- Profit on course for €2.5bn
- Weak sterling affects outlook
- Q3 stronger than Q2
IAG reported passenger unit revenue for the quarter was down 13.7pc but profit increased in their third quarter results. The parent of Aer Lingus, BA, Iberia and Vueling reported a stronger sales in Q3 than Q2.
Operating profit rose by 6.1pc in the first nine months of the year, but declined in the third quarter as a result of industrial action and plummeting sterling.
At current fuel prices and exchange rates, operating profit this year would come in at about €2.5bn, 8pc higher than the €2.3bn last year, but a downgrade from the “low double-digit” percentage growth estimated in late July and analysts’ forecasts of €2.6bn.
The results statement said Aer Lingus revenue performance has been strong since acquisition, in particular across the North Atlantic.
At current fuel prices and exchange rates, IAG expects its operating profit for 2016 to be around €2.5bn, and has seen no significant change in its short-term trading conditions.
CEO Willie Walsh said: “We are reporting a strong quarter 3 operating profit before exceptional items of €1,205m. While strong, these results were affected by a tough operating environment with a very significant negative currency impact of €162m, primarily due to sterling weakness, and continued disruption due to air traffic control strikes. Despite this, our unit revenue performance was better than in quarter 2 and our quarterly profit after tax was €970m before exceptional items, an improvement of 9.9pc on last year. In the nine months, we made an operating profit before exceptional items of €1,915m, up 6.1pc versus last year. We are pleased to announce an interim dividend payment of 11 euro cents per share, a 10pc increase on last year. As in 2015, we expect the interim dividend to be around half the full year dividend.”
A written statement said: The British referendum vote to exit the EU resulted in economic uncertainty throughout the second and third quarters of 2016. The Group experienced weak trading conditions in June leading up to and following the vote, with an emphasis in premium cabins. The vote to exit also created volatility in the foreign exchange markets. Weakening of the pound sterling impacted the translation of the Group’s sterling subsidiaries and reduced the Group’s profits, net assets and other reserves.
