annual report 2009 - Aer Lingus

Operating and Financial Review Aer Lingus Group Plc – Annual Report 2009Aer Lingus and United Airlines Join Forces(Left to right) Pictured at the launch of the airlines’ codeshare agreement: Aer LingusChief Commercial Officer Stephen Kavanagh alongside United Airlines MD for Europe,Marcel Fuchs, with Aer Lingus cabin crew Sinead Carroll and United Airlines FlightAttendant Kathleen Byrne.• Fuel: Volatility in fuel prices couldhave a material impact on the Group’soperating results.• Closure of airspace: A sustained closureof airspace of the type experienced inApril 2010 (as a result of the volcaniceruption in Iceland) could have a significantfinancial impact on the Group in termsof lost revenue and the costs of passengerdisruption.• Change Management: The Grouphas commenced the implementationof a cost reduction programme, whichis targeting specific annualised costsavings. If the Group fails to successfullyimplement the cost reduction programmethere is a risk that the Group will havean uncompetitive cost structure.• Taxes and Charges: The maintenanceof the €10 air travel tax introduced bythe Irish Government in 2009 and theincreasing charges being imposed bythe Dublin Airport Authority couldlead to a reduction in fare yield and/or negatively impact the Group’sfinancial performance.• People: The Group’s future performanceis dependent upon a strong and effectivemanagement team. If the Group failsto attract or retain suitably qualifiedemployees, this could negativelyimpact business performance.• Information Technology: The Grouphas commenced a project to furthermodernise its information technologysupport systems. If the Group fails tosuccessfully implement the project,the quality of the Group’s managementinformation could be impacted, whichin turn could impact upon revenuegeneration and financial performance.• Competition: The Group faces strongcompetition in the markets in whichit operates and if the Group fails torespond to that competition, marketshare and financial performance couldbe impacted.• Strategy: If the Group’s long termstrategy is unsuccessful it may negativelyimpact to Group’s financial performance.• Safety: Failure to operate safely or toadequately respond to an emergencysafety incident could adversely impactthe Group’s operations and financialperformance.The Group has a comprehensive systemof risk management and internal controlswhich is intended to address and mitigatesuch risks and uncertainties.