IAG reports 30% jump in third-quarter profits

Airline group says rise in profit was driven by tight cost control at both IAG’s British Airways and Iberia units

International Airlines Group reported a 30 per cent jump in third-quarter profit today and raised its forecast for the year, in contrast to the British Airways-owner’s strike-hit rivals.

IAG’s operating profit before exceptional items for the three months to the end of September was €900 million, up from €690 million a year earlier and beating analyst expectations of €879 million.

The company said it now expected to increase this year’s operating profit by between €550 million and €600 million from the €770 million it made last year, upping its previous forecast for an increase of at least €500 million.

The rise in profit was driven by tight cost control at both IAG’s British Airways and Iberia units, IAG said, helped by the introduction of new more fuel-efficient aircraft.

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The increased profit outlook from IAG, which also operates Spain-based budget airline Vueling, contrasts with updates from Germany’s Lufthansa and Air France-KLM.

Lufthansa on Thursday lowered its profit guidance for 2015 for the second time this year due to a stuttering global economy and increased competition. Air France said on Wednesday that a costly strike and a dip in fourth-quarter demand would shave €500 million off its 2014 core earnings.

Both Lufthansa and Air France are under pressure to expand their low-cost operations and reduce costs to compete better with budget carriers such as easyJet. By contrast,

IAG benefits from operating Vueling, which contributed €140 million to group operating profit in the third quarter. Shares in IAG, Europe’s biggest airline by market capitalisation, have outperformed over the last three months, posting a 16 per cent gain against a 20 per cent fall in Lufthansa’s stock and a 22 per cent drop in Air France’s shares.

Reuters