IAG profit dips in tough market
British Airways parent IAG has reported a 3.6% drop in operating profit to €1.205 billion euros for the third quarter, in a ‘tough operating environment’.
CEO Willie Walsh said: "While strong, these results were affected by a tough operating environment with a very significant negative currency impact of €162 million, primarily due to sterling weakness, and continued disruption due to air traffic control strikes.
"Despite this, our unit revenue performance was better than in quarter 2 and our quarterly profit after tax was €970 million before exceptional items, an improvement of 9.9% on last year.
"In the nine months, we made an operating profit before exceptional items of €1,915 million, up 6.1% versus last year."
Giving its trading outlook, IAG said at current fuel prices and exchange rates, it expects its full-year operating profit for 2016 to be around €2.5 billion.
This would be a rise of less than 7%, less than the lower double digit growth that Walsh forecasted back in July just after the Brexit vote.
IAG, which also owns Iberia, Vueling, and Aer Lingus, said it had also been hit by by terror attacks and air traffic control strikes.
But it said unfavourable exchange rates had been partially offset by lower fuel prices.
"IAG remains sensitive to economic conditions in the markets in which it operates. Deterioration in either a domestic market or the global economy may have a material impact on our financial position, while foreign exchange and interest rate movements create volatility," said the trading update.
"The UK referendum vote to exit the EU resulted in economic uncertainty throughout the second and third quarters of 2016. The Group experienced weak trading conditions in June leading up to and following the vote, with an emphasis in premium cabins. The vote to exit also created volatility in the foreign exchange markets."
IAG made an interim dividend payment of 11 euro cents per share, a 10% increase on last year, and said like in 2015, it expects the interim dividend to be around half the full-year dividend.
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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