UPDATE 2-Aer Lingus back to Q2 profit, to guard independence
* Q2 pretax profit 15.4 mln euros vs 13.8 mln loss yr ago
* H1 op loss 24 mln euros vs broker estimate -40 mln euros
* To at least break even on op level in FY; 2011 uncertain
* Shares fall 1.2 pct, outperform Irish market
(Adds analyst comment)
By Andras Gergely
DUBLIN, Aug 24 (Reuters) - Irish airline Aer Lingus (AERL.I) swung to profit in the second quarter after cost cuts more than offset the revenue hit from a volcanic ash cloud, and vowed to defend its independence by cutting costs further into next year.
Aer Lingus has cut unprofitable U.S. routes, reduced staff and fuel costs to survive in Ryanair's (RYA.I) shadow but also acknowledged it would be fruitless to insist on undercutting the prices of its much bigger and leaner former suitor.
After reporting full-year losses for both 2008 and 2009, it reiterated a projection on Tuesday to at least break even on an operating level before exceptional items in 2010, barring major action by its employees against the cost cuts.
"This operating performance, together with the very strong balance sheet, shows a company undergoing a fast recovery from the depths of 2009," Bloxham Stockbrokers said in a note.
Aer Lingus, which is more reliant than Ryanair on the Irish market, one of Europe's financial trouble spots, said it was too early to give a forecast for 2011 in such an uncertain economic climate.
For graphic comparing Aer Lingus and Europe's biggest carriers: r.reuters.com/wyr76n
With "plenty of cash" on hand and good shares of some key routes to Ireland it could stand its ground, Chief Financial Officer Andrew Macfarlane said, adding it would probably join one of the global airline alliances over the longer term.
"(There is) no reason why we shouldn't be able to remain independent," Macfarlane told reporters.
It posted a pretax profit of 15.4 million euros in the second quarter versus a 13.8 million euros loss a year ago, making progress towards its goal to reduce costs by 97 million euros by next year.
In the first half, Aer Lingus had an operating loss of 24 million euros after accounting for the cost of disruption caused by a volcanic ash cloud, narrower than the 93 million euros loss a year ago and the 40 million euro loss expected by in-house broker Goodbody.
Its shares, 70 percent of which are controlled by Ryanair, the Irish government and employees combined, reversed early gains to trade 1.2 percent lower at 0.9190 euros by 0930 GMT, outperforming the broader Irish market .ISEQ, down 3.8 percent after a profit warning from its biggest constituent, CRH (CRH.I) <ID:nLDE67M1L7>.
With the airline's full-year earnings forecast conditional on employees' cooperation, it awaited the outcome of last-minute talks with cabin crew who plan to start a work-to-rule campaign from Wednesday against the cost-cutting measures.
The employees do not intend to cause disruption to flights but such action could slow down the airline's efficiency drive. (Editing by Louise Heavens and Simon Jessop)
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