BA parent raises profit forecast
British Airways parent IAG has raised its profit forecast following a strong summer.
In an interim statement for the nine months to September 30, chief executive Willie Walsh said the Iberia restructuring was also continuing to bring benefits.
During the period, capacity increased by 10.5% and traffic rose by 9.5%, prompting load factors to drop by 0.7 points to 80.7%.
"This quarter we are reporting an operating profit before exceptional items of €900 million," said Walsh.
"At constant currency, revenue was up 6.9% with non-fuel unit costs down 4.5% and fuel unit costs down 7.5%.
"We continued to grow capacity efficiently and both our non-fuel and fuel unit cost performances were strong with the latter boosted by the introduction of new, more efficient aircraft into our fleet."
BA made an operating profit of €607 million in the quarter, compared to €477 million last year.
Iberia’s operating profit increased to €162 million from €74 million last year.
Vueling’s operating profit grew slightly from €139 million last year to €140 million.
"In the nine months, we made an operating profit of €1,130 million before exceptional items, up by €473 million from last year," said Walsh.
"For the full year 2014, we expect to produce an improvement in operating profit before exceptional items in the range of €550 million to €600 million, from a base of €770 million in 2013."
Meanwhile, rival Lufthansa has reduced its operating profit forecast for 2015 due to worries about a global economic slowdown and ‘fierce competition’.
The guidance was lowered from €2bn to an unspecified amount.
It said 2015 operating profits would still be a ‘significant improvement’ on its projected €1bn result for 2014.
The airline has been hit by a number of pilot strikes this year and warned that if there were more, it might have to reduce its 2014 profit forecast as well.
Operating profits were €849 million for the first nine months of the year, while net profits rose to €482 million from €247 million.
"Our results for the first nine months of 2014 represent a sound achievement in a difficult and highly competitive market environment, and one that enables us to confirm our current projections for the year as a whole," said Lufthansa chief finance officer Simone Menne.
"When we look ahead, though, we can see that the economic slowdown and the continuing declines in our passenger yields in the face of such fierce competition will affect our operating scope in the year ahead."
Lufthansa shares dropped by more than 6% on Thursday morning.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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