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BA owner IAG sees 18% 2017 profit jump on fare gain

BA owner IAG sees 18% 2017 profit jump on fare gain

2017 10 28

2017 10 28

* Third-quarter operating profit increased to €1.46b from €1.21b a year earlier

 

LONDON: British Airways owner IAG SA is targeting an 18 per cent jump in operating profit this year after third-quarter earnings were boosted by improved pricing on US and Asian routes and short-haul operations benefited from European competitors’ woes.

Full-year earnings excluding one-time items and shifts in fuel costs and exchange rates will total 3 billion euros (Dh12.7 billion), London-based IAG said Friday in a statement, compared with the 2.54 billion euros posted in 2016. Third-quarter operating profit increased to 1.46 billion euros from 1.21 billion euros a year earlier, in line with the 1.45 billion-euro average of analyst estimates compiled by Bloomberg.

Fares at European carriers are improving after price cutting encouraged by declining fuel costs drove weaker companies including Alitalia SpA, Air Berlin Plc and the UK’s Monarch Airlines into insolvency this year. IAG, which also owns Spanish carriers Iberia and Vueling as well as Ireland’s Aer Lingus, has benefited additionally as Europe’s biggest discounter, Ryanair Holdings Plc, cancelled thousands of flights amid scheduling snags and labour spats involving pilots.

IAG previously forecast that 2017 operating profit would jump by a double-digit percentage. The company said Friday that unit revenue excluding currency effects, a measure of fares, rose 2.2 per cent, particularly because of improvements in Spain and Latin America. Earnings are reviving from the effects of the Brexit referendum in mid-2016 that triggered a collapse in the pound, which reduced the value of British Airways’ revenue and discouraged lucrative business traffic. IAG has set up a new low-cost trans-Atlantic operation, dubbed Level, that’s expanding from a base in Barcelona to Paris or Rome next year.

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