"The benefits of Iberia's restructuring are beginning to show," said Willie Walsh, chief executive of International Consolidated Airlines (IAG). That's the news we've been waiting for, and better than expected second-quarter results reveal clear evidence of a turnaround.
IAG made an underlying operating profit of €245m (£212m) in the three months to June versus a €4m loss this time last year, driven by 4 per cent growth in passenger revenue and an assault on costs. Profit rocketed at BA from €94m to €247m but, crucially, losses at Iberia fell by nearly two-thirds to €35m. Shedding almost 1,700 staff saved millions, and those left have taken big pay cuts. If you strip out the €265m of redundancy costs, IAG lost just €33m in the first half compared with €253m in 2012. Spanish budget carrier Vueling, bought in April, chipped in €27m - its €549m cash pile also helped slash net debt - but IAG spent €109m less on fuel and currency benefits helped non-fuel costs slip a little, too. And while seeking shareholder approval for fleet orders precludes it from giving profit guidance, the carrier did say current trading is in line with recent trends and fuel costs will fall.
Deutsche Bank expects full-year adjusted pre-tax profit of €260m, giving adjusted EPS of 7¢ (from a loss of €480m and 21¢ in 2012).
| INTERNATIONAL CONSOLIDATED AIRLINES (IAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 320p | MARKET VALUE: | £ 5.93bn | |
| TOUCH: | 319-320p | 12-MONTH HIGH: | 332p | Low: 138p |
| DIVIDEND YIELD: | NA | PE RATIO: | NA | |
| NET ASSET VALUE: | 114¢ | NET DEBT: | 43% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 8.53 | -358 | -11.1 | nil |
| 2013 | 8.71 | -506 | -27.9 | nil |
| % change | +2 | - | - | - |
| *Includes intangible assets of €2.07bn, or 112¢ per share | ||||
| £1=€1.15 | ||||
