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British Airways parent IAG SA said second- quarter profit rose 40 percent as it cut costs, fuel prices fell and the Iberia unit extended an earnings revival.
Operating profit increased to 530 million euros ($580 million) from 380 million euros a year earlier, Europe’s third- largest airline group said in a statement Friday, with sales advancing almost 11 percent to 5.66 billion euros.
Chief Executive Officer Willie Walsh has driven productivity gains at BA, Iberia and the Vueling discount arm and is close to bolstering the group’s position on North American routes with the acquisition of Ireland’s Aer Lingus Group Plc. Average fares slipped in the quarter as competition on the trans-Atlantic increased, Walsh said, while reiterating that full-year earnings should exceed 2.2 billion euros.
“We said previously that profit improvement would be slower in the second quarter and we are on track to reach our full year targets,” Walsh said in the statement. “We continue to take cost out of the business, with both employee and supplier unit costs down.”
IAG is close to completing its Aer Lingus purchase after persuading the Irish government to sell its shares, cutting a deal with Ryanair Holdings Plc for its near 30 percent stake and winning European Union antitrust approval for the deal.
With BA’s London Heathrow base operating close to the capacity of its two runways and the hub’s expansion caught up in political wrangling, Walsh has said he aims to use Aer Lingus’s Dublin headquarters to add more U.S. flights.
IAG has cut thousands of jobs and scrapped underperforming routes to revive Iberia, while adding capacity at BA in a push to achieve a 1.8 billion-euro operating profit by 2015.
Iberia posted a quarterly profit of 51 million euros versus a year-earlier 16 million euros. BA earnings climbed 36 percent to 453 million euros, and Barcelona-based Vueling’s profit fell 20 percent to 24 million euros as it added capacity.
–With assistance from Kari Lundgren in London.
This article was written by Benjamin Katz from Bloomberg and was legally licensed through the NewsCred publisher network.