IAG scales back capacity growth
British Airways parent IAG is to further cut back its growth plans, blaming terror attacks, the effect of the Brexit vote on the pound, air traffic control strikes, Spain’s political situation and increased weakness in Latin American economies.
Announcing its second quarter results today, the group said it has reduced planned capacity growth for the second half of the year and has 2017 capacity growth and investment ‘under review’.
"We have continued to experience a weaker trading environment in our UK point-of-sale business, which represents around one third of total revenue. On top of this, continued pound sterling weakness would reduce pound sterling profits when translated into euros in what is traditionally the most profitable part of the year," said the airline.
"In addition, like other European airlines, our operations around Europe have recently suffered from significant weather and Air Traffic Control strike disruption, resulting in over a thousand flights having to be cancelled."
IAG took a €148 million hit, primarily due to the weak pound, in the last quarter and warned that it could cost at least another €80 million in the second half of the year.
The warning came as IAG reported an operating profit of €555 million for the three months to June 30, up from €530 million in the same period last year but slightly below forecasts.
Passenger unit revenue dropped 10.2% but fuel costs were down by 31.2%.
Operating profit before exceptional items for the half year were €710 million, up 27.9% on 2015.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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