26th Sep 2019 08:30
(Alliance News) - British Airways operator International Consolidated Airlines Group SA on Thursday issued a full-year profit warning and said industrial action and other recent disruption has cost the company EUR170 million.
The FTSE 100-listed firm said the net financial impact of allowing customers to re-book flights or receive refunds due to pilot strikes has resulted in a EUR137 million hit with other "disruption events" at Heathrow costing the company a further EUR33 million.
Booking trends in low cost airlines in IAG's portfolio will also knock the company's finances, the firm said.
It explained: "IAG estimates that the latest booking trends in its low cost segments (primarily Vueling and LEVEL) will have an adverse financial impact of EUR45 million."
At current fuel prices and currency exchange rates, IAG expects its 2019 operating profit before exceptional items to be EUR3.27 billion, 6.6% lower than the EUR3.49 billion pro-forma figure achieved in 2018. Previously, IAG had guided for profit in 2019 to be flat on the year before.
IAG added: "Passenger unit revenue is expected to be slightly down at constant currency, compared to flat guidance previously, and non-fuel unit costs are expected to improve at constant currency, unchanged from previous guidance"
Fourth quarter capacity growth, measured in available seats per kilometre, is forecast to be roughly 2.0%, "which is 1.2 points below previous guidance", IAG said, with full-year capacity growth expected at 4.0%, compared with 5.0% previously.
IAG added that there have been no further talks between British Airways and union the British Airline Pilots' Association.
The company said: "The airline's offer of a 11.5% pay increase over three years still stands and has been accepted by British Airways' other unions, representing 90% of the airline's employees. Clearly any further industrial action will additionally impact IAG's full year 2019 operating profit."
During September, industrial action by the British Airways main pilots' union led to an initial cancellation of 4,521 flights, though more than 2,000 were reinstated leaving 2,325 flights cancelled, IAG said.
The firm added that British Airways launched a "flexible commercial" policy on more than 4,000 flights which were not directly affected by industrial action.
Shares in the company were 3.5% lower at 463.20 pence each in London on early on Thursday morning.
By Eric Cunha; [email protected]
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