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BA owner IAG warns of profit hit from pilot strikes

Full-year operating pre-tax profit will be 215m euros lower than last year, it says


BRITISH Airways (BA) owner IAG warned on Thursday full-year operating pre-tax profit will be 215 million euros (S$324 million) lower than last year, after major pilot strikes grounded thousands of flights.

The strikes were the latest setback for the airline, which in August suffered its third major computer failure in little more than two years, disrupting flights in its peak travel period.

The group also faces a record US$230 million fine under tough new data-protection rules after the theft of data from 500,000 customers from its website last year.

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IAG said it expected the pilot strikes to cost the company 137 million euros. The strikes on Sept 9 and Sept 10 by British Airline Pilots Association (BALPA) members led to an initial cancellation of 4,521 flights. The group now expects full-year operating pretax profit will be 215 million euros lower than the 3.49 billion euros reported last year.

The airline, whose rivals include easyJet, Ryanair and other low-cost airlines, also estimated booking trends in its low-cost segments will be hit by 45 million euros. BA pilots have cancelled a strike set for Sept 27 to allow for talks.

BA has offered its pilots an 11.5 per cent pay rise over three years. "There have been no further talks between British Airways and BALPA," the company said on Thursday. "Clearly any further industrial action will additionally impact IAG's full-year 2019 operating profit."

IAG also estimated a further 33 million euro impact because of "threatened strikes" by Heathrow Airport employees. The owner of Iberia, Aer Lingus and Vueling expects passenger unit revenue to be slightly down on a constant currency basis, with full-year capacity growth expected to be about 4 per cent, compared to 5 per cent previously.

The profit warning comes nearly two months after IAG gave an optimistic outlook from growing revenues in North America and an easing in fuel cost growth.

In its statement on Thursday the company struck a more cautious tone on the prospects for 2020. "A number of airlines, the weaker ones are disappearing or significantly reducing their capacity so at this stage we still expect 2020 to be a growth year for us but the level of growth that we will be pursuing will be lower than we had previously guided," the company told analysts in a conference call. REUTERS