BOOMING demand for British Airways (BA) transatlantic flights and continued progress with the overhaul of Spanish carrier Iberia helped their parent company report a leap in quarterly profits.
International Airlines Group (IAG) hailed a strong July-to-September quarter as pre-tax profits increased to €606 million (£505m) from €244m a year earlier. Shares in the group surged by almost 8 per cent to close up 27.9p at 376.9p.
BA saw a €100m sales “bounceback” from last year’s London Olympic Games, which slashed demand for business flights from the UK capital.
Passenger numbers across the group leapt 35.2 per cent to 21.3 million during the quarter from 15.8 million a year earlier, boosted by its acquisition of Spanish budget airline Vueling.
Falling costs and 6.9 per cent growth in revenues to €5.4 billion helped drive the profits boom.
IAG, formed from a merger of BA and Iberia in 2011, said its revenue growth next year will be driven by rising passenger volumes rather than yield, as it launches additional BA routes and sees strong growth from Vueling.
Quarterly operating profits at BA surged to €477m from €268m a year earlier, driven by the strong London market, transatlantic flights and the recovery from the Olympics.
IAG is forcing through painful changes at Iberia, including cutting capacity by 15 per cent, slashing pay and axing 3,100 Iberia jobs.
Profits at Iberia hit €74m from just €1m a year earlier.
Chief executive Willie Walsh said the group results were “strong”, with an “improved” performance by Iberia.
But he added: “The airline must continue to implement its restructuring plan and reach agreement on productivity changes to bring about long-term sustainable profits and growth.”
Profits at its Vueling arm came in at €139m in its first full quarter with the group, helped by a tourism boost at Barcelona where it has a strong presence.