IAG Profit Rises as Brexit Hurts Airlines
July 29 2016 - 3:30AM
Dow Jones News
LONDON—British Airways parent International Consolidated
Airlines Group SA reported a 4.7% increase in operating profit in
the second quarter though per-passenger revenue slumped sharply
after the U.K.'s Brexit vote and terrorism weighed on demand.
Operating profit before exceptional items was €555 million ($615
million) compared with €530 million a year earlier. Excluding last
year's acquisition of Aer Lingus the operating profit would have
been €487 million in the April through June period, the
London-based company said.
Sales in the quarter rose 0.9% to €5.7 billion, though passenger
unit revenue fell 10.2%, the group that also owns Spanish carriers
Iberia and Vueling said.
European airlines have been battered by a flurry of bad news.
Terrorist attacks have spooked passengers, the Brexit vote has
dented consumer confidence, and air-traffic control strikes have
caused thousands of flights to be canceled.
Deutsche Lufthansa AG last week said full-year profit would be
below 2015's level. Air France-KLM SA this week said the benefits
from lower fuel costs would be more than wiped out by demand
weakness. EasyJet said it had to stimulate demand even in the peak
summer season to fill planes.
Shares in IAG fell 30% on the Brexit vote. Immediately after the
outcome was confirmed, the airline group said profit growth this
year would be lower than anticipated.
British Airway's lucrative premium bookings were weak ahead of
the U.K.'s June 23 referendum. The economic uncertainty from the
vote's outcome was expected to prolong the softness in demand.
IAG chief executive said "numerous external factors affected our
airlines including the impact of terrorism, uncertainty around the
U.K.'s EU referendum and Spain's political situation and increased
weakness in Latin American economies. This led to a softer than
expected trading environment, especially in June. "
Willie Walsh
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
July 29, 2016 03:15 ET (07:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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