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Volcanic ash cloud costs Aer Lingus €20 million

Irish airline Aer Lingus has confirmed that initial problems regarding the volcanic ash cloud have cost the company around €20 million and this is before yesterday's closure of airspace around Ireland and the UK. There are also serious concerns about further closures of UK airspace as the volcanic ash cloud continues to cause problems around Europe.

Aer Lingus also confirmed that the company's cost saving programme has been delayed which will place yet more pressure on the company's finances and short-term profitability. Even though first quarter trading was in line with expectations the company is cautious for the full year with airline travel struggling to recover in this difficult economic environment. The company has closed a number of loss-making routes, lowered ticket prices and deferred the receipt of new aircraft to try and reduce the short-term pressure.

There is no doubt that the airline industry is struggling and we seem to have one problem after another as well as the rising oil price which is not helping. The industry as a whole is almost certain to consolidate in the short to medium term with a number of US companies already confirming takeover and merger talks are underway. This is likely to be replicated across the world and the airline industry we see today will be very different to the one we see in 12 months time.

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