British Airways parent IAG profit rises

British Airways parent International Consolidated Airlines Group SA (IAG.LN) said Friday that second-quarter pretax profit rose 13%, and it backed its full-year outlook.

Pretax profit for the three months to the end of June was 770 million euros ($894.9 million) compared with EUR684 million in the year-earlier period, the company said.

Second-quarter operating profit before exceptional items was EUR835 million compared with EUR790 million a year earlier, the company said. IAG said its quarterly operating profit took a EUR66 million hit from foreign exchange.

IAG, which also owns Iberia, Aer Lingus and Vueling and recently launched low-cost brand LEVEL, said second-quarter revenue increased 4% to EUR6.18 billion from EUR5.95 billion a year earlier. Passenger unit revenue for the quarter declined 1.9%.

Nonfuel unit costs before exceptional items for the quarter fell 4.5%, while fuel unit costs rose 6.7%, IAG said. The company said its Vueling low-cost brand incurred additional costs of EUR20 million due to strikes in France.

The company said it carried 11.5 million passengers in July, up 6.9%, with a load factor–a measure of seats sold–of 88%. Group traffic for the month increased 7.5%, while capacity rose 5.7% in July, IAG said.

IAG confirmed its previous guidance and said that it still expects an increase in operating profit for 2018, and an improvement in passenger unit revenue and nonfuel unit costs at constant currency.

IAG gave no further detail on its potential takeover of Norwegian Air Shuttle ASA (NAS.OS). In May, the Scandinavian budget carrier said it rebuffed a bid by IAG, which in April said it had acquired a 4.6% stake in the Oslo-based budget carrier in order to begin talks.

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