UPDATE 2-Aer Lingus expects to break even at best in 08
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DUBLIN, June 6 (Reuters) - Irish carrier Aer Lingus (AERL.I) said on Friday it would at best break even this year, as the slowing world economy, the weakness of sterling and the dollar and rising fuel costs continued to bite.
Ryanair (RYA.I), Europe's biggest low cost carrier Ryanair and which owns a stake in its rival Aer Lingus, also warned earlier this week high fuel costs would hit profits this year.
"Based on current fuel prices and the uncertain economic outlook, we expect, at best, to break even for the year 2008," Aer Lingus Chairman John Sharman told the annual shareholders' meeting.
Aer Lingus (AERL.L) said the challenging climate would not allow it to increase its long-haul fleet in 2009 despite its medium-term strategy for long-haul growth. It is also suspending a service to Los Angeles from November 2, 2008.
Chief Executive Dermot Mannion said the airline had no plans to ground any short-haul aircraft, however, though it may consider "cancelling or deferring" some short-haul flights in the winter season.
"There is no doubt in these days of very high fuel prices there is going to be casualties across the industry," Mannion told reporters after the meeting. "Aer Lingus is in a very strong position. We will not be a casualty."
Shares in Aer Lingus closed 4.3 percent lower at 1.56 euros in Dublin, having fallen more than 7 percent after the statement was issued and underperforming a 3.2 percent drop on the Irish market .ISEQ.
"The board remains confident that the company's medium-term growth plans remain on track," Sharman said.
"Aer Lingus has a strong balance sheet ... and a strong management team to manage its business through the current period of uncertainty."
Sharman said its business was seasonal in nature and would be "markedly so" this year, with all its profit made in the second half.
In May, German carrier Air Berlin (AB1.DE) abandoned its full-year profit goal and said it would scrap unprofitable routes as it tries to deal with soaring fuel costs. British Airways (BAY.L) has also said it is braced for a turbulent year. (Additional reporting by Jonathan Saul; Editing by Quentin Bryar)
