Despite showing a rise in profits, it appears that modest improvement to guidance at BA-owner International Consolidated Airlines Group (IAG) may have disappointed; particularly in light of recent profit upgrades by European rivals, such as Easyjet (EZJ) and Ryanair (RYA). Shares in the £11.8 billion cap are down 3.77% at 574.75p.
IAG has indicated that, at current fuel prices and exchange rates, it expects to generate an operating profit of €2.25-2.3 billion for the full year excluding Aer Lingus compared with previous guidance for operating profit in excess of €2.2 billion.
On the previous day, the airline also announced its first dividend since 2011.
Third quarter operating profit at IAG printed at €1.25 billion before exceptional items, excluding the €1.2 billion pencilled in for the Aer Lingus deal. Revenue for the quarter was up 15.2% at €6,756 million while passenger unit revenue for the quarter rose 6.5%. However, excluding Aer Lingus and at constant currency, the passenger unit revenue metric showed a 3.3% decline.
In the nine months to the end of September, operating profit at IAG rose 59.%, coming in at €1.8 billion before exceptional items. Excluding Aer Lingus and exceptional items, revenue in the nine months came in at €1,76 billion.
Aer Lingus made an operating profit of €45 million since it joined IAG on August 18. While the airline's profitability is seasonal, IAG CEO Willie Walsh insists that 'Aer Lingus is cost-effective and provides a natural gateway to build our business between Europe and North America.'
Dublin-based Davy Research rates IAG as 'Outperform'.
