IAG first-quarter profit drops 60%

British Airways and Iberia parent IAG has posted a 60% drop in first-quarter operating profit before exceptional items, to Ђ135 million (USD 152 million), and offered a more gloomy assessment of passenger unit revenues for the year.

"In a quarter when European airlines were significantly affected by fuel and foreign exchange headwinds, market capacity impacting yield, and the timing of Easter, we remained profitable and are reporting an operating profit of Ђ135 million," states the group's chief executive Willie Walsh.

Max Kingsley-Jones / FlightGlobal

Passenger unit revenue for the quarter to March 31 was down 1.4% at constant currency, says IAG.

It expects passenger unit revenue at constant currency to improve in the remainder of the year, but foresees flat unit revenue for the year as a whole, against a previous forecast for an improvement.

The group also predicts that 2019's operating profit before exceptional items will be in line with 2018's pro-forma result of Ђ3.49 billion. The pro-forma figure takes into account the effects of the IFRS16 accounting change.

In the first quarter, non-fuel unit costs were down 0.6% at constant currency on a pro-forma basis. Fuel unit costs for the quarter were up 11% at constant currency. The group expects full-year non-fuel unit costs to show improvement.

Total revenue rose 5.9% to Ђ5.32 billion in the first three months. A capacity increase of 6.1% was driven mainly by Iberia, Aer Lingusand the expansion of the Level low-cost business.

The 60% drop in first-quarter operating profit before exceptionals is based on a comparable figure for 2018's first quarter of Ђ340 million which IAG has adjusted for the IFRS change. It had reported a first-quarter operating profit of Ђ280 million last year.