International Consolidated Airlines Grp Flies Into Profit

Improvements across the board help International Consolidated Airlines Grp (LON:IAG).

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In its half-year report to the end of June 2013, published this morning, International Consolidated Airlines (LSE: IAG) revealed a second quarter operating profit of €245 million, compared with  2012’s loss of €4 million. The company attributed the turnaround to strong passenger unit revenues and non-fuel unit cost improvements. And while there was still an operating loss of €33 million for the half-year, it was a substantially better performance than 2012’s loss of €253 million.

Revenue for the half-year rose 2.1% to €8,707 million, even after accounting for a 1.7% adverse currency impact. And half-year passenger unit revenue gained 2.8% (or 4.6% on a constant currency basis), on an increase in capacity of 1.2%.

Fuel costs for the half-year were reduced by 3.7%, to €2,864 million (3.9% for the second quarter), although half-year non-fuel costs (before exceptional items) rose 1.1% to €5,876 million.

Commenting on the results, IAG chief executive Willie Walsh said:

These are positive results for the quarter with an operating profit of €245 million based on total revenue up 3.4 per cent and costs down 2 per cent. Fuel costs were down 3.9 per cent.”

“Several factors have contributed to this improvement. Firstly, the benefits of Iberia’s restructuring are beginning to show. … British Airways’ performance has improved with operating profit up from €94 million in 2012 to €247 million. … Vueling joined IAG on April 26, 2013 and in the rest of the quarter achieved an operating profit of €27 million.

At the time of writing IAG’s share price is 306.5p, up almost 66% so far in 2013, and almost twice what it was this time last year.

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> Jon doesn’t own shares in International Consolidated Airlines.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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