Aer Lingus balance sheet help

qt9ukbg60ivjrn

Hi,

I need some help figuring out a financial report.

In August of this year Aer Lingus released its 2009 H1 report (first half of the year).

In the link it says it made a €73.9 million loss with an operating loss of €93million.

http://www.atwonline.com/news/story.html?storyID=17691

In their 2008 H1 their revenue was €648 million and in 2009 H1 €555 million....so the €93 million is lost there.

Is the €73.9 essentially the operating loss after tax???

I thought after tax it surely would be more because tax doesn't lessen your loss, unfortunately it increases.

Is the operating loss the important piece to focus on or is the €73 million important piece?

But maybe I'm looking at this in a twist way.

I have no financial, accounting experience...can you tell?


thanks

maddogcollins

havent looked at it myself but operating losses would include Depreciation etc, which for tax purposes are addbacks as they are not actual cash items.

So for example

Operating Loss €93, Depreciation of €20 (added back) , actual loss is €73. (-93+20=-73)


I assume its items like this that make the difference. Hope that helps

the1andonly1

if you take a look at the report attached, the difference is due to interest income that they recorded. I presume that since this doesnt come from aer lingus's normal operations, that it is excluded from the "operating loss" caption.

On which one to focus on, its tough to say. Operating activities would be their "normal" or actual business (flying planes), whereas the "real" loss figure (which is pre tax in this case) is a fuller picture of the business (including anything else that happened during the period).

ofjames

the1andonly1 wrote: »

if you take a look at the report attached, the difference is due to interest income that they recorded. I presume that since this doesnt come from aer lingus's normal operations, that it is excluded from the "operating loss" caption.

On which one to focus on, its tough to say. Operating activities would be their "normal" or actual business (flying planes), whereas the "real" loss figure (which is pre tax in this case) is a fuller picture of the business (including anything else that happened during the period).

this explanation is correct. operating profit/loss basically shows the results of a company's ongoing normal activities before tax. this is the more important figure as it shows the profitability of the core business that will continue to operate into the future. no business can survive if it is making operating losses for a sustained period.

operating profit/loss is then adjusted for any income and expenses not related to the core activities (non operating income & expenses), any profit or loss from any of the company's operations that were closed down during the year, and finally taxes to arrive at the net profit/loss for the year.

interest income is deemed to relate to the investing activities of a company and interest expenses is deemed to relate to the financing activities of a company. Hence, both are considered 'non-operating' in the income statement (i.e. they are an adjustment to operating profit).

as the initial question states, net loss for the year at aer lingus was €20mln less than operating loss. at first glance this doesnt seem to make a great deal of sense but there is a simple explanation for it.

basically, ever since their floatation on the ISEQ aer lingus have been sitting on a huge cash pile which is earning them a pretty penny in interest income. at one stage aer lingus had net cash on their balance sheet of €800mln. however, due to the operating losses and redundancies etc. they are burning through that money at a rate of knots. i think it's down to about €400mln now (in little more than a year:eek:) but clearly it is still substantial enough to earn enough interest income to ensure that they had a net non-operating profit of €20mln for the year (in other words the interest income outweighed the total taxes and other non-operating expenses by €20mln and therefore reduced the operating loss by that amount).

qt9ukbg60ivjrn

thanks for the help everyone