UPDATE 1-Fuel costs, weak economy hits Aer Lingus outlook

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DUBLIN, May 15 (Reuters) - Irish carrier Aer Lingus (AERL.I: Quote, Profile, Research, Stock Buzz) said on Thursday that a slowing world economy, the weakness of sterling and the dollar and rising fuel costs were having an impact on its outlook for 2008.

"The unprecedented cost of fuel and the difficult operating environment are having a negative impact on the financial performance of the business," the former state carrier (AERL.L: Quote, Profile, Research, Stock Buzz) said in a trading statement.

Aer Lingus said in March that it could not yet give guidance for this year because of uncertainties about the economic outlook and oil prices.

"The economic outlook in the company's main markets remains uncertain due to a slowing global economy, the record price of fuel and the current weakness of the U.S. dollar and sterling," it said on Thursday.

"Against this market backdrop, the company is also continuing to face increased competition," it added.

Aer Lingus said total revenues increased by 10.3 percent during the first four months of 2008 compared with the same period in 2007.

Aer Lingus will continue its cost-cutting programme, but it said the staff cost element of the programme, which was expected to save 20 million euros in the first year of implementation, has not yet been accepted by all employee groups. (Reporting by Andras Gergely and Jonathan Saul; Editing by Will Waterman)