Iberia turnaround boosts IAG profits

Iberia turnaround boosts IAG profits

A turnaround in fortunes at Iberia and a strong performance by British Airways on transatlantic routes helped lift third quarter profits at International Airlines Group.

Operating profit for the three months to September 30 rose to €690 million from €270 million in the same three summer months last year, before exceptional items.

Iberia made an operating profit of €74 million in the quarter, up from just €1 million a year earlier.

IAG chief executive Willie Walsh said: “This is an improved performance, bearing in mind it's the strongest quarter of the year. However, the airline must continue to implement its restructuring plan and reach agreement on productivity changes to bring about long-term sustainable profits and growth."

BA’s operating profit was up from €268 million to €477 million in the quarter.

“Its performance continues to benefit from a strong London and transatlantic market as well as a €100 million revenue bounce-back from the Olympic effect last year. In addition, the airline has maintained its focus on cost control," said Walsh.

Spanish low-cost subsidiary Vueling delivered an operating profit of €139 million for the quarter.

Walsh said: “Vueling adds value to the group with its lower costs and successful product strategy. This summer, there was a tourism boost in Barcelona and Vueling was able to capitalise on this seasonal spike due to its leadership position at the airport."

IAG reported an operating profit of €657 million in the first nine months of its financial year with passenger revenue up 5.6% at constant currency and non-fuel unit costs down 1.1%.

The group expects a full-year operating profit of around €740 million as capacity rises by 5.2% with the inclusion of Vueling.

“In addition, we should see a reduction in non-fuel unit costs in 2013,” IAG said.

“Moving into 2014, we expect the driver of revenue growth to shift from yield to volume due to new British Airways route launches and the strong growth of Vueling.”

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