IAG profits take off as passenger revenues recover
British Airways owner International Consolidated Airlines Group reported record first quarter profits well ahead of expectations as a drop in costs offset lower but improving passenger revenues, and said it expected a profit gain over the full year.
In what is traditionally its weakest quarter, IAG's operating profits in the first three months of the year of €170m before exceptional items were up 10% on the same period last year.
This was despite a foreign exchange impact on operating profit of €32m, due to the translation of sterling profit into euros.
At current fuel prices and exchange rates, boss Willie Walsh said he expected operating profit for 2017 to show an improvement year-on-year, with second quarter revenue per available seat kilometre to show an increase versus last year, at constant currency.
For the first quarter, passenger unit revenue declined 7.2% cent, or 3.1% at constant currency - this was a big improvement on the 12.7% in the fourth quarter.
Group passenger revenue fell 4.2% to €4.28bn and total revenue by 2.8% to €4.9bn.
Adjusted non-fuel unit costs shrank 3.9%, or were up 1.4% at constant currency, while fuel unit costs were down 13.6% or 16.1% at constant currency.
Cash stood at €7.5bn at 31 March, up by over €1bn since the year end.
Walsh said the record performance in what was traditionally the weakest quarter came amid an improving trend in passenger unit revenue continuing.
"In March we launched LEVEL, our new longhaul low cost airline brand, which starts flights from Barcelona to Los Angeles, San Francisco, Punta Cana and Buenos Aires in June. It's already been extremely successful with sales running well ahead of expectations," he added.
Group traffic in April, reported alongside results, increased by 10.0% against the same month last year, when revenue passenger kilometres, while capacity also improved, with available seat kilometres up 4.0%.
Premium traffic for the month of April increased by 7.0% compared to the previous year.