IAG reports strong 3Q on high operating profit

International Airlines Group (IAG) has reported what it described as a strong third quarter, despite disruptions caused by weather and terrorism during the period.

Net profit before exceptional items was €1.2 billion ($1.33 billion), up 18.1% on €970 million for the year-ago period. Net profit after exceptionals was €1 billion, compared to €930 million last time.

The group—which comprises Irish flag carrier Aer Lingus, British Airways (BA), Spain’s Iberia, new long-haul LCC Level and Spanish LCC Vueling—achieved the result on revenues of €6.6 billion, up 2% on the same period last year.

“We’re reporting another strong quarter with an operating profit up 20.7% to €1.5 million before exceptional items,” IAG CEO Willie Walsh said. “All our companies performed well. Passenger unit revenue was up 2.2% at constant currency, boosted by improvements in the Spanish and Latin American markets. Our commercial performance was good despite underlying disruption from severe weather and terrorism. IAG Cargo improved in the quarter due to stronger Asia-Pacific demand compared to last year.”

Capacity as measured in ASKs grew 0.9% to 84.2 billion, while RPKs rose slightly faster, up 1.6% at 72.6 billion. Passenger numbers grew 1.3%, to 31.3 million, giving a load factor increase of 0.6% to 86.2%.

The increase in capacity was partly attributed to the launch of Level in June, together with new BA routes from London to New Orleans, Louisiana; Oakland, California; Fort Lauderdale, Florida; and Santiago, Chile. These were partly offset by the discontinuation of the route to Chengdu, China, plus downgauging of capacity to Japan and frequency reductions to Brazil. Iberia increased services on several domestic routes and felt the full effect of 2016 route launches to Shanghai, Tokyo and Johannesburg, South Africa. Aer Lingus’s continued transatlantic expansion also contributed, with Miami its latest destination.

Vueling underwent a small capacity reduction as it rebalanced services toward a less seasonal, denser and more focused network, prior to resuming growth in months to come.