Strong Easter trading boosts British Airways owner IAG

IAG saidpassenger unit revenues rose 1.1per cent, helpedby the timing of Easter
IAG saidpassenger unit revenues rose 1.1per cent, helpedby the timing of Easter
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Strong Easter trading has buoyed British Airways owner IAG as it shrugged off the pressure of surging fuel costs.

IAG exceeded forecasts as it reported a 19 per cent jump in pre-tax profits to £843m in the three months to June.

During the quarter, the firm said passenger unit revenues rose 1.1 per cent, helped by the timing of Easter.

The company also saw passenger revenues surge for the half year, with revenues rising 7.2 per cent to £9.7bn in the first six months of 2019.

IAG's results were announced as a potential pilots' strike threatens to disrupt its earnings over the rest of the summer.

Earlier this week, British Airways said fresh talks would take place in a bid to stop the industrial action over a pay dispute after the airline lost a legal challenge.

Announcing quarterly results, the company highlighted a solid sales performance, which came despite rising cost pressures across the air travel sector.

IAG chief executive Willie Walsh said: "Despite fuel cost headwinds, we delivered a good performance.

"At constant currency, fuel unit costs were up 6.3 per cent while passenger unit revenue increased 1.1 per cent, benefiting from the timing of Easter.

"This highlights, once again, that our unique structure and diverse brand portfolio underpins our financial resilience and ability to deliver robust results."

Mr Walsh added that the firm was yet to allocate funds to pay the £183m fine it was issued by UK information commissioner over a data breach last year.

IAG held firm on profit forecasts for 2019 and said it expects passenger unit revenue to improve over the rest of the year.

Analysts at Liberum described the quarterly figures as encouraging and said its growth in passenger revenues "look better than the peer group".

Mr Walsh said he “would like to hope” that British Airways can reach a deal with its pilots, who last month overwhelmingly voted for strike action in a dispute over pay. They have not yet served notice.

Goodbody analyst Mark Simpson said: “Given all the uncertainties over global growth and Brexit, this looks to be a very strong statement by the company and implies that forward bookings are trending well.”

Days after rival Lufthansa cited intense short haul competition in Europe for pushing profits down 25 per cent, Mr Walsh said he was not too concerned about oversupply.

“We think the supply environment is going to be OK, certainly in the fourth quarter and going into the first quarter of next year,” he said,adding that he plans to taper growth in the last three months of the year.

“The economic environment is clearly softening, but it is still reasonably good,” he added.

While he said he was worried about the economic impact of Britain’s plan to leave the European Union on October 31, he hasn't seen any impact on bookings yet.