British Airways owner IAG sees rosy outlook despite strike threat

IAG chief Walsh says he 'would like to hope' for a deal with unions to avert strike.

    IAG, the owner of British Airways, says it has not seen any impact on passenger bookings ahead of Brexit [File: Hannah McKay/Reuters]
    IAG, the owner of British Airways, says it has not seen any impact on passenger bookings ahead of Brexit [File: Hannah McKay/Reuters]

    British Airways owner IAG gave an optimistic outlook for the year, lifting its shares on Friday, as it exceeded profit forecasts for the first half of its key summer period with growing revenues and easing fuel cost growth.

    IAG Chief Executive Willie Walsh said he "would like to hope" that British Airways could reach a deal with its pilots, who last month overwhelmingly voted for strike action in a dispute over pay. They have not yet served notice.

    "Despite fuel cost headwinds, we delivered a good performance," Walsh said in a statement, adding that unit revenue and non-fuel costs would improve for the rest of 2019.

    IAG shares were up 4.2 percent at 07:15 GMT and were the top gainer in Europe's STOXX 600 index, which was down 1.6 percent, after the owner of Iberia, Aer Lingus and Vueling, said second-quarter operating profit had risen to 960 million euros ($1.1bn).

    This was 5 percent ahead of the 914 million euro ($1.01bn) forecast by a company poll of analysts, and up from 900 million euro ($998m) last year.

    IAG said its revenue was up 1 percent and growth in unit costs, including fuel, came in better than expected at 6.3 percent on a constant currency basis.

    "Given all the uncertainties over global growth and Brexit, this looks to be a very strong statement by the company and implies that forward bookings are trending well," Goodbody analyst Mark Simpson said in a note.

    Days after rival Lufthansa cited intense short-haul competition in Europe for pushing profits down 25 percent, Walsh said he was not too concerned about oversupply.

    "We think the supply environment is going to be OK, certainly in the fourth quarter and going into the first quarter of next year," he told journalists in a conference call, saying he planned to taper growth in the last three months of the year.

    "The economic environment is clearly softening, but it is still reasonably good," he added.

    While Walsh said he was worried about the economic impact of Britain's plan to leave the European Union on October 31, he had not yet seen any impact on bookings. 

    SOURCE: Reuters news agency