Christoph Mueller, Aer Lingus CEO

Christoph Mueller, Aer Lingus CEO
26 August 2010

Disclaimer | Forward Looking Information
Certain information included in these statements is forward-looking and involves risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by the forward looking statements.
Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions and the Company's
plans and objectives for future operations, including, without limitation, discussions of the Company's Business Plan programs, expected future
revenues, financing plans and expected expenditures and divestments. All forward-looking statements in this report are based upon information
known to the Company on the date of this report. Due to such uncertainties and risks, you should not place undue reliance on such forwardlooking
statements, which speak only as at the date of this report. The Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or by any appropriate
regulatory authority.
It is not reasonably possible to itemise all of the many factors and specific events that could cause the Company's forward looking statements to
be incorrect or that could otherwise have a material adverse effect on the future operations or results of an airline operating in the global
economy. Among the factors that are subject to change and could significantly impact the Company’s expected results are the fuel costs,
competition from new and existing carriers, costs associated with environmental, safety and security measures, actions of governments and
regulatory authorities, fluctuations in currency exchange rates and interest rates, airport access and charges, industrial relations, the economic
environment of the airline industry and the general economic environment in the markets to which the Company operates.
Slide 2

Welcome & introduction

Who we are
Aer Lingus overview
• Headquartered in Dublin, Ireland
• We will celebrate our 75 th birthday in 2011
• We operate 44 aircraft on routes to destinations in the UK, Europe
and North America
• We carried 10.4 million passengers in 2009
• We connect Ireland with the world by offering the best product in
the Irish airline market at a competitive price to passengers
• We serve both leisure and business travellers with a quality core
product that can be augmented through a la carte paid options
• Unlike some low cost operators, we serve central airport locations
enhancing connectivity options for our passengers
• We offer this airport selection at more competitive fares than most
legacy carriers
Aer Lingus | 26 August 2010
4

Phases in the Aer Lingus story
The recent
past
Immediate
actions to
address issues
Delivering
results in H1
2010
Re-positioning
Profitable
growth
Aer Lingus | 26 August 2010
5

The recent past

Yr-on-yr movements in GDP & passenger traffic remain linked – except
for Ireland
Dublin Airport ¹ London Heathrow & Stansted ¹
0.0%
(5.0%)
(10.0%)
Q1 Q2 Q3 Q4 Q1
2009 2010
2.0%
0.0%
(2.0%)
(4.0%)
(6.0%)
Q1 Q2 Q3 Q4 Q1
2009 2010
(8.0%)
(15.0%)
(10.0%)
Irish GDP
Dublin
UK GDP
London Heathrow & Stantsed
Frankfurt Airport ¹ Charles de Gaulle & Orly ¹
5.0%
5.0%
0.0%
(5.0%)
(10.0%)
(15.0%)
Q1 Q2 Q3 Q4 Q1
2009 2010
0.0%
(5.0%)
(10.0%)
Q1 Q2 Q3 Q4 Q1
2009 2010
German GDP
Frankfurt
French GDP
CDG & Orly
10.0%
5.0%
0.0%
(5.0%)
(10.0%)
(15.0%)
Schipol Airport ¹
Q1 Q2 Q3 Q4 Q1
2009 2010
Dutch GDP Schipol
Comment
• GDP trends continue to correlate closely
with passenger traffic in most European
territories except Ireland
• Outlook remains uncertain & IATA note
that the “post recession re-bound may be
slowing”
Aer Lingus | 26 August 2010
¹ Growth compared to same quarter of previous year
7

Core Irish market conditions remain difficult
Comment
• Demand conditions remain weak
in Aer Lingus’ core Irish market.
Change in Passenger Numbers May 2010
Across all airports in the country (ranked by market size)
• However, the underlying trend of
air travel to & from Ireland is well
established and ranks significantly
ahead of European peers:
Country Pop. Air Pax Multiple
Ireland 4.5m 26.3m 5.8x
UK 61.6m 198.5 3.2x
Germany 82.0m 158.2m 1.9x
France 64.7m 117,.6m 1.8x
EU 27 500.0m 751.4m 1.5x
Source: Anna Aero
Aer Lingus | 26 August 2010
8

Immediate actions - to address demanding trading conditions
Difficult to stop losses when Irish GDP declines by (7%)
but we took corrective action
Capacity
Long haul capacity reduced by 22% in the second half of 2009
Yield
Focus is higher yields per passenger rather than simply
increasing passenger loads on aircraft
Bases
Gatwick losses deemed unacceptable & capacity scale-back
announced in January 2010
Aer Lingus | 26 August 2010
Slide 9

Immediate actions – “Greenfield” cost reduction programme launched
• Greenfield is significant and it is organisation wide
Greenfield - €97m cost savings
• €97m of cost savings
– €74m from staff cost and €23m of other savings
• Cost base reduction target
Workforce - 20%
Back office functions - 40%
Management positions - 40%
• Reduction of 170 of 600 Head Office building / support staff in
2011 / 2012
• Non-Greenfield actions will be supported by IT investment
and process re-engineering from 2011
• 10% salary reduction
• Pay freeze until 2012 / 2013
– Pay freeze will potentially avoid additional costs
Airline
€2m
€10m
€3m
€4m €3m
€9m
€30m
Cost Reduction
2009/10
€20m
% of Revenue
(FY YE)
Other = €23m
€16m
Cabin Crew Support Pilots
Advertising Airport Charges Mtnce
Other Staff Other Non-Staff Distribution
Source: Company information
Sector cost reductions
Staff = €74m
% of Op Cost
(FY YE)
British Airw ays £220m 2.40% 2.60%
Air France €700m 2.90% 3.10%
Aer Lingus €97m 7.15% 7.44%
Source: Company announcements (FY YE =last reported). Note (2):
Excludes restructuring costs
(2)
Larger relative cost reduction programme than competitors
Slide 10

Delivering results in H1 2010

H1 2010 – Delivering positive performance in difficult conditions
H1 2010 highlights
• Improved performance despite air space
closures & still declining demand in
primary Irish market
• Significant swing in Q2 2010 profitability
compared to prior year
• Both long haul & short haul operations
were positive at EBITDAR level in H1
2010
€m
40
20
0
Operating profit
Q1 Q2 H1
19
• Upward trajectory in unit revenue trend
(20)
(18)
(19)
• Affirmation of revised approach to
inventory & network management
(40)
(60)
(38)
• Financial position remains very robust
• Extremely robust cash position of over
€1bn at end of June 2010
(80)
(100)
(75)
(93)
• However, cost reduction programme
remains critical
2009 2010
Aer Lingus | 26 August 2010
Slide 12

H1 2010 | Business overview
Commercial highlights
• Following a challenging 2009, the first 6 months of 2010 witnessed the
turnaround of long haul operations with increased seat occupancy and higher
yields.
• Short haul performance was supported by a shift in customer booking
patterns to dates closer to the flight departure.
• Commercial impact of air space closures in Q2 2010 has been successfully
mitigated and the forward booking profile has recovered.
• Both long haul and short haul operations are now benefiting from remedial
actions taken in late 2009 and early 2010.
Aer Lingus | 26 August 2010
13

Long haul turnaround supported by network management
Long haul performance overview
• Demand opportunity developed via network management and partnership.
• Connecting traffic flows complementing point to point demand.
• Revenue management and pricing strategy adjusted to reflect this new
demand environment.
• Consistent on-board product introduced across A330 fleet.
• Strong unit revenue improvement delivered by combination of yield and load
factor improvements.
• Cargo volumes continue to improve year-on-year
Aer Lingus | 26 August 2010
14

Long haul turnaround supported by network management
Long haul yield per ASK growth vs. 2009 Long haul ASK capacity vs. 2009
36.5%
31.1%
Q1 10 Q2 10 H1 10
23.5%
Q1 10 Q2 10 H1 10
(31.8%) (31.3%) (31.6%)
Long haul yield per passenger growth vs. 2009
Long haul load factor vs. 2009
20.9%
17.5%
+ 6.4 pts
+ 5.2 pts
12.4%
+ 3.8 pts
Q1 10 Q2 10 H1 10
Q1 10 Q2 10 H1 10
H1 2010 Results | August 2010
15

Strong short haul yield growth in H1 2010
Performance overview
• Management of revenue per seat metric and not yield or load factor.
• Demand led capacity planning and deployment.
• Flight schedules adjusted to reflect time or price sensitive market
requirements.
• Underlying or natural demand managed with reduced reliance on promotional
activity.
Aer Lingus | 26 August 2010
16

Strong short haul yield growth in H1 2010
Short haul yield per ASK growth vs. 2009 Short haul ASK capacity vs. 2009
10.2%
4.9%
4.3%
Q1 10 Q2 10 H1 10
(5.3%)
Q1 10 Q2 10 H1 10
(2.2%)
(12.8%)
Short haul yield per passenger growth vs. 2009
13.8%
Short haul load factor vs. 2009
Q1 10 Q2 10 H1 10
9.0%
3.0%
Q1 10 Q2 10 H1 10
(1.8) pts
(1.5) pts
(1.9) pts
H1 2010 Results | August 2010
17

H1 2010 | Ancillary revenue growth
Overview
• Continued growth in ancillary revenue
per passenger with a 7.8% increase in
H1 2010 compared to corresponding
period in 2009.
• Volume decline resulting from planned
capacity reduction contributed to 3.9%
decline in total ancillary revenue.
Ancillary revenue per passenger - €
18.32
16.99 16.75
14.97
14.35
11.50 11.70
• Strong year-on-year performances from:
• Online booking fees
• Baggage fees
• Card fees
• Seat selection revenues
H1 07 FY 07 H1 08 FY 08 H1 09 FY 09 H1 10
• New fare family and bundled products
being trialled at present.
Aer Lingus | 26 August 2010
18

H1 2010 | EBITDAR costs
€m unless stated otherwise
H1 2010
€m
H1 2009
€m
Change
%
Direct operating Costs 46.0 46.9 (1.9%)
Distribution costs 24.9 26.1 (4.6%)
Airport charges 117.6 121.4 (3.1%)
En-route charges 26.9 28.2 (4.6%)
Maintenance 23.7 37.2 (36.3%)
FX hedging (gain) / loss (15.3) (20.7) (26.1%)
Total ex-staff & fuel costs 223.9 239.0 (6.3%)
Staff costs 135.7 152.1 (10.8%)
Total ex-fuel 359.5 391.1 (8.1%)
Fuel 132.1 189.6 (30.3%)
Total incl. fuel 491.6 580.7 (15.3%)
H1 2010 Results | August 2010 19

H1 2010 | Cash & debt
€m Cash Debt
Balance as at 31 st December 2009 828.5 492.6
Free cashflow 56.3 -
Net debt drawn / (repaid) 40.8 40.8
FX impact 75.6 70.6
Interest accrued 8.5 4.1
Balance as at 30 th June 2010 1,009.7 608.2
Restricted cash 59.5
H1 2010 Results | August 2010 20

Ash cloud disruption - cost of air space closures has been contained
Ash cloud response
• Aer Lingus reacted effectively to
unprecedented closure of Northern
European airspace in April & May
• Management confident that the total
impact on Aer Lingus’ operating result
will be a maximum of €20m
• Total cost as percentage of revenues
is in line with peers
No. of Aer Lingus
flights disrupted
Disruption periods
Estimated lost gross
margin
Estimated passenger
compensation costs
• 2,128
• 2 significant periods of
disruption in April & May
• Approx. €10.0 million
• Approx. €10.0 million
AF-KLM¹
Air Berlin¹
BA¹
Aer Lingus¹
Ryanair¹
easyjet¹
€158m impact
€40m impact
Stg£142m impact
€20m impact
€50m impact
Stg£65m impact
0.8% of revenues
1.2% of revenues
1.4% of revenues
1.7% of revenues
1.7% of revenues
2.4% of revenues
¹ Derived from company announcements & most recent annual financial statements
Aer Lingus | 26 August 2010
21

Re-positioning for long term growth

Next steps to implementing our new strategy
Satisfying customer needs
Bespoke a la carte enhancements
Fare families
Introduction of EPOS handsets to
further drive ancillary revenues
Working with the Dublin Airport Authority
State of the Art terminal will welcome visitors to Ireland
Development of Dublin Airport as a strategic transfer point
Aer Lingus | 26 August 2010
Slide 23

Re-positioning Aer Lingus for long term growth
Network
Focus on our core mission:
“Connecting Ireland with the World”
Distribution
Multi-platform strategy adopted to
individual markets
Product
Quality core product with paid value
enhancing options
Aer Lingus | 26 August 2010
Slide 24

Next steps to implementing our new strategy
Connectivity
“Filling-in” our existing short haul
network
Aer Lingus code now extended
across North America
Aer Lingus | 26 August 2010
Slide 25

Aer Lingus’ role in industry consolidation
• Network connectivity is key for us as we seek to connect Ireland to the World
• Aer Lingus benefits from excellent relationships with members of the
Oneworld, Star & SkyTeam alliances as well as our own partnership initiatives
OneWorld Star SkyTeam Bilateral
• These relationships provide us with a quality partner network with real depth
• Asian connectivity remains the main gap in our current network
• We are likely to join one of the 3 alliances in the medium term but no
decision has yet been taken
We will evaluate which of the 3 alliances is best suited to deliver a better
product for our customers and a return on investment for shareholders
Aer Lingus | 26 August 2010
Slide 26

Partnerships Update
United Airlines extended
code share
• Washington – Madrid commenced on 28
March 2010
Aer Lingus Regional
franchise
• Launched by Aer Arann in March with 4 of
its aircraft serving 12 routes
• Positive trading result at operating profit
level
• 100K+ passengers carried to date
• Performance meeting United Airlines’
and Aer Lingus’ expectations
• Meeting Aer Lingus network and franchise
revenue expectations
• Partners are reviewing opportunities for
an additional aircraft in 2011
• 5th ATR72 added to franchise by Aer
Arann in August to commence Shannon
services.
Both initiatives have already positively impacted the operating result despite
only commencing in late March 2010
Aer Lingus | 26 August 2010
27

“Greenfield” cost reduction programme remains imperative
Cost challenge
• Continuing challenge is to actively control upward cost pressures
• Fuel costs are volatile over time
Operating
environment
remains difficult
• A busy Summer season does not represent easing of operating
environment & return to pre-recession demand levels
• 2010/11 winter season will be more a difficult period to sustain
recent yield performance
We cannot be
complacent on
costs
• Cannot assume recent growth in yields will continue indefinitely
• Industry is already adding capacity with effect on long term yields
• Yields maximisation cannot compensate for cost inflation
H1 2010 Results | August 2010
28

Decisive action taken on key issues
Transatlantic
services
• Turnaround of long haul operations a crucial step for the company
• Action taken to address loss making Shannon winter services
• Aer Lingus remains committed to Shannon transatlantic services for rest of year
Dublin Airport
Terminal 2
• Agreement with DAA to commence transfer of operations from November 2010
• Aer Lingus passengers to benefit from US Custom & Border Protection facilities
Property
consolidation
• Positive steps taken to reduce property portfolio
• Includes surrender of leasehold interest in the Head Office Building site to DAA
• Financial & operational benefits will accrue to Aer Lingus
Dublin
Maintenance
• Base maintenance contract awarded to Dublin Aerospace
• Services previously undertaken by Sabena Technics in France
• Aer Lingus proud to support development of Irish air maintenance activities
Management
changes
• Chief Operating Officer – Trevor Jensen – appointed on 29 April 2010
• De-layering of organisational structure under way
• 40% of remaining management positions with new appointments
H1 2010 Results | August 2010
29

Aer Lingus | Progress on key objectives
• Significant turnaround in profitability of long haul operations
• Revised revenue management strategy is generating positive results
• Financial and operational impact of ash cloud disruption contained
• United Airlines extended code share is delivering proof of concept
• Cargo performance continues on positive trajectory
• IT implementation remains on track
Aer Lingus | 26 August 2010
30

2010 Trading outlook
Outlook comments
• Cash drain addressed through remedial actions
• Strategic actions are on track
• Strong commercial performance at end of H1 2010
• Full year operating result (before exceptional items) should be no worse than breakeven
• However, this view is heavily dependent on delivery of committed staff productivity savings and no
significant disruptions to operations from industrial action or further airspace closures
• It is premature to provide firm guidance on likely performance in 2011. However….
• Expected improvement in 2011 costs as a result of continued implementation of Greenfield
programme
H1 2010 Results | August 2010
31

Q & A

Thank you !