IAG flies higher in first half

British Airways owner International Consolidated Airlines Group presented its results for the six months to 30 June on Friday, with second quarter operating profit reaching €555m before exceptional items, up from €530m last year.

Excluding Aer Lingus, which IAG holds a 98.05% stake in, operating profit in the second quarter was €487m

The FTSE 100 firm said the net foreign exchange operating profit impact for the quarter was an adverse €148m.

Passenger unit revenue for the quarter dropped 10.2%, or 6.2 % at constant currency and 6.5% excluding Aer Lingus.

Non-fuel unit costs before exceptional items for the quarter reduced 1.1%, although at constant currency it rose 0.8%, or 1.3% excluding Aer Lingus.

Fuel unit costs before exceptional items for the quarter were down 31.2%, or 29.3% at constant currency.

Operating profit before exceptional items for the half year was €710m, up 27.9% from €555 million, and excluding Aer Lingus it was €668m.

IAG had cash of €6.561bn at on 30 June, an increase of €705m on 2015 year end.

The company’s adjusted gearing went down one point to 53%, and adjusted net debt to EBITDAR improved 0.2 to 1.7x

“We're reporting another strong performance in quarter 2 with an operating profit of €555m before exceptional items which is up from €530m compared to last year,” said IAG chief executive Willie Walsh.

“Our performance this quarter saw a negative currency impact of €148m, primarily due to the weak pound.

“Numerous external factors affected our airlines including the impact of terrorism, uncertainty around the UK's EU referendum and Spain's political situation and increased weakness in Latin American economies,” Walsh added.

He said this led to a softer than expected trading environment, especially in June.

“In addition, the airlines' operations have been considerably disrupted by 22 air traffic control strikes in Europe so far this year.

“This has impacted our passenger revenues,” Walsh added.

He pointed out that non-fuel unit costs fell 1.1% but are up 0.8% at constant currency, following the significant cost reductions achieved last year.

“In spite of the vast majority of our planned capital expenditure this year occurring in the first half, cash was €705m higher than at the end of 2015,” he added.