IAG reports strong 2018

Lauren Eldershaw
By Lauren Eldershaw February 28, 2019 15:29

IAG reports strong 2018

International Consolidated Airlines Group (IAG) has reported a 9.5% increase in pre-tax profit for 2018, which rose to €3.2bn up from €2.95bn in 2017.

Revenue was up 6.7% from €22.8bn in 2017 to €24,4bn; passenger revenue rose 6.2% across the group.

IAG warned that the outlook for 2019 would be hit by fuel prices and exchange ratings and that profit this year would be flat.

IAG has proposed a special dividend of €700m and an ordinary dividend of €615m.

“In 2018, we’re reporting an operating profit of €3,230 million before exceptional items, up 9.5 per cent compared to last year,” said Willie Walsh, IAG Chief Executive Officer. “Yet again, we’ve improved our operating profit this year and our adjusted earnings per share grew by 15.1 per cent. This was a very good performance despite three significant challenges: fuel prices increasing 30 per cent, considerable Air Traffic Control disruption and an adverse foreign exchange impact of €129 million.”

At current fuel prices and exchange rates, IAG expects its 2019 operating profit to be in line with €3,230m reported in 2018. Passenger unit revenue is expected to improve at constant currency and non-fuel unit cost is expected to be flat at constant
currency.

Passenger revenue for the Group rose 6.2% versus the prior year, with 2.4 points of adverse currency. In 2018, IAG increased capacity by 6.1%, including LEVEL, for the full year. Capacity was increased in all airlines and throughout each region except for Asia Pacific.

The increase partially reflects new long-haul routes at British Airways, Iberia and Aer Lingus and the full year impact of routes launched in 2017. IAG passenger load factor reached its highest level since the creation of IAG at 83.3 points, 0.7 points higher than the previous year.

The Group carried almost 113 million passengers an increase of 7.7% from 2017, with passenger load factor improvement of 0.7 points for the Group and at four of the five airlines.

British Airways operating profit was £1,952 million, up £203 million over the prior year on a capacity increase of 2.5%. Aer Lingus operating profit was €305 million, a record performance and an improvement of €37 million over last year. Capacity increased 10.0% from additional flying to new routes such as Philadelphia and Seattle.

Aer Lingus’ adjusted operating margin rose 0.6 points to 16.8%. Passenger unit revenues decreased at outturn rates from lower yields, while non-fuel unit costs improved.

Vueling’s operating profit was €200 million an increase of €12 million despite facing significant operational disruption from ATC regulations and strikes. Its adjusted operating margin of 11.8%, was 1.0 points down versus last year.

Iberia’s operating profit before exceptional items was €437 million, up by €61 million versus last year, achieving an adjusted operating margin of 10.0%. Capacity for the year was up 9.6%, with a reduction in passenger unit revenue from lower yields partially offset by higher passenger load factor. Iberia’s other revenue also increased by 9.6%, primarily from its MRO business.

Lauren Eldershaw
By Lauren Eldershaw February 28, 2019 15:29