Aer Lingus 2013 Annual Report Download - page 22

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20
2013 Financial Review
Aer Lingus delivered a good operating result, before net exceptional items, in 2013 despite encountering challenges in the year. In addition,
the Group remains in a financially strong position.
Year on year operating profit bridge (€million):
Revenues grew 2.3% to €1,425.1 million (2012: €1,393.3 million) and operating costs increased 3.0% to €1,364.0 million (2012: €1,324.2
million). This resulted in an operating profit of €61.1 million (2012: €69.1 million), before net exceptional items.
The 2013 operating profit is 11.6% below that reported for 2012 and represents an operating margin of 4.3% in respect of 2013 (2012:
5.0%).
However, EBITDAR declined by only 1.1% as the impact of the lower operating profit noted above was partly caused by relatively higher
year-on-year depreciation charges driven by operational changes in our aircraft fleet.
2013 was a year of two halves. At the end of the first 6 months of 2013, revenues generated by our mainline short haul route network were
performing slightly ahead of 2012 despite a reduction in mainline short haul capacity. However, the second half of 2013 presented us with
some challenges which resulted in a mainline short haul performance which was below our expectations. Despite these pressures, our
mainline short haul route network remains an attractive and important business for us and we continue to be satisfied with its performance.
Explanatory note on comparative figures and operating statistics
Please note the following with regard to the financial results for 2013 compared to 2012:
For our Summer 2013 schedule, we deployed an additional (seventh) A330 long haul aircraft in our mainline fleet which has increased
revenues and costs compared to 2012. The revenues earned from the enhanced code share, on which this aircraft had previously been
deployed and which ceased in Q4 2012, were reported as a component of “Other revenue” in 2012. The main operating expense line
items impacted by this change in our operation are fuel, airport charges, staff costs, maintenance and depreciation.
Revenue associated with our contract flying business with Virgin commenced in Q2 and is included in “Other revenue”. The relevant
operating expenses we incur under the agreement, such as staff costs, maintenance, aircraft hire and overheads have been recorded in
each relevant operating expense line, including €2.1 million of start up costs reported in Q1 2013. This wet lease operation broadly
broke even in 2013 and is expected to be profitable in 2014.
These two changes have added approximately €55 million to total revenue. Please note that we do not include the contract flying business
in our operating statistics (e.g. passenger numbers, ASKs, etc.)
Revenue
The year-on-year increase in total revenue is due to strong revenue performances from long haul, retail and contract flying operations (which
commenced in 2013) that more than offset weaker performances on short haul and cargo.
Passenger revenue
In 2013, our short haul markets were softer than expected, particularly in the second half of the year. We responded by actively promoting
our services while carefully making tactical capacity reductions to manage fare revenue per seat and load factor. Long haul performance in
the year was very positive, supported by strong underlying demand.
Total capacity as measured by ASKs increased by 1.1% with long haul capacity growing by 11.6% and short haul capacity decreasing 4.1%.
Despite this increased capacity, overall passenger fare revenue increased by 0.9%.
69.1 61.1
31.8 (39.8)
2012 operating profit Revenue growth Increased cost 2013 operating profit
€ million