BA owner trims expansion plans after Brussels attacks

29th April 2016, Comments 0 comments

International Airlines Group, owner of British Airways and Iberia, said Friday it was scaling back plans to raise its flights offering, blaming the move on last month's Islamist attacks in Brussels.

The announcement was made alongside news that IAG had swung into a net profit in the first quarter compared with a year earlier, thanks to its recent purchase of Aer Lingus and lower fuel prices.

However IAG was the biggest faller on London's benchmark FTSE 100 index, slumping 4.45 percent to 526.50 pence. The FTSE was down 0.9 percent overall.

"British Airways parent IAG went into a tailspin as it scaled back short term capacity plans in the aftermath of the Brussels terror attacks," said Russ Mould, investment director at AJ Bell.

"The group was the biggest blue chip faller in early trading despite a strong first quarter."

In an earnings statement, IAG said that in the current second quarter, "revenue trends... have been affected by the aftermath of the Brussels terrorist attacks, as well as some softness" in demand for premium travel.

"As a result, IAG has moderated its short-term capacity growth plans."

But the company said it still expects to deliver a rise in operating profits this year, as it did in 2015.

On March 22, Brussels was hit by suicide bombings claimed by the extremist Islamic State group that targeted the city's airport and a metro station, leaving 32 people dead.

Two bombers blew themselves up at the check-in area of Brussels airport, while a third detonated his explosives at Maalbeek metro station near the EU headquarters.

In the first quarter, IAG reported a net profit of 104 million euros ($118 million), which compared with a loss after tax of 26 million euros one year earlier.

Fuel costs were down 30 percent at constant currency levels.

IAG has been boosted by its purchase last year of Aer Lingus -- a move aimed at increasing its share of the lucrative transatlantic market.

Airlines are meanwhile benefitting from much lower costs for jet fuel that is refined from crude oil -- a commodity whose prices have plunged since a year ago.

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© 2016 AFP

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