BA owner sees jump in yearly profits on healthy demand

LONDON (AFP) -
British Airways parent group IAG on Friday forecast a 20-percent jump in operating profit this year thanks to rising demand and falling costs.

IAG said in a statement that its underlying operating profit -- stripping out exceptional items and fluctuations in fuel prices and exchange rates -- was expected to hit 3.0 billion euros ($3.5 billion) in 2017.

That was up from 2.5 billion euros in 2016.

While some European airlines, including Air Berlin, Alitalia and Monarch, collapsed this year, IAG became the latest carrier after Lufthansa to announce a sunnier outlook.

The Anglo-Spanish group had previously only forecast that 2017 operating profit would see a double-digit percentage improvement without specifying further.

IAG added Friday that third-quarter profits were boosted by a good performance on Spanish and South American markets, as well as lower fuel costs.

?We're reporting another strong quarter," said chief executive, Willie Walsh.

"All our companies performed well. Passenger unit revenue was up 2.2 percent at constant currency boosted by improvements in the Spanish and Latin American markets.

"Our commercial performance was good despite underlying disruption from severe weather and terrorism."

In the period from July to September, operating profit before exceptional items jumped nearly 21 percent to 1.455 billion euros and net profit rose 7.5 percent to 1.0 billion euros.

IAG's new long-haul low cost airline, LEVEL, launched in March 2017 and contributed a "positive" trading performance. Barcelona-based LEVEL flies to Los Angeles, San Francisco, Argentine capital Buenos Aires and Punta Cana in the Dominican Republic.

As well as British Airways, IAG also owns low-cost Spanish airlines Vueling and Iberia, and the Ireland's Aer Lingus.

The group's four main airlines carried 31.3 million passengers in the third quarter, up 1.3 percent on last year.

Fuel costs before exceptional items for the period fell 8.4 percent thanks to weaker jet fuel prices and the use of more efficient aircraft. Revenue increased by two percent to 6.6 billion euros.

Earlier this year, British Airways had suffered three days of flight disruption due to a computer power failure, sparking cancellations that affected 75,000 passengers.

IAG confirmed on Friday that this would cost it about 65 million euros.