Market Research News

IAG Profit UP First Quarter – Record IAG Performance and Reasons Why

  • May 6, 2017
  • By Pete Nisbet
  • 0

IAG profit levels have increased in the first quarter, ending 31st March.  International Airlines Group owns operators British Airways, Aer Lingus, Iberia and Vueling.  CEO Willie Walsh stated that tight control of those costs “within its power” was a major factor. Unit costs at constant currency were reduced by 2.9%.  Lower fuel prices also helped the company achieve a record performance despite a fall in revenue – and despite the ‘Brexit effect’.

AIG Profit – Effect of Sterling-Euro Exchange Rates

IAG had cut its results guidance in 2016 due to the Brexit referendum leading to a drop in value of the pound sterling. The change of profit from sterling to the euro led to an exchange deficit of €32 million for the quarter. That aside, AIG profit was also assisted by a 14.8% increase in Aer Lingus traffic. Underlying operating profit for the group increased by 10% in the first quarter, totaling £144 million (€170 million).

IAG Profit

This record IAG performance was achieved in spite of group revenue dropping 2.8% to €4.9 billion. The first quarter is traditionally the worst for IAG. However, this is the continuation of a trend that began last year with a 31% increase in annual profits posted in February.

 

IAG Profit and IAG Shares Increase

 

Ticket prices have been falling now for many years, and a number of airlines have suffered because of it.  However, the rate of decrease is slowing down in Europe. This was also a likely factor involved in the record IAG performance which resulted in IAG shares rising by 5% in afternoon trading Friday to their highest level since January of last year.

 

Other European airlines also posted good results, and Easyjet shares rose  3.5% after enjoying improved passenger growth in April. IAG also noted that the company’s new long-haul service known as ‘Level’ had experienced more than expected bookings. This low-cost service is scheduled to start operating in June.

About Pete Nisbet

Pete has been working in the field of website design and content for many years. He has a great interest in technology and current affairs, particularly business affairs. Pete's interests are technology, writing and world affairs and he is widely traveled. Pete also holds an Honors BSc from the University of Edinburgh.