IAG Q2 Results
#1
Original Poster
Join Date: Jul 2014
Location: London
Programs: BAEC Silver
Posts: 772
IAG Q2 Results
IAG Q2 headlines
· Operating profit €555m* (2015: €530m)
· Passenger unit revenue down 6.2 per cent**
· Non-fuel unit costs up 0.8 per cent***
· Fuel unit costs down 29.3 per cent***
BA Q2 headlines
· Operating profit £302m* up 4.6 per cent (2015: £289m)
· Passenger unit revenue down 6.2 per cent**
· Underlying non-fuel unit costs (CASK) 0.5 per cent better***
· Fuel costs down 26.3 per cent
· Customer satisfaction target missed at 8.2 pts (target 9.4pts)
· Punctuality target missed at 73 per cent (target 80 per cent)
· H1 operating profit £487m* (2015: £356m)
*Before exceptional items
** At constant currency
***Before exceptional items and at constant currency
Must admit, these are better results than I expected. However, the group also took a £148m negative currency hit. BA are not happy that the fall in revenue was greater than the fall in costs.
· Operating profit €555m* (2015: €530m)
· Passenger unit revenue down 6.2 per cent**
· Non-fuel unit costs up 0.8 per cent***
· Fuel unit costs down 29.3 per cent***
BA Q2 headlines
· Operating profit £302m* up 4.6 per cent (2015: £289m)
· Passenger unit revenue down 6.2 per cent**
· Underlying non-fuel unit costs (CASK) 0.5 per cent better***
· Fuel costs down 26.3 per cent
· Customer satisfaction target missed at 8.2 pts (target 9.4pts)
· Punctuality target missed at 73 per cent (target 80 per cent)
· H1 operating profit £487m* (2015: £356m)
*Before exceptional items
** At constant currency
***Before exceptional items and at constant currency
Must admit, these are better results than I expected. However, the group also took a £148m negative currency hit. BA are not happy that the fall in revenue was greater than the fall in costs.
Last edited by Down Low; Jul 29, 2016 at 1:38 am
#3
Join Date: Jan 2010
Posts: 7,464
Essentially, profit driven by good decisions on fuel costs/hedging, which may not be sustainable for the long term.
I cannot believe that their internal target for punctuality is 80% That is truly shocking, and shows completely why there is absolutely no urgency to get departures away on-time, particularly at LHR.
The customer service 'miss' does not surprise me one bit.
The results show profit at the expense of everything else. Great business strategy ^
I cannot believe that their internal target for punctuality is 80% That is truly shocking, and shows completely why there is absolutely no urgency to get departures away on-time, particularly at LHR.
The customer service 'miss' does not surprise me one bit.
The results show profit at the expense of everything else. Great business strategy ^
#5
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#6
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#7
Join Date: Jun 2003
Programs: BA, IHG, 5C
Posts: 4,412
They are being a bit more specific about full year op profit growth (low double digit %). This implies a further small c5% downgrade, and disruption (strikes) seems a more prominent reason alongside Brexit/uncertainty.
Presentation here: http://www.iagshares.com/phoenix.zht...-presentations
Guiding to 4.5% FY capacity growth instead of 4.9% (though BA least affected 2.6% vs 2.7%).
Presentation here: http://www.iagshares.com/phoenix.zht...-presentations
Guiding to 4.5% FY capacity growth instead of 4.9% (though BA least affected 2.6% vs 2.7%).
#8
Join Date: Jan 2004
Location: London, UK
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Posts: 693
Overall not a bad set of results. The revenue decline is in line with Delta - a very well run airline also - and AA. Not unsurprising really as the warning signs of a downturn in the sector have been there for quite a while.
#9
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Without the fuel hedges finally unwinding it would be a mess. They can't even keep non-fuel costs under control.
#10
Join Date: Aug 2010
Location: Gloucestershire
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They're a mixed set of results, to be honest, and partially explain the focus on cost control. However, we have to be close to the stage where we see customer satisfaction and therefore loyalty declining if they push any harder.
However, passenger unit revenue looks like a problem - airlines never generate huge returns and can easily go negative so it's not inherently suggestive of poor management.
Needs to be compared against other airlines' year-on-year - I wonder as well whether the increase in costs is driven by poor punctuality, i.e., it's under-investment that's driving it, rather than overspending.
However, passenger unit revenue looks like a problem - airlines never generate huge returns and can easily go negative so it's not inherently suggestive of poor management.
Needs to be compared against other airlines' year-on-year - I wonder as well whether the increase in costs is driven by poor punctuality, i.e., it's under-investment that's driving it, rather than overspending.
#11
Join Date: Oct 2010
Location: BRU
Programs: BA Gold
Posts: 518
It is of note that despite all the cost-cutting we whine about, this isn't significantly affecting non-fuel costs.
Significant issues ahead if revenue /passenger doesn't improve once favorable fuel costs drop out.
Significant issues ahead if revenue /passenger doesn't improve once favorable fuel costs drop out.
#12
Join Date: Aug 2013
Posts: 8,721
It seems there's fairly broad downward pressure on RASK throughout the industry at the moment.
#13
Join Date: Apr 2005
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the issue - as it is the case for many companies - will be to maintain positive jaws.
so if income line drops (either less growth or no growth), the cost line needs to reduce in line / greater than that.
very difficult to / I can't see BA trying to break out of that cycle by investing (thus increasing the cost line) with the hope of greater customer satisfaction leading to income growth (when that is largely depressed due to external factors, i.e. not customers voting with their feet but market conditions, competition etc)
so if income line drops (either less growth or no growth), the cost line needs to reduce in line / greater than that.
very difficult to / I can't see BA trying to break out of that cycle by investing (thus increasing the cost line) with the hope of greater customer satisfaction leading to income growth (when that is largely depressed due to external factors, i.e. not customers voting with their feet but market conditions, competition etc)
#15
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Bits of it are funny (I used to do this stuff for a living).
"74% of forecast Q3 revenue is already booked" - well, erm, great but last time I looked it was 29th July! That means a third of Q3 has already gone.
This means that only (74% - 33%) 41% of expected August and September revenue has already been booked, which given that August is mainly holiday traffic and you would expect that to be booked long ago doesn't say much.
BA selling New York in Club today for £1,199 INCLUDING 3 nights in a four star hotel is probably more indicative of where we are. Same for yesterdays £1,200 Club World US West Coast deals from Scandi.
All that said, BA remains more successful than any of its competitors due to the effective duopoly on North America.
"74% of forecast Q3 revenue is already booked" - well, erm, great but last time I looked it was 29th July! That means a third of Q3 has already gone.
This means that only (74% - 33%) 41% of expected August and September revenue has already been booked, which given that August is mainly holiday traffic and you would expect that to be booked long ago doesn't say much.
BA selling New York in Club today for £1,199 INCLUDING 3 nights in a four star hotel is probably more indicative of where we are. Same for yesterdays £1,200 Club World US West Coast deals from Scandi.
All that said, BA remains more successful than any of its competitors due to the effective duopoly on North America.