IAG quarterly profits grow on higher tickets prices and lower costs

posted on 3rd August 2018 by Justin Burns
IAG quarterly profits grow on higher tickets prices and lower costs

Strong performance in unit revenue and costs drove the International Airlines Group (IAG) to a six per cent increase in operating profit in the second quarter (Q2) of €835 million – which was a €45 million increase on Q2 last year.

IAG reported the figures in its half-yearly financial results for January to June and they came despite pressure from ATC strikes across Europe, fuel unit costs going up 6.7 per cent, and 15 per cent at constant currency.

Unit revenue performance, which measures pricing, rose 2.9 per cent in the period, helped by strong demand in North America, Europe and Latin America. Q2 passenger revenue was €5.5 billion, up 3.8 per cent and total revenue was up four per cent to €6.1 billion.

In Q2, IAG Group airlines British Airways, Iberia, Vueling, Aer Lingus and Level carried 7.7 per cent more passengers at 29.7 million with an average load factor of 84 per cent, up 1.4 percentage points on Q2 last year.

IAG’s total revenue in the first half of the year was €11.2 billion, up 3.1 per cent on the same six month last year and passenger revenue was €9. 9 billion, up 3.6 per cent on 2017. Operating profit before exceptional items for the half year were €1,115 million, up 17.4 per cent.

In the first half of 2018, IAG Group airlines carried 52.7 million passengers, an eight per cent rise on last year’s 48.8 million with an average load factor of 82.4 per cent, up 1.5 percentage points.

The airlines in the group operated 565 aircraft in the first half of the year, 19 more than the 546 in the same period in 2017.

IAG chief executive officer, Willie Walsh (below) said: “There was a strong performance in both unit revenue and costs. At constant currency, our passenger unit revenue increased by 2.3 per cent while non-fuel unit costs went down 2.0 per cent.

“Unfortunately, French Air Traffic Control strikes continued to challenge our airlines’ operations causing disruption to our customers. Vueling was particularly affected and incurred an additional €20 million of disruption costs in the quarter. These strikes are also having a significant negative impact on the Spanish economy and tourism.

“In July, Level started flights from Paris Orly to Montreal and Guadeloupe. We are committed to accelerating Level’s growth and its fleet will increase to a total of seven A330-200 aircraft in Paris and Barcelona next year. Also, we launched Level short-haul operations from Vienna where it will have four A321 aircraft that will operate to 14 European destinations.”

IAG continues to want to add new airlines to its portfolio and Walsh, told BBC radio this morning that IAG remained interested in low-cost carrier Norwegian which it had approached earlier this year and in April it bought a 4.6 per cent stake in.