International Consolidated Airlines Group SA, owner of British Airways and Iberia, reported strong results in the third quarter, a complete contrast with strike-hit rivals Lufthansa and Air France-KLM.
IAGs operating profit before exceptional item stood at €900 in the recent quarter, a 23% increase compared to last year and better than analysts expectation of €879 million.
The company now expects full-year operating profit of between €550 million and €600 million, an increase from its previous target of at least €500 million, but still lower that last years €770 million.
CEO Willie Walsh said AIG could afford to raise its prediction for the year due to cost cuts in its Spanish operations and increased focus on U.S. routes, rather than the Euro zone.
British Airways added flights to Austin, Texas and increased the number of planes flying to Denver and Washington, while continuing to benefit from strong trans-Atlantic demand. The daughter company reported a 27% increase in earnings to €607 million during the quarter.
“The general economic environment is slightly weaker than three to six months ago, but we have anticipated that,” Mr. Walsh said. “Our market focus is good and restructuring is showing benefits.”
Spains Iberia reported more than doubled third quarter profit of €162 million as the company is profiting from “strong cost discipline combined with the continued benefits of restructuring” IAG said.
The Companys main competitors have been under strike pressure over plans to cut cost, mainly by expanding budget airlines, where employees would be paid less compared to their mainlines units.
“Lufthansa is a little bit behind us, Air France is a good bit behind us” said Mr. Walsh relating to restructuring efforts.
On Wednesday KLM said it feels necessary to speed up cost-cutting measures and retain investment next year, after the company suffered a two-week strike, which cost them about €500 million.
On Thursday Lufthansa said it would not hit its 2014 operating profit target. The company already reduced its goal in June as it faces increased competition from Gulf carriers.
IAG reported a 6.9% increase in revenue in the quarter with a 7.5% decrease in fuel unit costs. However, revenue per passenger fell 0.9%.
IAG gained 1.43% on Thursday and closed at GBX 390.70 in London. On Friday the stock gained 3.74% to trade at GBX 405.30, marking a one-year increase of 16.59%. The company is valued at GBP 8.07 billion.
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