Created from January's merger between British Airways and Iberia, International Consolidated Airlines (IAG) reported a half-year profit - despite high fuel prices, the Japanese earthquake and turmoil in the Middle East and North Africa. Indeed, underlying pre-tax profit reached €39m (£34m), compared with last year's volcanic ash and strike-driven loss of €419m.
Much of the improvement reflects the strength of IAG's premium long-haul business, which compensates for fierce competition on short-haul routes. So underlying group revenue grew 18 per cent and passenger yield rose 7.2 per cent, but costs remain a burden - 12 per cent higher at €7.7bn. Fuel is the main culprit and will remain so. It cost the carrier €2.4bn, up 35 per cent, and the annual bill could hit €5.2bn. Luckily, other expenses fell 5.6 per cent and the anticipated €90-€100m profit hit inflicted by Japan, the Middle East and North Africa is at least unchanged.
Chief executive Willie Walsh expects "significant" growth in annual profits amid further progress on unit revenue and costs. Moreover, merger savings - €400m is the five-year target - could exceed the €72m forecast for 2011; good news as implementation costs are €65m.
Oriel Securities expects an adjusted full-year pre-tax of €383m, giving an EPS of 15¢.
International Consolidated Airlines (IAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 233p | MARKET VALUE: | £4.32bn | |
| TOUCH: | 233-234p | 12-MONTH HIGH: | 307p | Low: 207p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 268¢p* | NET DEBT: | 9% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 4.33 | -401 | -30.5 | nil |
| 2011 | 7.54 | 78.0 | 4.70 | nil |
| % change | +74 | - | - | - |
Ex-div: Payment: *Includes intangible assets of €1.36bn, or 73¢ a share £1=€1.14 | ||||
