BA-owner reports profits dive as weak sterling bites

IAG, the parent group of British Airways and Spanish carrier Iberia, reported on Friday a 74-percent slump in first-quarter net profit, in large part owing to a weak pound.

Profit after tax slid to 27 million euros ($30 million) in the first three months of the year from 104 million euros in the first quarter of 2016, IAG said in an earnings statement.

"The impact of currency exchange was 32 million euros in the quarter due to the translation of sterling profit into euros," said IAG chief executive Willie Walsh.

Sterling slumped by about 15 percent in value last year, largely owing to Britain voting to exit the European Union, hurting IAG as it converts income from BA ticket sales into euros.

IAG, which owns also Irish airline Aer Lingus, added Friday that first-quarter group revenue dropped nearly three percent to 4.9 billion euros owing to the Easter vacation period occurring in April this year, outside the reporting period.

Operating profit before exceptional items however climbed almost ten percent to 170 million euros, aided by low oil costs.

"This is a record performance in Q1, traditionally our weakest quarter," said Walsh.

IAG shares jumped 4.7 percent to 599 pence in reaction to the earnings update, in early trading on London's benchmark FTSE 100 index which was flat overall.

Analysts said IAG's share price won support also from a fresh slide in oil prices.

source: AFP