IAG share price takes off as HY operating profit rises

Shares in International Consolidated Airlines (LON:IAG) have gained more than one percent in London this morning as the company posted a rise in half-year operating profits. The blue-chip group, which owns British Airways, Aer Lingus and Spanish carriers Iberia and Vueling, however, saw the recent slump in sterling weigh on its performance.

As of 09:47 BST, IAG’s share price had added 1.55 percent to stand at 415.66p, outperforming the benchmark FTSE 100 index which has climbed marginally higher and is currently 0.03 percent better off at 6,723.16 points. The group’s shares have lost nearly a quarter of their value over the past year, and are down by just under 32 percent in the year-to-date.
IAG announced in a statement this morning that its half-year operating profit before exceptional items had climbed to €710 million, from €555 million a year ago, while the group’s second-quarter operating profit had come in at €555 million, as compared with €530 million in the prior-year period. The British Airways parent, however, saw the post-referendum slump in sterling erode €148 million from its profits.

“Numerous external factors affected our airlines including the impact of terrorism, uncertainty around the UK’s EU referendum and Spain’s political situation and increased weakness in Latin American economies,” the company’s chief executive Willie Walsh said in the statement, adding that the group’s operations had further been ‘considerably disrupted’ by traffic control strikes in Europe.
The British Airways parent noted that it expected at least €80 million disruption costs to be booked in the second half of the year as a result of air traffic control strikes, and said that it had reduced its planned capacity growth for the second half of the year, with 2017 capacity growth and capex also under review.
In a separate development, Bloomberg reported yesterday that Qatar Airways was set to further hike its stake in IAG, after the group’s share price plunged in the wake of the Brexit vote. People with knowledge of the matter told the newswire that the Gulf carrier would boost its holding to about 20 percent from 15.7 percent, with the increased stake likely to be announced in the coming days.
Qatar Airways’ move to hike its holding in the FTSE 100 group has prompted concerns about the Gulf state’s grip on British aviation, with Qatar Holding, part of the country’s sovereign wealth fund, holding a 20-percent stake in Heathrow.
As of 10:15 BST, Friday, 29 July, International Consolidated Airlines Grp share price is 416.20p.