26th Oct 2018 10:53
LONDON (Alliance News) - Shares in International Consolidated Airlines Group SA rose after the British Airways parent delivered positive third quarter earnings, as new details of the cyber attack came to light.
IAG shares were up 2.2% at 600.00 pence each, the best performer in the FTSE 100 on Friday.
For the three months to September 30, the company posted pretax profit of EUR1.38 billion, up from a restated EUR1.23 billion pretax profit in the comparative quarter a year ago. On an adjusted basis, pretax profit was marginally down to EUR1.42 billion.
Pretax profit in the nine months to the end of September increased 8.6% to EUR3.04 billion from EUR1.99 billion.
Meanwhile, revenue for the third quarter jumped 8.5% to EUR7.14 billion from EUR6.58 billion a year ago. Revenue for the nine month period increased 5.1% to EUR18.35 billion from EUR17.45 billion.
Passenger revenue in the quarter was up 1.3%. On a constant currency basis, it increased 2.4%.
In the nine months to September 30, IAG said it carried over 86 million passengers, up 7.7% from last year. Moreover, passenger load factor, which measures how full a carrier's planes are, during the same period rose 1.0 points to 83.9%.
Available seat kilometres, a measure of the airline's capacity, was up 6.6% to 89.78 billion from 84.21 billion.
"Not only is the group adding more flights, it's managing to fill more seats on its planes while also getting a benefit from pricing. That's helping the top line grow smoothly," said Hargreaves Lansdown analyst George Salmon.
However, IAG recorded a rise in both non-fuel unit costs and fuel costs, measured in available seat kilometres, up 0.5% and 14.3% respectively.
The airline group also said profit was hindered by unfavorable currency swings, to the tune of EUR111 million.
Airlines have been hurt by a sharp rise in oil prices this year amid a strengthening global economy, production cuts by OPEC and impending US sanctions on Iran's oil exports, which will come into force on November 4.
Brent oil has risen by 15% since the start of 2018, peaking at USD86.71 a barrel earlier this month.
"The fly in the ointment is solid progress on revenues is being undone by a sharp jump in operating costs. However, that's really just a product of rising fuel costs, which are of course well out of IAG's control. Take out the impact of higher fuel prices and unfavourable currency moves, and it becomes clear IAG is doing some pretty impressive work on underlying operating improvements," Salmon noted.
IAG proposed an interim dividend of 14.5 euro cents per share, up from 12.5 cents paid a year ago.
Looking ahead, IAG expects to deliver an EUR200 million increase in operating profit before exceptional items for 2018. In 2017, operating profit totalled EUR2.95 billion.
The company, which also owns Irish airline Aer Lingus and Spain's Vueling and Iberia, expects underlying operating profit for the full year to increase by EUR200 million.
IAG also said anticipates an improvement in non-fuel unit costs for the full year.
"These were strong results despite significant fuel cost and foreign exchange headwinds," Chief Executive Officer Willie Walsh said.
The company's well-received performance comes a day after it said 185,000 further British Airways customers may have had their personal details compromised during a cyber attack.
On Thursday, IAG said that the investigation into the hacking found that a further attack was carried out between April 21 and July 28.
British Airways notified the holders of 77,000 payment cards that their name, billing address, email address, and card payment details including card number and card verification value could have been compromised.
A further 108,000 customers may also have had their information compromised, though not including their CVV numbers, IAG said on Thursday.
The news follows an announcement at the beginning of September that personal and financial details of British Airways customers had been compromised by an attack between August 21 and September 5.
IAG's probe found that of the 380,000 customers originally identified as being impacted by the hack, 244,000 had actually been effected.
Since September, British Airways has confirmed it has seen no verified fraud cases.
"There may also be some relief among shareholders that an investigation into the recent cyber security attack on British Airways customer data has not yet turned up any evidence of fraud," said AJ Bell's Russ Mould.
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