IAG posts 25% profit rise for quarter ahead of Aer Lingus move
International Airlines Group, which is set to take over Aer Lingus in a 1.4 billion euro deal, has posted a 25% rise in profits for the second quarter despite a drop in revenues per passenger.
IAG, which also owns British Airways and Spain's Iberia, reported pre-tax profits of 449 million euro for the three months to the end of June helped by a 12% fall in fuel costs at constant currency.
But revenue per passenger was 6.6% lower, with analysts at Cantor Fitzgerald saying it suggested "stiff price competition" and that the market was forcing the business to pass on the benefits of plunging oil prices.
IAG recently gained agreement over the Aer Lingus deal from the government and Ryanair, which both have major stakes.
IAG's earnings growth for the second quarter was slower than it had been at the start of the year, which it said it had previously warned.
But chief executive Willie Walsh said: "We are on track to reach our full-year targets." He added that employee and supplier costs continued to be cut.
IAG expects to post an operating profit "in excess of 2.2 billion euro" for the year.
Profits at British Airways for the quarter rose 36% to 453 million euro and for Iberia they more than tripled to 51 million euros though for low-cost Spanish carrier Vueling they fell by a fifth to 24 million euro.
Shares fell 1%. Experts at Cantor said: "Notably, passenger unit revenue was down 6.6% at constant FX suggesting stiff price competition and that the market is forcing the pass-through of the benefits of lower fuel costs.
"We remain somewhat concerned about the group's reliance on profits at BA and hence, North American traffic."