British Airways owner lifts guidance after strong Q3

Investors are expecting further details of potential savings from the 1.3 billion euro acquisition of Aer Lingus, plus forecasts for 2016 performance, in the group’s presentation to investors on November 6.

CEO Willie Walsh said: “We’re reporting strong quarter results with a positive contribution from all of our airlines”.

Shareholders in IAG have not received a dividend since the group was formed in 2011 from a merger of Iberia and British Airways.Sahres in the airline group are down 2.46pc today at 595 pence each in London following the announcement.

This increased profit was on the back of a 15.2 per cent increase in revenue to €6.8 billion during the quarter.

“While the airline’s profitability is seasonal, Aer Lingus is cost-effective and provides a natural gateway to build our business between Europe and North America”, he said. It previously said it would exceed EUR2.2 billion.

IAG said that excluding recently acquired airline Aer Lingus it posted operating profit of EUR€1.205 billion in the third quarter.

It now says its operating profit for the full year excluding Aer Lingus could be as high as 2.3 billion euros, up from its previous forecast of 2.2 billion. Nevertheless, IAG state that Aer Lingus will be a great asset for the group. Passenger unit revenue was up 6.5 per cent in the quarter and up 13.6 per cent for the nine months to the end of September. Iberia’s operating profit advanced to EUR200 million, up 24%, while Vueling added 27% to EUR178 million.

Analysts had expected the upgrade and shares initially fell on Friday.

Capacity for the quarter, measured in Available Seat Kilometres (ASKs) rose by 6.9%, with Passenger unit revenue per ASK rising by 6.2%, ahead of non-fuel unit costs per ASK, which rose by 4.8%. The group said it expects to pay out 25 per cent of its underlying profit after-tax in dividends for the full-year.