July 18, 2014 8:12 pm

Aer Lingus in quest for chief executive after Mueller steps down

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Aer Lingus is starting a search for a new chief executive, after announcing on Friday that Christoph Mueller will step down from airline in May next year.

Mr Mueller has overseen the first phase of a turnround strategy at the company since being appointed chief executive in mid-2009. But his unexpected departure comes as the Irish airline continues to grapple with a pension deficit, disputes with trade unions, and the unresolved issue of Ryanair’s near 30 per cent stake.

On Friday, Mr Mueller said he felt it was “the right time to hand over the reins” as Aer Lingus was “well positioned both strategically and financially”, and September would mark the fifth anniversary of his appointment. He joined the airline in 2009 from TUI Travel, where he was a senior executive.

Colm Barrington, the group’s chairman, said that during Mr Mueller’s tenure Aer Lingus had been “transformed into a strong, consistently profitable airline with a strategic direction, a resilient business model as a value carrier and an improved cost base.”

Analysts at HSBC said Mr Mueller’s departure would be a loss to the business – noting his work in driving down costs, managing the core short haul business through a period of tough competition, and starting to build a transatlantic hub at Dublin Airport.

In March, Aer Lingus reported an operating profit of €61m for 2013 on revenues of €1.4bn – both slightly ahead of forecasts. Its long haul business performed well, with revenue up 11 per cent year-on-year and passenger numbers rising 12 per cent. But its short haul business, which accounts for most of its routes, saw both revenue and passenger numbers decline.

At the time, Mr Mueller told the Financial Times that Aer Lingus could spend its net cash of €420m on acquisitions in Europe, as the sector continued to consolidate and restructure. However, the airline has since been hit by a strike that damaged its revenues, and warned in June that its operating profit for 2014 may be up to 20 per cent lower as a result.

Last month, the Aer Lingus board also “reluctantly” accepted the findings of a government-appointed panel that was set up to improve the airline’s poor industrial relations. It has agreed to boost the funding of its pension scheme, increasing its payments from €110m to €147m. Mr Mueller said this was “the only solution that is capable of acceptance by all the parties.”

His successor will also have to deal with rival airline Ryanair, which retains a substantial shareholding in Aer Lingus. The low-cost carrier has accumulated a stake of about 30 per cent and is refusing to dispose of it – despite being blocked by both the European Commission and the UK Competition Authority from taking control of its rival.

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