Profit at Aer Lingus owner down more than a third in first half

IAG chief executive Willie Walsh said it was a ‘good performance’ from the company

Passenger growth at Aer Lingus included the full year impact of routes to Philadelphia and Seattle launched in 2018.

Passenger growth at Aer Lingus included the full year impact of routes to Philadelphia and Seattle launched in 2018.

 

Operating profit before exceptional items at Aer Lingus owner IAG was down more than a third in the first half of the year, the company’s financial results show.

The results, published on Friday for the six months to June 30th, 2019, show operating profit for the six months to June 30th, 2019, was €1.1 billion before exceptional items, which was down from €1.7 billion last year.

Meanwhile, operating profit after exceptional items was down more than 41 per cent from €1.9 billion last year. There were no exceptional items in the first half of this year.

In contrast, IAG recognised an exceptional gain of €678 million last year due to the closure of British Airways’ NAPS and BARP pension schemes.

There was also an exceptional charge of €58 million related to the continuation of British Airways’ “transformation initiatives”.

Profits at Aer Lingus for the half year were down 25 per cent to €78 million from €104 million last year.

British Airways made a profit of €873 million before exceptional items as compared with €868 million in 2018.

Elsewhere, Iberia made a profit of €109 million which was up slightly on the €102 million it made the year before, while Vueling’s profit was €5 million, up from a €11 million loss.

Taking the second quarter, IAG made an operating profit of €960 million before exceptional items, which was up from €816 million last year.

Passenger unit revenue for the second quarter was up 3.1 per cent, or 1.1 per cent at constant currency basis.

IAG chief executive Willie Walsh said it was a “good performance” from the company.

“Despite fuel cost headwinds, we delivered a good performance,” he said. “At constant currency, fuel unit costs were up 6.3 per cent while passenger unit revenue increased 1.1 per cent, benefitting from the timing of Easter.

“This highlights, once again, that our unique structure and diverse brand portfolio underpins our financial resilience and ability to deliver robust results.”

In terms of its trading outlook, IAG said that at current fuel prices and exchange rates, it expects its 2019 operating profit before exceptional items to be in line with 2018.

Passenger unit revenue is expected to be flat at constant currency and non-fuel unit cost is expected to improve at constant currency. It also expects passenger unit revenue at constant currency to improve for the remainder of the year.

In the first six months of 2019, IAG capacity, measured in available seat kilometres (ASKs), was higher by 5.7 per cent with increases across all regions. ASKs are the number of seats available multiplied by the number of miles or kilometres flown.

Passenger revenue at Aer Lingus was €939 million, which was up from €867 million the year before. Its growth included the full year impact of routes to Philadelphia and Seattle launched in 2018.

Vueling increased its capacity through new routes and additional frequencies across its domestic market, with Balearic and Canary Islands “performing well” throughout 2019.

Iberia increased its capacity primarily through additional frequencies on its Latin and North American routes, in particular Mexico, Chile and New York.

British Airways increased capacity through additional frequencies, primarily in Latin America and the Caribbean, together with new destinations, including flights to Charleston, Pittsburgh and Osaka from London Heathrow.

IAG’s cash position of €8 billion was broadly in line with last year. Net debt at the end of the period, including the debt associated with right of use assets, was €4.8 billion.

Aer Lingus held €42 million of restricted cash, down from €44 million for the same period last year.