BA owner IAG flies profitably through warnings

Willie Walsh: IAG's airlines had best Q2 profits since 2007. Picture: Getty
Willie Walsh: IAG's airlines had best Q2 profits since 2007. Picture: Getty
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BRITISH Airways owner International Airlines Group (IAG) revealed yesterday that its carriers had enjoyed their best quarter since the financial crash.

Operating profit at BA soared a third to €332 million (£263m) in the second quarter while IAG’s Spanish flag-carrier Iberia made Q2 earnings of €16m – a rebound from a €35m loss in the same period of 2013.

Willie Walsh, IAG’s chief executive, said the growth came despite a dilution in revenues from a World Cup effect that saw many South American football fans decide not to travel during the tournament.

IAG, which also operates Spanish low-cost carrier Vueling, lifted group second-quarter profit 55 per cent to €380m. The first quarter of this year saw a loss of €150m.

Half-year operating profits came in at €230m – reversing a €33m loss in the same period last year.

However, IAG said a key measure of how full its aeroplanes are had weakened as it announced that it would shave 3 per cent off planned capacity this winter, mainly due to slower than expected growth on transatlantic routes.

Walsh said all of IAG’s airlines had their best Q2 operating profit since 2007, which he said showed “solid progress”.

However, he added: “Our disciplined approach to capacity continues and we will make reductions where it makes sense as we go through the year.” Despite this, investment also continues, with Iberia adding 16 new Airbus aircraft to its long-haul fleet.

IAG said it expected to improve full-year operating profit by at least €500m above the €770m profit last year. It contrasts with recent profit warnings from rival airlines Lufthansa and Air France-KLM.

The company said passenger revenue for the half-year rose 9 per cent to £8.18 billion while capacity grew 11.3 per cent.

But its aeroplanes were less full, with “seat factor” down 0.6 per cent to 78.9 per cent. Last week the company signed an agreement that could see a further 1,427 job cuts. Walsh said this could help boost profits over the next few years.