Airlines hit by Ryanair profit warning, but IAG rallies on strong August traffic

4th Sep 2013 15:30

Stocks in the airline sector were hit hard by a trading update from Ryanair on Wednesday after a gloomy outlook from Europe's largest budget airline prompted investors to take profits following a strong performance by equities so far this year.International Airlines Group (IAG) however managed to trim losses by the afternoon after reporting some solid traffic statistics for August, easing concerns about negative readacross from the weak summer bookings reported by its rival.IAG, the owner of British Airways and Iberia airlines, reported a 10.6% year-on-year increase in group traffic (measured in revenue passenger kilometres) for last month, with growth accelerating from the 6.6% annual rise registered in July. The decline on a pro-forma basis eased to 0.2% in August, from a fall of 2.8% the month before.The annual growth in premium traffic also picked up in August to 2.4% from just 0.4% in July.Meanwhile, IAG said that group capacity (measured in available seat kilometres) increased by 9.4% in August (-1.4% pro-forma), up from the 8.5% growth in the capacity in July (-1.7% pro-forma).Traffic was helped by the addition of Spanish airline Vueling which was bought by IAG back in May.IAG's share price was down just 0.98% at 291.8p by 15:48 on Wednesday, having trimmed losses after hitting an intraday low of 278.8p (-5%) in morning trade. Still, the stock has jumped by nearly 60% in 2013 alone; sector peer easyJet - down 5% today - has risen by a similar amount since the start of the year.Ryanair said earlier on in a trading update that it expects full-year net profit to be near the bottom of its earlier guidance of €570-600m as bookings were hit by the hot summer weather across Northern Europe."However if fares and yields continue to weaken over the coming winter there can be no guarantee that the full year outturn may not finish at or slightly below the lower end of this range," the Irish airline said.BC