Irish airline Aer Lingus yesterday posted a first-half operating loss, and predicted a loss for the full year and said high costs threatened the long-term viability of its business.

Aer Lingus made an operating loss of €22.3 million in the first six months of this year, compared with a €2.6 million profit a year ago and a loss of €34.7 million expected by an average of three analysts surveyed by Reuters.

"It is now clear that we will require further fundamental changes in our operating cost base in order to minimise losses next year and to help ensure the long-term viability of the business," chief executive officer Dermot Mannion said.

He added, however, that Aer Lingus was "making progress on the delivery of its business objectives", demonstrating strong growth in ancillary revenue and had made progress in cutting maintenance and staff costs.

In its seasonally weaker first half, Aer Lingus faced a combination of unprecedented fuel costs, slowing economic growth in its main markets and a weakness in dollar and sterling, Mr Mannion said.

Its fuel bill rose by €56.5 million in the period.

"Even with the reduction in fuel prices over the last few weeks, competitive pressure on fares and volumes will continue," stated Mr Mannion.

Revenue increased by 10.2 per cent in the first half of the year to €632.9 million and it flew 10.5 per cent more passengers than in the same period last year, the carrier reported.