IAG Profit Hit By Currency Weakness
International Airlines Group reported a drop in operating profit in the third quarter, blaming a “tough operating environment”.
IAG, parent of British Airways and Iberia, said operating profit before exceptional items was down 3.6 percent at EUR€1.205 billion. Net profit for the three months was EUR€930 million, up 9.9 percent from last year.
The “very significant negative currency impact” of the weaker pound after Britain’s decision to leave the European Union was EUR€162 million.
Passenger unit revenue was down 13.7 percent, but only 5.9 percent at constant currency rates.
Capacity in the quarter, measured in available seat kilometres increased by 9.6 percent, but passenger unit revenue (per available seat km) was down 13.7 percent. Load factor edged down 0.1 of a percentage point to 85.6 percent.
IAG chief executive Willie Walsh said the results “were affected by a tough operating environment with a very significant negative currency impact… and continued disruption due to air traffic control strikes.”
IAG said it expects operating profit for 2016 to be around EUR€2.5 billion, and has seen no significant change in its short-term trading conditions.