Annual Report 1999 in PDF - Aer Lingus

Chairman’s StatementI am pleased to report another successful year for the Aer Lingus Group with an increase of7% in operating profits on continuing operations to e71.6 million. This was achieved on aturnover of e1,134.2 million, an increase of 12% over 1998.For Aer Lingus, the year was also marked by the completion of new bilateral allianceagreements with both American Airlines and British Airways which led to Aer Lingus’ entry as afull member of the oneworld alliance.The Government decision to float shares in Aer Lingus is a very positive development in movingtowards the full commercialisation of the airline. This is vital for the Group to grow in theintensely competitive modern air transport environment. I believe it is especially positive for ourcustomers providing them with a greater range of choice and value whilst continuing with ourgrowth performance of recent years.Further significant initiatives in Aer Lingus, including the acquisition of new aircraft, routeexpansion with new gateways added in the US and UK together with record passengernumbers, contributed to a strong performance.Group operating profit before interest, exceptional items and Employee Share ParticipationScheme, and including discontinued operations, was e74.2 million, an increase of 1.8% on1998.There was a net interest charge of e0.8 million in 1999, against e6.0 million earned in theprevious year and, after allocation of profits to staff through the Employee Share ParticipationScheme of e2.6 million (1998: e7.2m), profit before exceptional items declined by 1.3% toe70.8 million.The 1999 results include a number of changes in accounting policies and methodologieswhich, in accordance with accounting standards, have given rise to a restatement of prior yearresults in certain cases and significant exceptional items also. These changes follow a detailedreview of industry practice undertaken in advance of the IPO and in close consultation with theGroup’s financial advisers.Exceptional items represented a net loss of e11.3 million, compared to a net gain of e4.3million in 1998. After a significantly increased charge for taxation and minority interests ofe7.6 million (1998: e1.4 million), the net profit for the year was e51.9 million (1998: e74.6million).Once again the Group enjoyed strong cash flows, with net cash inflow from operating activitiesincreasing by 72% to e253.7 million. Net cash and liquid resources at 31 December 1999 weree162.2 million, an 83% improvement on the 1998 figure of e88.7 million. Shareholders’funds showed a 23% improvement to e296.7 million.Facing the Future with ConfidenceLast year, I cautioned that there were external elements which could impact negatively onoperating performance within the industry. Issues such as transatlantic capacity increases, risingfuel costs and the economy in the Far East were core to many successful commercial airlines2