Nothing infuriates travellers quite like flight disruptions, so the outrage that poured out over social media when a power outage grounded tens of thousands of British Airways flights over the second May bank holiday weekend was no surprise. Despite this, management at parent company International Consolidated Airlines (IAG) tried hard to brush the incident aside in these half-year results. Chief executive Willie Walsh briefly mentioned that pre-exceptional non-fuel unit costs rose at constant currency during the period, which includes the financial impact of the British Airways outage. Handling, catering, and other operating costs increased by 4.6 per cent during the period to €1.4bn (£1.3bn), which includes €65m of additional compensation fees and baggage claims related to the disruption in May.
Despite the power outage headache, British Airways still made an operating profit of €741m over the six-month period, up from €631m this time last year. Elsewhere, profit for Iberia recovered from a €6m loss in 2016 to an €84m profit this year, while Aer Lingus grew its profit from €42m to €59m. Vueling reported a €6m loss, although this was an improvement on the €54m plunge into the red the previous year. The 37 per cent rise in group adjusted operating profit to €975m was largely concentrated in the second quarter, thanks to the timing of Easter. During this quarter, passenger revenue per available seat rose 4 per cent at constant currency, to 671¢, while relative costs per available seat fell by more than 10 per cent on the back of lower fuel prices.
For the six-month period, capacity rose across all regions, culminating in a 3 per cent group-wide increase. But passenger load factor barely inched up to 80.8 per cent (from 80 per cent in 2016) despite a 4.6 per cent increase in passenger numbers to 48.8m.
Analysts at Liberum expect pre-tax profit of €2.6bn during the year to December 2017, giving EPS of 100¢, compared with €2.4bn and 94.9¢ in FY2016.
| INTERNATIONAL CONSOLIDATED AIRLINES (IAG) | ||||
| ORD PRICE: | 598p | MARKET VALUE: | £12.5bn | |
| TOUCH: | 597.5-598p | 12-MONTH HIGH: | 638p | LOW: 357p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 228¢* | NET DEBT: | 139% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 10.8 | 688 | 26.8 | nil |
| 2017 | 10.9 | 706 | 26.4 | nil |
| % change | +1 | +3 | -1 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of €3bn, or 143¢ a share | ||||
