Aer Lingus is to resume its Shannon to Heathrow service from next March and said it expects the route to be profitable within the first year of operation.
At a press conference in Dublin today the airline said it would operate twice daily flights on the route following “agreements with staff to opt for alternative cost saving measures”.
The airline said the changes combined with revised airport charges at Shannon and declining oil prices meant the resumption of services was viable.
Dermot Mannion, Aer Lingus chief executive said: “We are very pleased to be in a position to recommence the Shannon Heathrow service and I want to acknowledge the huge contribution of our staff and Shannon Airport Authority, in making this a reality.”
Mr Mannion said a hike in services between Dublin and Gatwick had allowed the airline to free up some of its Heathrow slots from Dublin and allocate them to Shannon.
"That has now given us the flexibility today, which we've never had before, to look at reallocating some of those Dublin Heathrow slots, and that's exactly what we're now doing into this new profitable Shannon operation," Mr Mannion said.
The airline’s chairman Colm Barrington urged shareholders to reject a takeover bid from Ryanair saying that the €1.40 per share offer “fundamentally undervalues” the airline and “misrepresents the significant progress of Aer Lingus” since it was floated in 2006.
The Minister for Transport Noel Dempsey welcomed the move as the route was strategically important for the mid-West region. He said the restoration of "global connectivity" for was all the more important now given the difficult economic circumstances.
Aer Lingus said today it would continue to be profitable in 2009 and that it has net cash reserves of €803 million. It says the sharp decline in oil prices - from a high of $147 in July - to around $43 today will contribute to its profitability.
The Minister for Defence Willie O'Dea welcomed the announcement. Speaking from Kosovo today, where he and the Taoiseach are visiting Irish troops, he said that Aer Lingus has taken the right decision.
"The decison by Aer Lingus to withdraw the Shannon Heathrow slots was wrong and caused unnecessary anguish and anger in the region. The people of the mid west were united in saying that decision was wrong and potentially damaging to Shannon Airport and the local economy. I am pleased that Aer Lingus has recognised its folly and will be re-establishing the Shannon/Heathrow route. It is a vitally important route, even more so now in the current economic climate. It should never have been withdrawn."
Fine Gael’s foreign affairs spokesman and local TD Pat Breen welcomed this morning's announcement, describing it as "a huge boost" to the region.
He said it should never have been withdrawn in the first place. "This was a profitable route carrying over 360,000 passengers annually, 60,000 of which were American tourists back tracking into this region. Nothing has changed to convince me that this decision was made for anything other than politically expedient reasons and it could have been avoided if the political will was there to do so.”
Labour's TD for Limerick East Jan O'Sullivan echoed Mr Breen's welcome and said the decision to scrap the service had caused "significant economic damage to the region, from which it will take some time to recover. The people of this area were badly let down both by Aer Lingus management and also by the government which refused to do anything to have the decision changed.
She said the fact that the service was now being restored "would suggest that the original decision was not justified and not fully thought through."
The chairman of the Irish Hotels' Federation, Michael Vaughan, described the route as "a critical component in providing tourism and business links into the region" and said today's announcement recognised "the clear commercial viability of the route and highlights the need for strong investment in the region’s economic infrastructure.”
Clare Fianna Fáil TD Timmy Dooley has called on the former national carrier to invest heavily in marketing the revived Shannon Heathrow route.
Mr Dooley welcomed today's announcement but said it was now up to the airline to help ensure there was a strong demand for the service "as they damaged what was a very successful and profitable route when they discontinued the Heathrow link last year".
"In all my discussions with businesspeople . . . global connectivity through the Shannon Heathrow link was repeatedly stressed as being of utmost importance. . . . Now the airline must also step up to the plate and make sure they do everything they can to ensure Shannon's continuing success," Mr Dooley said.
Additional reporting Bloomberg