Aer Lingus has reported passenger statistics for Novemer this morning that show declines for both short and long haul passengers carried. For the month, the total number of passengers carried, including Aer Lingus Regional amounted to 728,000 (-5% YoY). The number of short haul passengers amounted to 647,000 (-4.7% YoY) while long haul passengers carried fell to 81,000 (-6.9% YoY). <p>

In a move typical of what we anticipate going forward, we expect the airline to reduce Available Seat Kilometres (ASKs)in months that prove difficult from a load factor perspective. November was one such month, particularly for short haul routes. Aer Lingus ASKs declined by 3.5% for short haul and increased by .8% on long haul routes. As a result of capacity being taken out, the short haul load factor impact is more muted than the decline in passengers carried, with the measure declining to 68.6 (-1.9%). The load factor decline on long haul routes was more pronounced with a decline to 80.0 (-5.7%). <p>

November tends to be a challenging month for airlines, particularly for flag carriers and while Aer Lingus is no exception to this, we do believe that management are focusing on maximising profitability per plane flown and are willing to take out capacity in a move to maximise profitability through reducing losses. <p>

In terms of the impact of November for Aer Lingus, management had pointed to a challenging short haul environment for the rest of 2013 in their IMS on the 5th of November and as a result, the November passenger numbers are in line with Aer Lingus internal expectations. With Ryanair reducing fares across its European network, we expect that the short haul market will remain challenging for Aer Lingus going in to 2014 but this is captured in Aer Lingus management’s guidance for FY 2013 operating profits to amount to c.€60 million, mirroring our own forecasts for an outturn of €60.5 million. <P>

We continue to view Aer Lingus favourably and believe that the airline is well placed to make use of its strategic geographic positioning to expand its presence as a transfer hub out of Dublin going forward.

<p><h5>David Holohan</h5>


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