Tough market pressure lowers IAG Q3 operating profit

For the last three months, IAG Cargo saw cargo tonne kilometers rise 5.4 percent, year-over-year, to 1.3 billion, while total tonnes of cargo carried fell 18.8 percent, y-o-y, suggesting that the carrier flew less volume longer distances. This, and other factors, led to a third-quarter decline in operating profits of €1.21 billion before exceptional items versus 2015’s Q3 operating profit of €1.25 billion.

Also, Q3 commercial revenue at IAG Cargo fell 7 percent, y-o-y, to €240 million, during the period from July 1 to Sept. 30, 2016.

For the first nine months of this year, cargo tonne kilometers were up 3 percent, y-o-y, to 3.98 billion. Reflecting Q3 trends, total nine-month tonnage was down 15 percent to 543,000 tonnes. The period saw total cargo revenue decline by 6.9 percent y-o-y, to €743 million.

Operating profit for the group, before exceptional items for the first nine months to Sept. 30, 2016 were €1.92 billion versus 2015: €1.81 billion, up 6.1 percent.

Willie Walsh, IAG’s CEO, explained that while the company reported a “strong quarter 3 operating profit,” before exceptional items, of €1.21 billion, “results were affected by a tough operating environment, with a very significant negative currency impact of €162 million, primarily due to sterling weakness, and continued disruption due to air traffic control strikes.”

The company also cited terrorist attacks and the Brexit vote as contributing factors in the decline.