Aer Lingus owner IAG beats second-quarter profit estimates

Joanna Plucinska and Shashwat Awasthi, Reuters

Aer Lingus owner IAG reported better than expected second-quarter earnings on Friday, helped by strong demand for its transatlantic routes despite fears of knock-on effects from US president Donald Trump's tariff war.

Europe's airlines have broadly managed to dodge turmoil over tariffs, with Air France-KLM and Lufthansa reporting strong second quarters and confirming their annual forecasts this week.

IAG reported operating profit of €1.68 billion for the quarter, up 35 per cent from a €1.2 billion profit in the same period last year.

Aer Lingus reported operating profits of €135 million for the quarter, a significant improvement on its operating profit of €91 million the same time last year.

"We continue to benefit from the trend of a structural shift in consumer spending towards travel. We remain focused on our market-leading brands and core geographies, where we continue to see robust performance," chief executive Luis Gallego said in a statement.

The group confirmed its full-year financial forecasts and said it was seeing strong demand in its core North Atlantic markets, as well as Latin America and Europe.

The airline group said it expected a slight rise in costs due to lower capacity growth tied to air traffic control issues in Europe as well as cancelled flights to destinations like Tel Aviv.

While Gallego acknowledged volatility in the US economic situation, he said any weakness was mitigated by strengths in other parts of the business.

"The US point-of-sale economy cabin is still weak but it's offset by the strong premium cabin we have ... but it has been improving in the past few weeks," Gallego told reporters on a media call.

US airlines have not fared as well, with Delta pulling its full-year guidance this spring over worries about declining demand.

Growth in the Latin American market has also continued to boost the business, Gallego added.

IAG shares have been among the strongest performers among European airlines in recent years, but this year they have slightly lagged rivals Lufthansa and Air France-KLM as they have recovered from cost pressures.