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Aer Lingus warns of trouble ahead as profits rise

Aer Lingus warns of trouble ahead as profits rise

Irish flag-carrier Aer Lingus has seen annual profits double, but warned higher fuel costs and a growing pension deficit could harm its long-term growth.

The carrier made a pre-tax profit of €84.4 million in 2011, up from €27.2 million a year earlier.

Effective cost-cutting was the main driver of the increase, Aer Lingus said in a statement.

Revenue also rose six per cent to €1.3 billion.

Chief executive Christoph Mueller pointed out the successful results had come against a backdrop of rising fuel prices, increased airport charges and “challenging” demand in core markets.

Looking forward, Mueller said Aer Lingus would still be “significantly” profitable, albeit below 2011 levels.

Further increases in fuel costs and the potential for industrial action, prompted by pension reform, could both impact upon the carrier, he warned.

Gains in 2011 yields due to changes in pricing policies and new IT systems would not be repeated, Mueller added.

“Our expectation for 2012 is that the group will remain significantly profitable albeit below 2011 levels,” the airline added in a statement.