BA owner climbs into profit despite currency headwinds
BRITISH Airways owner International Airlines Group has posted a profit in the post-christmas quarter for the first time since it acquired Spanish carrier Iberia in 2011.
The group managed a slender operating surplus of €25 million (£18m) after a big improvement in trading at both BA and Iberia and the benefit of Easter trading, which was in April the previous year.
IAG now expects annual operating profits in excess of €2.2 billion, which would compare with €1.39bn in 2014.
The improved results for the group’s traditionally weakest trading quarter come as IAG drums up support for its £1bn bid to buy Aer Lingus.
The board of the Dublinbased carrier is prepared to accept an offer but progress hinges on major shareholders Ryanair and the Irish government.
With currency movements and the earlier Easter helping its performance, IAG said passenger revenues increased 12.3 per cent to €4.1bn.
British Airways made a profit of €117m, compared with a loss of €5m a year earlier. Iberia’s deficit was cut in half to €55m and low-cost arm Vueling narrowed its loss to €29m.
Fuel costs decreased 11 per cent due to lower oil prices and the introduction of more efficient planes.
Iberia’s restructuring has seen 2,500 staff leave the airline under a voluntary redundancy programme, while salaries were reduced by between 11 per cent and 18 per cent. The group employs some 60,000 people.
Willie Walsh, IAG’S chief executive, said: “We achieved a strong unit cost performance with nonfuel unit costs down 2.7 per cent and fuel unit costs down 11 per cent, at constant currency. As before, fuel costs benefitted by operating more efficient aircraft and lower fuel prices though hedging and significant currency headwinds reduced the positive impact of lower oil prices.
“Cost discipline across our airlines continued through increased productivity and supplier cost savings, enabling us to improve our operating margin while growing capacity by 5 per cent.”
He warned that fuel costs in the second quarter would show an increase because of the strong dollar.
Analysts noted some profittaking in IAG’S shares, after a 40 per cent rise in the stock over the past six months.
European airlines tend to run at a loss in the winter quarter when there are fewer customers flying.
Air France-klm yesterday said its first-quarter operating loss narrowed to €417m from €445m a year earlier. l Airbus has seen its profits jump in the first quarter thanks to the sale of a stake in rival Dassault Aviation, although its plane orders and deliveries fell slightly.