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British Airways owner's profit nosedives on soaring fuel costs, fierce competition
[LONDON] IAG, the parent group of British Airways and Spanish carrier Iberia, reported on Friday a collapse in first-quarter net profit amid soaring fuel costs and fierce competition.
Profit after tax nosedived 91 per cent to just 70 million euros (S$107 million) in the first three months of the year from 794 million euros in the first quarter of 2018, IAG revealed in a results statement.
Fuel costs rose 15.8 per cent in the reporting period and revenues were up nearly 6 per cent to 5.3 billion euros.
A key industry measure of performance, passenger unit revenue per available seat kilometre, slid 0.8 percent on the back of increased market capacity.
Demand was also dented by the later timing of Easter compared with 2018.
IAG, which also owns Irish airline Aer Lingus, added that operating profit before exceptional items slid 60 per cent to 135 million euros.
"In a quarter when European airlines were significantly affected by fuel and foreign exchange headwinds, market capacity impacting yield and the timing of Easter, we remained profitable," said chief executive Willie Walsh in the earnings release.
The airline repeated that it expects operating profit to be flat in 2019, owing partly to the high cost of kerosene or jet fuel.
The IAG results came one week after Dutch-French carrier Air France-KLM logged deepening first-quarter net losses as it also buckled under the pressure of higher fuel costs and competition.