirement to purchase US dollars to meet our fuel costs. In addition, we will continue ...

  • Page 11
    ... fleet and network scheduling adjustments and an emphasis on marketing to inbound and transfer passengers on short haul, and with increased demand on long haul, passenger numbers increased year-on-year resulting in a positive performance with respect to RPKs and load factor. 9 ANNUAL REPORT 2012

  • Page 12
    ... order to serve increased demand in the transatlantic market which performed strongly in 2012. We intend to add additional frequencies to the Boston and Chicago services in Summer 2013 and will deploy the long haul A330 aircraft which is returning to the mainline Aer Lingus long haul fleet following...

  • Page 13
    ...Progress achieved in 2012 and relevant performance indicators: Our young fleet age continues to help us drive our competitive unit cost position. At 31 December 2012, the average age of the Aer Lingus fleet was 7.1 years. We introduced two leased A319 aircraft into the fleet in early 2012 to replace...

  • Page 14
    ...REVIEW AND KEY PERFORMANCE HIGHLIGHTS Aer Lingus Group Plc For 2013, in order to serve underlying market demand, an additional A330 will be deployed in the Summer 2013 schedule. The Group had an A330 aircraft return to the fleet in 2012 following the conclusion of the enhanced codeshare with United...

  • Page 15
    ..., we recorded an operating loss, before net exceptional items, of â,¬4.4 million compared with â,¬26.8 million for the first 6 months of 2011. Q3 2012 We continued to trade strongly over the key summer months. The year to date momentum in yield and load factor performance continued with long haul...

  • Page 16
    ... passenger numbers (excluding Aer Lingus Regional), a 0.8 pt increase in load factor and a 3.9% increase in fare revenue per seat. Yield per short haul passenger increased by 3.8% and continues a positive trend in yield growth on short haul over the past three financial years. 14 ANNUAL REPORT 2012

  • Page 17
    ... returning aircraft from the enhanced codeshare with United Airlines on our own long haul fleet during Summer 2013. Growth vs. prior year % 9.6% Growth vs. prior year % 5.2% Growth vs. prior year % 18.9% â,¬ Long haul yield per passenger 2012 350.82 2011 319.96 2010 304.07 15 ANNUAL REPORT 2012

  • Page 18
    ..., baggage fees, on-line booking fees and seat selection fees. Cargo Cargo revenue performance Cargo revenue (â,¬ million) Cargo tonnes - scheduled ('000s) 2012 45.7 28,140 2011 43.0 27,653 % Increase/ (decrease) 6.3% 1.8% Aer Lingus' strategy is to carry cargo on both long haul and short haul...

  • Page 19
    ... includes recruitment of flight crew, operations and catering staff and apprentices in our maintenance department. Pay rates remained frozen under the Greenfield deal. % Increase/ (decrease) 6.4% â,¬ million Airport & en-route charges 2012 356.7 2011 335.3 Aer Lingus is a price taker in respect...

  • Page 20
    ...) 343.3% â,¬ million Other gains/losses 2012 (13.3) 2011 (3.0) Other gains and losses relate primarily to net gains arising on the maturity of US$ and GBP currency contracts which are used to manage FX exposure. Aer Lingus is structurally short US$ in any financial year. This is due to the fact...

  • Page 21
    2012 FINANCIAL REVIEW Aer Lingus Group Plc 23.0 13.0 28.6 41.8 28.0 74.0 56.0 55.7 13.2 6.7 Total Greenfield targeted savings (original plan 2009) Revised February 2011 Staff 2011 exit run rate New savings achieved 2012 Other Annual value of savings at December 2012 62.4 Non Staff Net ...

  • Page 22
    ... FINANCIAL REVIEW Aer Lingus Group Plc Cash flow, cash and debt Significant cash flow movements in 2012 are as follows: 3.1 (22.0) 79.5 (41.1) (2.2) 17.3 75.2 40.6 Profit before tax Depreciation Provisions Working capital Net capex Net interest paid Other (incl. exceptional items) Free...

  • Page 23
    ... their share of total EU activity in 2010. In November 2012 the European Commission (EC) proposed a one year moratorium on the ETS scheme in respect of flights which were not entirely within the EU in 2012. Aer Lingus is fully compliant with EU ETS for 2012 and received free allowances equivalent...

  • Page 24
    2012 FINANCIAL REVIEW Aer Lingus Group Plc Dividend On 4 May 2012, we announced a new dividend policy and indicated that the Group intends to pay a dividend for those future years in which we make an operating profit, provided that the payment of a dividend is appropriate and prudent in the context...

  • Page 25
    ... and fares. The traffic and by using its relationships with other airlines, effect would be compounded by the Group's high including Aer Lingus Regional, to flow transfer passengers fixed cost base. Sustained weakness in these markets through its network and stimulate inbound traffic to Ireland...

  • Page 26
    ... uneconomic, the Group would consider reductions in capacity to restore profitability. Staff productivity and relations Aer Lingus has a largely unionised workforce and collective bargaining takes place on a regular basis across a range of issues including but not limited to: pay, rosters and...

  • Page 27
    ... 65% of the of the future service of its own employees. Subject to the schemes liabilities are associated with current or former uptake of Aer Lingus employees, the overall increase in employment costs attributable to the new DC Scheme is not members of Aer Lingus staff. expected to be significant...

  • Page 28
    .... There to increase its rate of contributions to the Pilots' Scheme, pay all members the benefits relating to their current or past service. Notwithstanding Aer Lingus' involvement in the two sets of discussions outlined above, it remains the Group's position, supported by firm legal advice, that...

  • Page 29
    ... on its margins by The core Irish market is very price sensitive, with a implementing fuel surcharges on long haul flights, using substantial majority of passengers travelling for leisure or family reasons. Fuel and airport charges represented in the price of jet fuel can have a significant negative...

  • Page 30
    ...and financial performance. be sought where Aer Lingus lacks the necessary skills bookings and yield management could adversely impact or resources, including in relation to project and risk In management. The Group will give high prioritisation to the upgrade of its passenger management system. This...

  • Page 31
    ... a significant adverse impact on consumer confidence and therefore on the Group's bookings and revenues. Financial Details of the principal financial risks to which the Group is exposed, and the approach to mitigating them, are set out in Note 3 to the financial statements. 29 ANNUAL REPORT 2012

  • Page 32
    ... in 27 countries and with offices in Dublin, London, Belfast, New York and Chicago. He is a member of the National Economic and Social Council and he also sits on the Executive Committee of the European Trade Union Confederation. He served as a governor of the Irish Times Trust from 2002 to 2012 and...

  • Page 33
    BOARD OF DIRECTORS Aer Lingus Group Plc in Laws by the National University of Ireland. In 2009 he was awarded an Honorary CBE by Queen Elizabeth II for services to UK-Irish relations. Laurence has vast experience as both a Chartered Accountant and Board member. This experience enables him to make a...

  • Page 34
    ... and was Company Secretary at Aer Lingus from early 2009 to September 2012. Prior to joining Aer Lingus he spent 9 years with software company IONA Technologies, most recently as Assistant General Counsel. Prior to that he worked in practice as a solicitor in the Corporate Department of William...

  • Page 35
    ... the Airline's flight safety & accident prevention programme. Information and advice for customers on air travel and health is available on the Group's website, www.aerlingus.com, in the inflight magazine, Cara, and through onboard announcements and videos. Air Safety Aer Lingus' Air Safety Office...

  • Page 36
    ... departments on development of health and safety and manages incident reporting and occupational accident investigation procedures. It is Aer Lingus policy to have as a constant objective the creation and maintenance of a safe working environment for its staff and the Group has a Safety Statement...

  • Page 37
    ...world class airline. Aer Lingus is continually building on its long-standing tradition of Irish welcomes as an airline loved by its passengers because of our great value fares, friendly and caring service. due to the "buy on board" products and pre-order meal service whereby food is purchased based...

  • Page 38
    ... placed in September 2012. Aer Lingus is the official airline partner of Dublin GAA under a three year sponsorship agreement, building on existing support for the Galway Hurling Supporters Club and other local GAA initiatives. In Northern Ireland, Aer Lingus signed a two year deal with Ulster Rugby...

  • Page 39
    CORPORATE SOCIAL RESPONSIBILITY STATEMENT Aer Lingus Group Plc Flexible Working Aer Lingus recognises that changes in personal circumstances affect employees' lives and work. In order to recognise the diverse needs of employees, and to ensure fairness and consistency across the Group, Aer Lingus ...

  • Page 40
    ... DIRECTORS' REPORT Year ended 31 December 2012 Introduction The Directors present their report to shareholders, together with the financial statements of Aer Lingus Group plc and the Auditors' report thereon, for the year ended 31 December 2012. Name Ryanair Limited Minister for Finance of Ireland...

  • Page 41
    ... of the Group's Internal Control processes is included in the Corporate Governance Statement on pages 40. Issue and purchase of own shares The Company received authority from shareholders at its last Annual General Meeting on 4 May 2012 to allot relevant securities up to a nominal value of â,¬8,811...

  • Page 42
    ... by the Irish Stock Exchange (together the "Codes") in respect of its corporate governance practices. Subsidiary companies Details of the Group companies are set out in Note 18 to the consolidated financial statements. Books of account The measures taken by the Directors to secure compliance with...

  • Page 43
    ... member of the Board of Tourism Ireland. Further details are set out on page 30. Board Size and Membership The Board currently comprises twelve Directors - two Executive Directors (Christoph Mueller, Chief Executive Officer and Andrew Macfarlane, Chief Financial Officer) and ten Non-Executive...

  • Page 44
    ... and all Directors have access to her advice and services. The Company Secretary ensures that the Board members receive appropriate training as necessary. The Company Secretary is responsible for advising the Board on all corporate governance matters. The Company has an insurance policy in place...

  • Page 45
    ... weaknesses in internal control in relation to the financial reporting process; • the Committee monitored and reviewed the internal and external auditors performance; • the Committee monitored the independence of the external auditors; • the Committee reviewed the 2012 profit forecast and...

  • Page 46
    ...of Annual General Meeting including the statement on dividend policy, which was published on 29 March 2012; • the Audit Committee jointly conducted (with the Risk Committee), an annual review of Aer Lingus' system of internal financial control and risk management systems and reported to the Board...

  • Page 47
    ... the Audit Committee), an annual review of Aer Lingus' system of internal financial control and risk management systems and reported to the Board in this regard; • the Risk Committee reviewed and approved the Company's Corporate Risk Assessment Process for 2012 and reported to the Audit Committee...

  • Page 48
    ... independent Board that meets regularly during the year, with separate Chairman and Chief Executive roles; • corporate policies for financial reporting, treasury and financial risk management, information technology and security, project appraisal and corporate governance; • Board of Directors...

  • Page 49
    DIRECTORS' REPORT Aer Lingus Group Plc Any system of internal control can provide only reasonable and not absolute assurance that material financial irregularities will be detected or that the risk of failure to achieve business objectives is eliminated. The Directors, having reviewed the ...

  • Page 50
    ... at Dublin Airport. From time to time, the Company has entered into codeshare agreements with other airlines as well as aircraft finance leases and exchange and interest rate hedging contracts with financial institutions. These agreements contain provisions which allow for their early termination in...

  • Page 51
    ... of Aer Lingus. 2012 Fixed Pay In line with the challenging market backdrop, and a broader market expectation for public companies generally to exercise pay restraint at a senior level, there were no changes to fixed pay arrangements of the Executive Directors in 2012. 49 ANNUAL REPORT 2012

  • Page 52
    ... group of companies in the ISEQ General Index. See Note 32. 2012 Annual Bonus The performance of Aer Lingus in 2012 means that the annual bonuses earned by the Executive Directors are at the upper end of the range between target and maximum. Further details are set out in the Remuneration Report...

  • Page 53
    ... Cost Reduction Program target for 2011 for employee gainsharing incentives; • reviewed and approved the 2012 share award grants under the Company's Long Term Incentive Plan (LTIP) to Executive Directors and other senior managers; • considered the outcome of the performance conditions for the...

  • Page 54
    ... shares. Performance versus the corporate targets in 2012 is illustrated in the table below: 2012 Performance Related Bonuses Performance related bonuses are payable to Executive Directors and senior managers for meeting clearly defined and stretching annual profit targets and strategic goals set...

  • Page 55
    ... applied in 2012. In 2013, the Group will continue to focus its Executive Directors and senior managers on the sustainable performance and health of the Group with annual performance related bonus opportunities. The continued emphasis on individual targets allows the Company to take account of the...

  • Page 56
    ... Corporate Governance Code and the Irish Stock Exchange. Non-Executive Directors The terms upon which each of the Non-Executive Directors have been appointed are set out in letters of appointment which reflect the form recommended by the 2010 UK Corporate Governance Code. It is the Company's policy...

  • Page 57
    ...COMMITTEE ON DIRECTORS' REMUNERATION Aer Lingus Group Plc Report of the Remuneration Committee on Directors' Remuneration Audited Information The information on pages 55 to 57 forms part of the financial statements. Table 2.1 Individual Directors' remuneration for year ended 31 December 2012 Basic...

  • Page 58
    ...* Or date of appointment if later With the exception of the shares vested on 6 February 2013 to Mr Andrew Macfarlane and Mr Christoph Mueller in respect of the 2010 LTIP , there was no change in the Directors' interests in the period between 31 December 2012 and 7 March 2013. 56 ANNUAL REPORT 2012

  • Page 59
    ... OF THE REMUNERATION COMMITTEE ON DIRECTORS' REMUNERATION Aer Lingus Group Plc Report of the Remuneration Committee on Directors' Remuneration Table 2.3 Share Options As at 31 December 2012 and subject to achieving the closing market share prices (as set out in the fourth column) below, for at...

  • Page 60
    ... Corporate Governance Statement of the main features of the internal control and risk management systems in relation to the process for preparing the group financial statements is consistent with the group financial statements. • The net assets of the company, as stated in the Company Statement...

  • Page 61
    ... Aer Lingus Group Plc INDEPENDENT AUDITORS' REPORT (continued) Under the Listing Rules of the Irish Stock Exchange we are required to review: • the directors' statement, set out on page 47, in relation to going concern; • the part of the Corporate Governance Statement relating to the company...

  • Page 62
    FINANCIAL STATEMENTS Aer Lingus Group Plc CONSOLIDATED INCOME STATEMENT Year ended 31 December Note 2012 â,¬'000 Revenue 2011 â,¬'000 1,288,309 6 1,393,284 Operating expenses (before net exceptional items) Staff costs Depreciation and amortisation Aircraft operating lease costs Fuel and oil ...

  • Page 63
    FINANCIAL STATEMENTS Aer Lingus Group Plc CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December Note 2012 â,¬'000 2011 â,¬'000 71,194 Profit for the year Other comprehensive income Available-for-sale reserve - Amortisation of available-for-sale reserve - Deferred tax impact Cash...

  • Page 64
    ... 366,570 Total liabilities Total equity and liabilities 947,020 1,781,731 The notes on pages 68 to 118 form an integral part of these financial statements. Andrew Macfarlane DIRECTOR Christoph Mueller DIRECTOR Approved by the Board of Directors on 7 March 2013 62 ANNUAL REPORT 2012

  • Page 65
    ...year determined in accordance with IFRS is a profit of â,¬0.2m (2011: Profit of â,¬0.1m). The notes on pages 68 to 118 form an integral part of these financial statements. Andrew Macfarlane DIRECTOR Christoph Mueller DIRECTOR Approved by the Board of Directors on 7 March 2013 63 ANNUAL REPORT 2012

  • Page 66
    ... at 1 January 2011 Profit for the year Other comprehensive loss for the year ended 31 December 2011 Total comprehensive income/ (loss) for the year Exercise of share awards Share based payment reserve Deferred tax impact Balance at 31 December 2011 Balance at 1 January 2012 Profit for the year Other...

  • Page 67
    FINANCIAL STATEMENTS Aer Lingus Group Plc COMPANY STATEMENT OF CHANGES IN EQUITY Called up share capital â,¬'000 Share premium â,¬'000 Capital conversion reserve fund â,¬'000 Capital redemption reserve fund â,¬'000 Retained earnings â,¬'000 Total equity â,¬'000 Balance at 1 January 2011 ...

  • Page 68
    FINANCIAL STATEMENTS Aer Lingus Group Plc CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 December Note 2012 â,¬'000 2011 â,¬'000 Cash flows from operating activities Income tax paid Net cash generated from operations 36 118,508 (37) 118,471 87,618 87,618 Cash flows from investing ...

  • Page 69
    FINANCIAL STATEMENTS Aer Lingus Group Plc COMPANY STATEMENT OF CASH FLOWS Year ended 31 December Note 2012 â,¬'000 Cash flows from operating activities Net cash (used) in/generated from operations 36 (1) (1) 2011 â,¬'000 133,986 133,986 Cash flows from investing activities Investment in share ...

  • Page 70
    ... FINANCIAL STATEMENTS 1 General information Aer Lingus Group plc ("the Company") and its subsidiaries (together "the Group") operates as an Irish airline primarily providing passenger and cargo transportation services from Ireland to the UK and Europe ("short haul") and also to the US ("long haul...

  • Page 71
    ...is now a standard dealing solely with separate financial statements. (effective date: Aer Lingus financial year commencing 1 January 2014) • IFRS 11 Joint arrangements. IFRS 11 eliminates the existing accounting policy choice of proportionate consolidation for jointly controlled entities. IFRS 11...

  • Page 72
    ... group companies, are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The financial statements of all subsidiaries are drawn up to the year ended 31 December. Accounting policies of subsidiaries have been changed...

  • Page 73
    ... in the income statement in "Other (gains)/losses - net" except when deferred in equity as qualifying cash flow hedges. Exchange rates prevailing at the reporting date are set out below: USD 31 December 2012 31 December 2011 1.32 1.30 STG 0.82 0.84 Average exchange rates during the year were as...

  • Page 74
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) ¹The assets' residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its ...

  • Page 75
    ... Aer Lingus Group Plc Notes to the consolidated financial statements (continued) and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value...

  • Page 76
    ... interest rate swaps is recognised in the income statement within "Other (gains)/losses - net". If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over...

  • Page 77
    ... asset's carrying amount and the present value of estimated cash flows, discounted at the effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement within "ground operating, catering...

  • Page 78
    ... refund or a reduction in the future payments is available. For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each reporting date. Actuarial gains and losses are recognised in full in the...

  • Page 79
    ...these measures. 2.23 Frequent Flyer Programme The Group maintains a loyalty points programme, the Gold Circle Club, which allows customers to accumulate points when they purchase flights. The points can be redeemed for free flights, products and services with Aer Lingus and its partners, subject to...

  • Page 80
    ... principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. 78 ANNUAL REPORT 2012

  • Page 81
    ... to foreign exchange rate risk relates to the management of the Group's cashflow exposures. Significant currency exposures are managed for the current and future financial years on a systematic, amortising basis within pre-set bands. The dollar deficit arises because the dollar costs for fuel and...

  • Page 82
    ... STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) by purchasing allowances as required, and by taking advantage of available allowance types which may have lower prices. The entire non-free allowance requirement for 2012 was incurred in advance of the year...

  • Page 83
    ... in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal prudent capital structure to reduce the cost of capital. The Board regularly reviews the Aer Lingus statement of financial position with a view to improving flexibility for the future. As...

  • Page 84
    ... rates at the statement of financial position date, with the resulting value discounted back to present value. • The fair value of fuel price swaps is determined using forward fuel prices at the reporting date, with the resulting value discounted back to present value. 4 Critical accounting...

  • Page 85
    ... particular the Group is managed as a single business unit that provides air transportation for passengers and cargo, which allows the Group to benefit from an integrated revenue pricing and route network. The Group's flight equipment is deployed through a single route scheduling system. When making...

  • Page 86
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) The chief operating decision maker, Christoph Mueller, (Chief Executive Officer) assesses operating segment performance based on a measure of operating profit before net exceptional items. Total ...

  • Page 87
    ... financial statements (continued) 6 Revenue 2012 â,¬'000 Passenger revenue Ancillary revenue Cargo revenue Other revenue Total revenue 1,159,853 176,466 45,670 11,295 1,393,284 2011 â,¬'000 1,067,993 168,651 43,069 8,596 1,288,309 7 Other (gains)/losses - net 2012 â,¬'000 Fair value losses...

  • Page 88
    ... aircraft to the lower of Net Book Value and Fair Value less costs to sell. (c) Re-measurement of a provision to fully extinguish the Group's obligations to pay any further share of profits to the Aer Lingus Employee Share Ownership Trust ("ESOT"). The 2012 charge relates to the finalisation of the...

  • Page 89
    ... to occupy the Head Office Building under a short term license from DAA to allow the Group to transfer to the new office accommodation noted above in an organised and structured manner. (h) Release of amounts from cash flow hedging reserve related to capital foreign exchange hedges originally...

  • Page 90
    ...Notes to the consolidated financial statements (continued) 11 Employee Benefits The average number of persons (Full Time Equivalents) employed by the Group in the financial year was 3,566 (2011: 3,491) split as follows: 2012 â,¬'000 Operations and administration Sales and marketing 3,517 49 3,566...

  • Page 91
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) (ii) Reconciliation of effective tax rate 2012 â,¬'000 Profit on ordinary activities before tax multiplied by standard Irish corporation tax rate of 12.5% (2011: 12.5%) Effects of: Expenses not ...

  • Page 92
    .... See Note 9 for further information. 2 Reclassification of an aircraft previously held for sale. Refer to Note 17 for further detail. Finance lease obligations are secured on flight equipment with a net book value of â,¬502.2 million (2011: â,¬554.8 million) (See Note 25). 90 ANNUAL REPORT 2012

  • Page 93
    ... agreement with United Airlines. The Group's share of the net profit or loss associated with its extended codeshare agreement with United Airlines is reported within Other revenue. 2 Amortisation of the licence to occupy DAA plc owned property is reported within Ground operations, catering...

  • Page 94
    ... million has been included within Ground operations, catering and other operating costs in the income statement. 16 Investment in Joint Venture 2012 â,¬'000 At 1 January Investment during the year Share of after tax loss At 31 December 10,954 (190) 10,764 2011 â,¬'000 - 92 ANNUAL REPORT 2012

  • Page 95
    ...as held for sale and its recoverable amount at the date of the decision not to sell in December 2012. See Note 14. 18 Group undertakings Aer Lingus Group plc is a company incorporated under the Irish Companies Acts, 1963 to 2012. Its head office is at Dublin Airport, Co. Dublin, Ireland. It is the...

  • Page 96
    ... discounted using a rate based on the market interest rate and the risk premium appropriate to the unlisted securities. â,¬0.1 million (2011: â,¬0.1 million) was amortised from the available-for-sale reserve to the income statement in the year. The effective interest rates of the financial assets...

  • Page 97
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) 2012 â,¬'000 Assets Less non-current portion: Interest rate swap Forward foreign exchange contracts Forward fuel price contracts Total non-current portion Current portion Foreign exchange contracts...

  • Page 98
    ... and other receivables as the Group has a large and widely dispersed customer base. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security. At 31 December 2012, trade and other...

  • Page 99
    ...23 March 2012, the Company subscribed for additional shares in Aer Lingus Limited. The consideration payable was offset against the loan due to the Company from Aer Lingus Limited. See Note 37 for further information. 699,911 699,911 23 Deposits and cash and cash equivalents The Group's gross cash...

  • Page 100
    ... meet certain lease obligations. 24 Trade and other payables 2012 â,¬'000 Trade payables Accruals and deferred income Ticket sales in advance, excluding taxes and charges ¹ Employment related taxes Other amounts payable 53,716 47,973 129,469 7,348 45,133 283,639 ¹The total value of ticket sales...

  • Page 101
    ... and other defined contribution schemes are set out in the table below. These are accounted for as defined contribution schemes in both the entity accounts of Aer Lingus Limited and in the Group's consolidated accounts because the rate of contribution to the schemes is fixed. 99 ANNUAL REPORT 2012

  • Page 102
    ... funds to pay all members the benefits relating to their current or past service. The IASS is a multi-employer scheme with fixed contributions made by the employers and employees in accordance with the trust and deed rules. At 31 March 2012 (the most recent date for which data is available...

  • Page 103
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) As at 31 December 2012, the Pilots' Scheme was estimated to have an MFS deficit of approximately â,¬218 million. ALL's position that it has no responsibility for the deficit in the scheme could be ...

  • Page 104
    .... The Group also operates a non contributory defined benefit scheme in respect of two retired Irish executives. The movement in the defined benefit obligation over the year is as follows: 2012 â,¬'000 At 1 January Interest cost Actuarial (gains)/losses Past service (credit)/cost Benefits paid At...

  • Page 105
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) The movement in the fair value of plan assets of the year is as follows: 2012 â,¬'000 At 1 January Expected return on plan assets Actuarial losses Employer contributions Benefits paid Taxes paid At...

  • Page 106
    ... on service costs, will not increase significantly. History of defined benefit obligations, assets and experience gains and losses: Financial year ending in 2012 â,¬'000 Defined benefit obligation Fair value of plan assets Deficit/(surplus) 14,422 9,770 4,652 2011 â,¬'000 14,481 9,405 5,076 2010...

  • Page 107
    ... follows: 2012 â,¬'000 Present value of unfunded obligations Deficit of schemes Liability in the statement of financial position The movement in the defined benefit obligation over the year is as follows: 2012 â,¬'000 At 1 January Current service cost Interest cost Actuarial losses Benefits paid At...

  • Page 108
    ... plans for the year ending 31 December 2013 are â,¬Nil, as the arrangements are unfunded. History of unfunded defined benefit obligations and experience gains and losses: Financial year ending in 2012 â,¬'000 Defined benefit obligation/plan deficit 30,206 2011 â,¬'000 23,906 2010 â,¬'000 18,525...

  • Page 109
    ...Ireland introduced an air travel tax for flights departing from Irish airports. The tax was set at â,¬2 for destinations within 300km of Dublin and at â,¬10 for those exceeding 300km. The EC found that the lower rate favoured flights within Ireland and to nearby parts of the UK, giving the companies...

  • Page 110
    ... and â,¬10 rates of tax is sought from the Group. Arrangements relating to Aer Arann Aer Lingus Regional flights are operated by Aer Arann. However, passengers book their flights using the Aer Lingus website and booking channels. Should Aer Arann fail to meet its obligation to passengers and such...

  • Page 111
    ... statement Credited directly to equity At 31 December 2012 37,250 7,206 44,456 7,019 51,475 Deferred tax credited to equity during the year is as follows: 2012 â,¬'000 Fair value reserves in shareholders' equity - Cash flow hedging reserve - Revaluation reserve on available-for-sale financial...

  • Page 112
    ... for Finance at the record date of such meeting of the Company, expressed as a percentage of the total number of issued Ordinary Shares as at such record date, plus 5%) provided that if the value of "X" under this formula is greater than 75, "X" shall be deemed to be 75. 110 ANNUAL REPORT 2012

  • Page 113
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) 32 Share premium, capital conversion reserve fund, capital redemption reserve fund and other reserves 2012 â,¬'000 Share premium At 1 January and 31 December 510,605 2012 â,¬'000 Capital ...

  • Page 114
    ... cancelled by the Group prior to its initial public offering for nil consideration pursuant to Sections 41(2) and 43 of the Companies (Amendment) Act, 1983. Cash flow hedging reserve The cash flow hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash...

  • Page 115
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) Long Term Incentive Plan ("LTIP") In July 2007, arising from the review of the Group's compensation arrangement for Executive Directors and senior managers, the Company's shareholders approved the ...

  • Page 116
    FINANCIAL STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) The 2012 awards will expire no later than 12 months after the end of their performance period, being the end of 2015. The fair value of the shares awarded were determined using a Monte Carlo ...

  • Page 117
    ... Termination benefits Share-based payments 5,475 495 1,984 7,954 2011 â,¬'000 4,669 374 2,032 1,626 8,701 ¹ Key management compensation comprises all amounts in respect of Directors, Non-Executive Directors and members of the Executive Management Team. ² No member of key management received a pay...

  • Page 118
    ... Pay and Shop Limited (trading as "Realex Payments") to be a related party for the purposes of IAS 24 by virtue of the fact that Mr Laurence Crowley, Chairman of Realex Payments, is also a Non-Executive Director of Aer Lingus Group plc. The Group engages Realex Payments to provide on-line payment...

  • Page 119
    ... STATEMENTS Aer Lingus Group Plc Notes to the consolidated financial statements (continued) 36 Cash generated in operations Group 2012 â,¬'000 Profit before tax Adjustments for: - Depreciation and amortisation - Net movements in provisions for liabilities and charges - Net fair value losses...

  • Page 120
    ... the current interline partnership between the carrier's two networks at New York's John F. Kennedy International airport ("JFK") as well as Boston's Logan International airport. The codeshare will allow customers purchase tickets on Aer Lingus' website featuring an Aer Lingus flight number for...

  • Page 121
    ... INFORMATION Aer Lingus Group Plc SHAREHOLDER INFORMATION (unaudited) 2013 financial calendar Annual General Meeting 2013 H1 period end 2013 H1 results 2013 FY ends 26 April 2013 30 June 2013 July 2013 31 December 2013 Share price data â,¬ Share price movement during 2012 - High - Low Share price...

  • Page 122
    ... and investors. News releases are also made available in this section of the website immediately after release to the Stock Exchanges. Company officers and advisors Directors Colm Barrington (Chairman) Christoph Mueller (Chief Executive Officer) Andrew Macfarlane (Chief Financial Officer) David...

  • Page 123
    ... AND FINANCIAL STATISTICS For the year ended 31 December 2012 2012 2011 Change 2010 2009 2008 Long haul¹ Number of routes flown Number of sectors flown (flights) Average sector length (in kilometres) Number of passengers (in thousands) Average fare (including airport charges/taxes) (in...

  • Page 124
    Great Care. Great Fare.