IAG airline soars back into black in first half
International Airlines Group, formed from the merger of British Airways and Spain's Iberia, said Friday it bounced back into first-half net profit, aided by premium demand and despite soaring fuel costs.
Earnings after taxation hit 88 million euros ($126 million) in the six months to the end of June. That contrasted with a net loss of 352 million euros in the same part of last year, IAG said in a results statement.
IAG, created only in Janaury, also reported a pre-tax profit of 39 million euros, after a 419-million-euro loss last time around. And revenues rallied 17.9 percent to 7.773 billion euros.
However, the group also admitted that fuel costs surged 34.8 percent to 2.439 billion euros in the reporting period, as oil prices jumped. Jet fuel, or kerosene, is refined from crude oil.
Chief Executive Willie Walsh added that the group was on track to deliver "significant" profit growth and synergies this year, and noted that there had been "continued strength" in the market for premium air travel.
"We expect significant growth in operating profit this year, with improvements in both our unit revenue and unit cost performance versus 2010 and are on track to reach our synergy targets," Walsh said in the earnings release.
British Airways and Iberia sought to merge in order to slash their costs, as the global economic downturn and the rise of low-cost airlines resulted in steep losses for traditional carriers.
"We are already making cost savings through joint procurement in areas such as insurance and airport handling," said Walsh on Friday.
"We have established a single cargo business and introduced integrated sales and airport teams in several key markets."
He added: "Customers are also directly benefiting through airline website cross-selling, more fare and schedule choice on overlapping longhaul routes and easier access to more destinations via new codeshares."
IAG was also boosted by the lack of disruption to air travel in the first six months of 2011 -- in stark contrast to the same period of last year.
"Volume growth was driven from both the recapture of lost activity from the volcanic ash cloud and industrial disruption of 2010 and market increases in 2011," it said.
Under the new IAG umbrella group, British Airways and Iberia retain their current operations and individual brands.
© 2011 AFP