{"id":562304,"date":"2026-07-22T09:55:17","date_gmt":"2026-07-22T09:55:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/562304\/"},"modified":"2026-07-22T09:55:17","modified_gmt":"2026-07-22T09:55:17","slug":"dublin-airport-is-about-to-boom-why-is-aer-lingus-shrinking-itself-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/562304\/","title":{"rendered":"Dublin Airport is about to boom. Why is Aer Lingus shrinking itself? \u2013 The Irish Times"},"content":{"rendered":"

The decision by Aer Lingus<\/a> to shrink itself by 7.7 per cent<\/a> just as the cap on flights at Dublin Airport<\/a> is being lifted and passenger charges are about to be cut seems like an act of wilful self-harm. <\/p>\n

Depending on which narrative you choose to believe, the decision to axe flights and staff has its roots in the 2024 pilots\u2019 strike or an ill-judged expansion plan. Either way, it raises some questions at whether Aer Lingus really belongs in International Airlines Group<\/a>, which bought the Irish airline in 2015 for \u20ac1.4 billion. <\/p>\n

Whatever the proximate cause might be, the logic behind the move is IAG\u2019s focus on operating margins at its subsidiaries, which also include British Airways<\/a>, Iberia <\/a>and Vueling. It is the rubric by which it allocates investment across the four airlines. <\/p>\n

It is one way to run an airline group \u2013 there are others \u2013 but it seems to work. IAG reported an operating profit of \u20ac5 billion last year. Its shares are up about 15 per cent year on year. <\/p>\n

The IAG yardstick is that if your operating margin is 12 to 15 per cent per cent, we will give you some money to invest in new planes and routes. If it falls below this level, we won\u2019t give you any more money until you improve margins. <\/p>\n

Aer Lingus\u2019 operating margin was just over 11 per cent for 2025 but its performance in the first three months of the year deteriorated. It lost \u20ac103 million in the three months to March 31st, \u20ac48 million more than during the same period in 2025.<\/p>\n

Rivals\u2019 operation margin<\/p>\n

By comparison, BA\u2019s operating margin was 15.2 per cent, Iberia\u2019s 16.2 per cent and Vueling\u2019s 13 per cent. For context, Ryanair has an operating margin of about 11 per cent and other European airline groups have significantly lower ones. <\/p>\n

The writing was on the wall for Aer Lingus earlier this year when IAG\u2019s chief executive, Luis Gallego, warned: \u201cIt is clear that existing transformation efforts are not enough. The airline [Aer Lingus] will need to take decisive actions to restore financial performance and ensure it is positioned to deliver in line with the group\u2019s 12 per cent to 15 per cent operating margin.\u201d <\/p>\n

The net effect of all this is that Aer Lingus now plans to shrink itself by 7.7 per cent to improve operating margins. It will axe flights from Dublin to Denver, Minneapolis, Las Vegas and Split in Croatia this autumn. Some 500 jobs \u2013 70 pilots, 140 cabin crew and 290 head office posts \u2013 are to be cut from a total workforce of 6,500. Negotiations with F\u00f3rsa and the Irish Air Line Pilots\u2019 Association (Ialpa) are under way. <\/p>\n

However, as Ialpa and others have pointed out, it seems counterintuitive to retrench at this point. The cap on flights into and out of Dublin Airport has just been lifted and the indications are that passenger charges, determined by the Irish Aviation Authority (IAA), are also about to fall. <\/p>\n

This coincides with aggressive expansion by US carriers flying into Dublin, including United Airlines, Delta and JetBlue, which have increased aircraft and seats on their flights to and from Dublin by up to 45 per cent.<\/p>\n

Even assuming Aer Lingus gets off the IAG operating margin \u201cnaughty step\u201d sooner rather than later, it will have conceded valuable ground to the US airlines and Ryanair is unlikely sit on its hands. In fact, Michael O\u2019Leary has said he will add two million seats in Dublin next year if the IAA cuts passenger charges (a consultation process is under way). <\/p>\n

[\u00a0Aer Lingus Regional operator boosts pilots\u2019 payOpens in new window<\/a>\u00a0]<\/p>\n

Not only that, Aer Lingus\u2019 options for expansion will be pretty much what they are at present: European short haul or transatlantic. Two very competitive markets where the margins expected of their competitors \u2013 or at least tolerated by their owners \u2013 are lower than those set by IAG. <\/p>\n

The maximalist approach adopted by IAG does raise questions over whether Aer Lingus really belongs in a group where it is expected to make the same sort of margins as BA and Iberia with their extensive high-margin, long-haul networks and bigger populations. <\/p>\n

BA is roughly five times bigger than Aer Lingus and Iberia about three times larger. Vueling is twice as large. Aer Lingus would seem destined to always be the poor relation in IAG when it comes to operating margins. <\/p>\n

There is, however, no suggestion of IAG disposing of Aer Lingus. It\u2019s operating margins may be low by IAG\u2019s exacting standards, but they are firmly at the higher end for the industry. <\/p>\n

If Aer Lingus was put on the block, it would find a buyer for the same reason that IAG wants to hold on to the Irish airline \u2013 its strategic niche in the transatlantic market anchored at Dublin Airport, its pre-clearance regime for US emigration and its valuable Heathrow slots. <\/p>\n

IAG has either decided to take a step back by shrinking Aer Lingus in order to take two steps forward or has missed a trick because of its obsession with operating margins. <\/p>\n","protected":false},"excerpt":{"rendered":"The decision by Aer Lingus to shrink itself by 7.7 per cent just as the cap on flights…\n","protected":false},"author":2,"featured_media":40975,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[601,37758,72,11900,68040,61,74871,60,237534],"class_list":["post-562304","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-aer-lingus","tag-british-airways","tag-business","tag-dublin-airport","tag-iberia","tag-ie","tag-international-airlines-group","tag-ireland","tag-vueling"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/562304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=562304"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/562304\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/40975"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=562304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=562304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=562304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}