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BA parent IAG forecasts rise in 2018 profits

British Airways owner International Airlines Group today projected a rise in 2018 operating profits.

The forecast improvement came as IAG reported a €45 million increase in second-quarter operating profits to €835 million.

The result was achieved despite disruption caused by striking French air traffic controllers which affected all group carriers but cost Spanish low cost arm Vueling €20 million.

Net foreign exchange operating profit impact for the three months was an adverse €66 million

Chief executive Willie Walsh said: “We’re reporting another good set of results in quarter two with an operating profit of €835 million before exceptional items, up from €790 million last year.

“There was a strong performance in both unit revenue and costs. At constant currency, our passenger unit revenue increased by 2.3% while non-fuel unit costs went down 2%.

“Unfortunately, French air traffic control strikes continued to challenge our airlines’ operations causing disruption to our customers. Vueling was particularly affected and incurred an additional €20 million of disruption costs in the quarter.

“These strikes are also having a significant negative impact on the Spanish economy and tourism. In July, Level started flights from Paris Orly to Montreal and Guadeloupe.

“We are committed to accelerating Level’s growth and its fleet will increase to a total of seven A330-200 aircraft in Paris and Barcelona next year. Also, we launched Level short-haul operations from Vienna where it will have four A321 aircraft that will operate to 14 European destinations.”

IAG’s overall operating profit for the six months to June 30 rose by 17.4% to €1.15 billion as total revenue grew by 3.1% to €11.2 billion.

Looking forward, IAG said: “At current fuel prices and exchange rates, IAG still expects its operating profit for 2018 to show an increase year-on-year.

“Both passenger unit revenue and non-fuel unit costs are expected to improve at constant currency.”

Walsh said the group is not in any talks to buy low-cost airline Norwegian but continues to look at the carrier. IAG acquired a 4.6 per cent stake in the airline earlier this year.

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