Troubled Irish airline Aer Lingus has reported a further drop in revenues, but has revealed that its overall performance is benefitting from efforts to cut aircraft and capacity.

The Dublin-based carrier, which plans to cut a fifth of its workforce, is now planning to strip out another aircraft from its long-haul service and to trim winter and summer 2010 capacity further.

The airline said that passenger numbers rose by 7% to 3.08 million. This was made up of a 10% increase in short-haul passengers and a 13.2% decrease on long-haul passengers. Aer Lingus added that average passenger revenues in the three months from July to September fell by 14.8% year on year.

The company said this morning that short-haul average fares fell by 12.3 per cent year-on-year, a decline which was partly offset by an 8.5 per cent rise in ancillary revenue per passenger. Long haul average fares fell by 17 per cent for the year ending September 30th.

“The business continues to experience challenging conditions. However the actions taken to remove capacity on underperforming parts of the network has had a positive impact on stabilising load factors and yields while reducing operating costs. While the fall in yield year on year continues, the pace of decline in average fares does not appear to be accelerating currently,” the group said in a statement.

“Cost increases in the form of higher fuel prices, airport and navigation charges together with further expected GDP declines and unemployment increases in our major markets, will mean that we must continue to reduce any costs within our control so that we can cope with continued falling fares, compete and maintain balance sheet strength,” it added.