British Airways and Iberia parent IAG expects to achieve a full-year operating profit of more than €2.2 billion ($2.4 billion), after generating a first-quarter profit for the first time.
It disclosed the outlook as its first-quarter operating profit reached €25 million compared with a loss of €150 million last year.
IAG points out that the figure marks the first time it has achieved an operating surplus in the three-month period. Chief executive Willie Walsh attributes the profit to a “strong improvement” among its member carriers.
The company cut after-tax losses by 86% to €26 million.
Revenues rose by 12% to €4.7 billion. IAG increased capacity by 5% for the three-month period but seat load factor nevertheless rose by a point to 77.7%.
Walsh says that “currency headwinds” reduced the positive impact of lower oil prices.
Fuel unit costs fell by 4.5% while non-fuel unit costs increased by 5.9%. Walsh says that, at constant currency levels, both figures fell and this reflects a “strong unit-cost performance”.
Profit improvement in the second quarter will be slower than during the first, the company says, owing to the timing of the Easter holiday period, as well as “adverse” year-on-year fuel prices net of hedging.