British Airways, Air France earnings soar
Europe’s two largest airlines benefit from higher prices in longhaul markets as rivals focus on shorter routes
British Airways parent IAG SA and its biggest competitor Air France-KLM Group both boosted secondquarter earnings around 50 per cent amid strong demand for business travel on routes to Asia and Latin America.
Europe’s two largest airlines are benefiting from higher prices in long-haul markets as rivals focused on shorter routes see fares crimped by overcapacity. IAG said earnings should show a doubledigit jump for the full year, while Air France reiterated its targets for a positive cash flow and reduced net debt. “We’re optimistic,” IAG Chief Executive Officer Willie Walsh said on a conference call yesterday, adding that the London-based company had enjoyed a “very strong” performance. “It’s across the network, it’s not just about premium bookings and it’s not just about long-haul.”
IAG’s quarterly operating profit before one-time items rose 45 per cent to €805 million (Dh3.8 billion, $941 million), beating the €747 million figure predicted by analysts. The London-based company’s Spanish Iberia arm posted a profit from a year earlier loss while discount unit Vueling cut its deficit and British Airways tapped a strong trend in corporate bookings.
A power outage at BA that grounded flights for more than 75,000 passengers cost €65 million more in compensation than at the same time last year, though earnings were bolstered by a late Easter. Passenger unit-revenue — a measure of fares — should gain in the second half at constant currencies, spurring 12-month profit growth of at least 10 per cent, Walsh said.
Air France-KLM, the European No 1, lifted three-month operating profit 56 per cent to €496 million as unit revenues rose 4.4 per cent at constant currencies. With four-month long-haul bookings higher than a year ago, fares should be “slightly up” in the second half, it said. The positive development in unit revenue shows the “wide balance of demand and supply” in Air FranceKLM’s markets, Chief Financial Officer Frederic Gagey said in a Bloomberg TV interview.