British Airways parent IAG said first-quarter earnings increased more than six-fold as it tapped lower fuel prices. The company will rein in capacity increases for the current three months as the March 22 Brussels attacks take the edge off demand.
Operating profit increased to €155 million from €25 million a year earlier, excluding one-time items, the London-based company said in a statement Friday. Analysts expected earnings of €139 million, based on data compiled by Bloomberg.
"Revenue trends in quarter two have been affected by the aftermath of the Brussels terrorist attacks, as well as some softness in underlying premium demand,” Chief Executive Officer Willie Walsh (pictured) said in the release. “As a result, IAG has moderated its short-term capacity growth plans.”
IAG is establishing itself as Europe’s leading network airline as Air France-KLM Group and Deutsche Lufthansa AG grapple with unions over cost cuts. The company’s operating profit jumped almost 70 percent €to 2.34 billion in 2015 and Walsh today reiterated forecasts for a similar gain this year.
First-quarter sales increased 7.9 per cent to €5.1 billion, spurred by the acquisition of Dublin-based Aer Lingus last year, which IAG plans to use to add trans-Atlantic flights as BA struggles for growth at its crowded London Heathrow hub. Excluding the Irish carrier, which a negative earnings contribution, revenue was up only 0.7 per cent.
Walsh, who formed IAG through a merger of British Airways and Spain’s Iberia before purchasing British Midland, Barcelona-based discount carrier Vueling and Aer Lingus, said last month he expects further consolidation in Europe despite low oil prices propping up weaker carriers.
IAG has agreed to form a joint venture with Latam Airlines Group , the biggest South American operator, and has begun code-sharing talks with China Southern Airlines Co., Asia’s top carrier by passenger numbers, and China Eastern Airlines Corp.
Qatar Airways Ltd. CEO Akbar Al Baker said Wednesday that his airline, the biggest stakeholder in IAG, as International Consolidated Airlines Group is known, had lifted its holding close to 12 per cent.
News by Bloomberg, edited by Hospitality Ireland