Shares in International Consolidated Airlines (IAG) slipped 4 per cent after the British Airways (BA) owner lowered its full-year guidance on operating profits from break-even level to a "small" loss. Though BA provided a fillip through decent trans-Atlantic passenger numbers over the second quarter, the group's Iberia subsidiary continues to struggle, and with no apparent resolution to Spain's debt crisis in sight, it will continue to weigh on IAG's numbers through the second half.
Iberia recorded a €263m (£209m) operating loss for the half year, against a €13m profit for BA. The loss was partly attributable to the wretched state of Spain's economy, but also to fierce competition from low-cost carriers like easyJet.
Total group passenger numbers were up by 3.7 per cent, and IAG managed to pull in 8.9 per cent more revenue for every passenger kilometre flown. However, profits were held in check due to a 25 per cent hike in fuel and emission costs, up by €534m on the 2011 half year. The faltering euro resulted in a €72m net foreign exchange loss, and prompted IAG to set up a management group to consider the implications of a possible Spanish exit from the single currency.
Goodbody had been predicting a loss per share of €0.05 for 2012 (from EPS of €0.295 in 2011), but is likely to lower this estimate further.
| INTERNATIONAL CONSOLIDATED AIRLINES (IAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 151p | MARKET VALUE: | £2.80bn | |
| TOUCH: | 151-151p | 12-MONTH HIGH: | 222p | LOW: 131p |
| DIVIDEND YIELD: | nil | PE RATIO: | 14 | |
| NET ASSET VALUE: | €2.79* | NET DEBT: | 24% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 7.54 | 78.0 | 4.70 | nil |
| 2012 | 8.53 | -390 | -13.0 | nil |
| % change | +13 | - | - | - |
*Includes intangible assets of €2.08bn, or €1.12 a share £1 = €1.27 | ||||
