By Business & Finance 
Kieran Duff, partner, MERC Partners; Christoph Mueller, CEO, Aer Lingus; Barry O’Connor, managing partner, MERC Partners.
Christoph Mueller continues to show outstanding business acumen in the face of adversity and during the difficulties encountered while steering the company through a challenging restructuring process.
Aer Lingus delivered a strong trading performance against a challenging trading environment in Q3 2013, recording an operating profit, before net exceptional items, of €94.9mn. This operating result is €4.0mn, or 4.4%, higher than the €90.9mn operating profit reported for the third quarter of 2012.
In a trading update on September 13th this year, Aer Lingus highlighted two main issues that negatively impacted its short haul revenue performance in Q3 2013: Exceptionally good weather conditions in Northern Europe which discouraged short haul leisure travel to the usual sun-belt destinations, and the increasingly competitive pricing environment that has particularly affected higher yielding bookings.
The above factors resulted in a year-on-year decrease in its short haul revenue in Q3 2013. However, total revenue remains higher than the previous year due to the continued strength of the airlines long haul business, retail revenue initiatives and contract flying.
Although Aer Lingus had significantly higher year-on-year operational activity in the quarter – as a result of the additional A330 deployed on its long haul services and the contract flying business – operating costs increased marginally by just 0.4%. This is due to a reduction in fuel costs, airport charges and overheads partly offset by increases in staff costs, depreciation and the effect of a reduction in gains on foreign exchange hedging.
“Aer Lingus has delivered an operating profit of €94.9 million for Q3 2013 which is 4.4% ahead of prior year despite challenging conditions,” Christoph Mueller, Aer Lingus’ CEO said.
“As stated in our trading update on September 13th, good weather conditions and strong price competition have hurt our short haul performance. However, long haul revenue growth was impressive and the market has absorbed the extra capacity we added on the North Atlantic this summer.
“We continued our tight cost management with operating costs increasing in the quarter by just 0.4% despite a 2.9% increase in capacity deployed and the costs of operating our wet lease business. However, I must again express my disappointment that the ongoing process to resolve pension issues continues to have a negative impact on our ability to deliver efficiencies and cost saving measures, particularly in respect of our recent voluntary severance programme.”
According to Mueller: “We do not expect any improvement in the short haul environment for the rest of 2013 which remains characterised by heavily discounted fare offerings across Europe. The 2013 outlook on long haul remains positive with the exception of some weakness expected in November, which was previously communicated. We maintain our current guidance for full year 2013 operating profit, before net exceptional items, to be around €60mn.”
CV highlights
- Christoph Mueller joined Aer Lingus as its chief executive officer in September 2009. He previously held the position of executive aviation director at TUI Travel plc, a FTSE 100 company.
- In January 2006, Mueller joined the executive committee of TUI AG, a DAX 30 company with responsibility for its flight division.
- He served as the chief financial officer of DHL Worldwide from 2002 to 2004 and became a member of the executive committee of Deutsche Post AG in 2004 after the acquisition of DHL by Deutsche Post AG.
- Mueller has extensive experience within the aviation industry, having held senior position in Daimler Benz Aerospace, having been executive vice president at Lufthansa AG and chief executive officer of the Sabena Group.
- In 2012, he was appointed to the Board of Tourism Ireland, the organisation responsible for the international promotion of the island of Ireland as a tourism destination.
- In March of 2013, Mueller was appointed to the role of chairman of An Post.
- He has an MBA from the University of Cologne and subsequently completed an Advanced Management Program at Harvard Business School.
Business & Finance, Business Person of the Month
Business & Finance, in association with MERC Partners, has been rewarding excellence in business through the ‘Business Person of the Month’ award over the last number of years. These awards seek to recognise noteworthy achievements in business leadership, and particularly those that make a telling contribution to the wider business community in Ireland.
