International Consolidated Airlines Group (IAG) reported an operating profit of €25 million for the three months to March 31, 2015, compared to an operating loss of €150 million during the year-ago period.
Willie Walsh, IAG Chief Executive Officer, said: “his is IAG’s first ever quarter 1 operating profit in what is traditionally the weakest quarter of the year. There was a strong improvement both at a Group level and with all three airlines.
Revenue for the quarter were up 12.0% to €4,707 million, up 3.7% at constant currency. Passenger unit revenue for the quarter up 6.9% and down 0.8% at constant currency – Walsh highlighted that IAG had a consistent positive performance in its key North American market.
IAG’s fuel unit costs for the quarter were down 4.5%, down 11% at constant currency, while non-fuel unit costs for the quarter rose 5.9%, down 2.7% at constant currency.
Walsh said that fuel costs “benefitted by operating more efficient aircraft and lower fuel prices though hedging and significant currency headwinds reduced the positive impact of lower oil prices”.
He adds: “Cost discipline across our airlines continued through increased productivity and supplier cost savings, enabling us to improve our operating margin while growing capacity by 5.0%.”
At current fuel prices and exchange rates, IAG expects in 2015 to generate an operating profit in excess of €2.2 billion. The rate of profit improvement in the second quarter will be slower than in the first quarter, says IAG, due to the timing of Easter, and an adverse year-on-year fuel price in this quarter (net of fuel and currency hedging).
IAG management maintains that while Aer Lingus talks are ongoing, they are not a distraction for the group, which instead touched on its Iberia transformation and best-in-group margins at Vueling.
Walsh reiterates an emphasis on long term fleet/capacity plans (especially in light of potential Q2 fuel increases), guiding to a 5.5% increase in 2015 ASKs.
IAG further improved its adjusted net leverage position to 1.7x as of March 31, 2014 from 1.9x at the end of 2014. BA’s cash position was €4.0bn (of the group’s total; cash of €6.0bn).