Aer Lingus reports drop in operating profits and blames pilots' strike action
Reuters
Aer Lingus has reported an operating profit of €139 million for the third quarter of this year. That is down €57 million on the same period last year.
The airline - which is owned by IAG - is blaming the strike action by pilots over the summer, along with market pressures, particularly on its routes to and from America, for the downturn.
However, its owner IAG reported quarterly operating profit jumped 15%, beating forecasts, and expressing optimism about future travel demand, as its growing exposure to lucrative transatlantic routes helped it outperform rival airlines.
Shares in IAG opened up 6% and are trading at levels last seen in March 2020, before the pandemic halted travel. The stock is up 50% so far this year.
IAG, which also owns British Airways, Iberia and Vueling, said planes flying between London and the US were fuller this year compared to last and it had added capacity of 4% on the North Atlantic, while also flying more on the South Atlantic.
"Demand remains strong across our airlines, and we expect a good final quarter of 2024 financially," chief executive Luis Gallego said.
IAG also on Friday announced a €350 million share buyback.
Higher ticket prices and lower fuel prices plus the group's focus on costs and efficiencies helped offset a higher wage bill and deliver the consensus-beating quarterly result.
IAG's performance contrasts with Air France-KLM and German group Lufthansa, both of which struggled over the summer with higher costs.
"IAG continues to shine as one of the highest-quality airlines in Europe," Bernstein analysts said.
Compared to its European competitors, IAG is less exposed to Asian routes, where Chinese carriers have an advantage as they are still able to fly over Russian airspace, making their flights shorter and cheaper.
"It's not right now a priority for us to have capacity in Asia. We're trying to reinforce our main markets, North Atlantic, South Atlantic and intra-Europe," Gallego told reporters.
For the three months to end-September, its busiest season, IAG posted operating profit of €2 billion, compared to a consensus forecast of €1.78 billion, and analysts are expecting full-year operating profit of €3.7 billion, compared to the €3.5 billion it made last year. - Reuters
