British Airways owner IAG scrapes a profit despite fare war

The earnings figure was still 60% down from a year earlier

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British Airways passenger aircraft are pictured at London Heathrow Airport, west of London.
British Airways passenger aircraft are pictured at London Heathrow Airport, west of London.
AFP

London. IAG SA managed to report a profit in the first quarter even after the impact of a European fare war that pushed its biggest rivals to a loss.

Shares of the British Airways owner rose as much 5.1 per cent after it posted an operating profit of 135 million euros ($151 million) for the first three months on Friday, while reiterating its full-year guidance and predicting that pricing will pick up in coming months.

The earnings figure was still 60 per cent down from a year earlier as higher fuel costs and the timing of Easter further eroded margins. Deutsche Lufthansa AG reported a 336 million-euro loss and Air France-KLM Group suffered a 303 million-euro shortfall.

“Most European airlines have reporting losses in the quarter. That’s what sets us apart,” IAG Chief Executive Officer Willie Walsh said on a conference call. He suggested that the “capacity issue” is set to ease and stood by a forecast for annual earnings in line with last year’s 3.48 billion euros.

Shares of London-based IAG, which hit a two-year low on Thursday, traded 3.5 percent higher at 506.60 pence as of 8.24 a.m. That pared the stock’s slide this year to 17 per cent, compared with declines of 4.4 percent and 6.9 percent at Lufthansa and Air France-KLM respectively.

IAG’s passenger unit revenue, a measure of fares, fell 0.8 per cent at constant currencies in the quarter and the fuel bill came in 16 per cent higher.

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