International Consolidated Airlines (IAG) soars 5.2% to 367.1p after positive results from the British Airways owner. Third quarter results reveal an airline on track to deliver strong full-year profits following successful restructuring of Iberia.


After IAG made pre-tax losses of €997 million on the back of Iberia’s dismal 2012 performance, the Spanish flag carrier now looks to be off the critical list, posting an operating profit of €74 million in the quarter, compared to an operating profit of €1 million last year.


The ongoing restructuring which will ultimately involve the loss of 3,100 Spanish jobs and chief executive officer Willie Walsh is adamant that 'the airline must continue to implement its restructuring plan and reach agreement on productivity changes to bring about long-term sustainable profits and growth'.


The 'Vueling effect' was also in evidence for the first time this quarter with the group's low cost variant bringing in an operating profit of €139 million.


British Airways also put in an impressive performance with operating profit rising to €477 million from €268 million. Walsh maintains that its performance 'continues to benefit from a strong London and transatlantic market as well as a €100 million revenue bounce-back from the Olympic effect last year.'


IAG's third quarter operating profit of €690 million before exceptional items compares very favourably to €270 million in the same period a year earlier and translates as an operating profit for the year to 30 September of €657 million. Revenues at the £6.6 bilion cap were up 3.9% to €14,113 million over the nine-month period while passenger unit revenue was up 2.3%.


Analyst James Hollins at Investec Securities remains cagey and keeps a 'hold' call on IAG, maintaining that he would 'need more comfort' on delivery of more than €1.2 billion of earnings before interest and tax in the 2014 financial year prior to taking a more bullish stance.

Issue Date: 08 Nov 2013