BA-owner IAG third quarter profits take off - UPDATE

8th Nov 2013 07:03

- Q3 profits soar- BA and Iberia profits sharply higher- Sees FY operating profit of 740m euroInternational Consolidated Airlines Group (IAG) reported forecast-busting third quarter profits after British Airways' performance took off, helped by the bounce back from the Olympics effect last year. The airlines group reported pre-tax profits leapt to €609m in the three months to the end of September from €237m last time after revenues rose 6.9% to €5.4bn and costs fell 1.5%. Third quarter passenger unit revenue was up 6.7%. Chief Executive Willie Walsh said: "These are strong results with an operating profit in the quarter of €690m."The results showed British Airways' operating profit had risen to €477m from €268m driven by a strong London and transatlantic market and a €100m revenue bounce-back from the Olympic effect last year. IAG's airline Iberia delivered an operating profit of €74m in the quarter from €1m last time while discount carrier Vueling contributed an operating profit of €139m to the results.IAG said current trading was in line with recent trends and predicted it would produce an operating profit for 2013 of €740m, which is 6% ahead of analysts' forecasts.Separate figures showed that group traffic rose by 8.9% in October and group capacity was up 8%.The group's cash balance stood at €3.5bn at the end of September up €831m from the end of 2012. The third quarter result beat analysts expectations and shares had soared 6.3% to 371p by 14:43 on Friday.Jefferies analyst Mark Irvine-Fortescue said: "For consecutive quarters IAG has now shown meaningful, and simultaneous, progress at Iberia, BA and Vueling, justifying the positive share price run.He added: "We see a clear roadmap to higher return on capital, and therefore a higher valuation, which we expect to emerge as restructuring benefits develop.TB