IAG Half Year 2017 Results

Old Jul 28, 17, 2:54 am
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IAG Half Year 2017 Results

It looks like, overall, a solid set of numbers:

SIX MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (July 28, 2017) presented Group consolidated results for the six months to June 30, 2017.

IAG period highlights on results:

Second quarter operating profit €805 million before exceptional items (2016: €555 million)
Passenger unit revenue for the quarter up 1.5 per cent, up 4.0 per cent at constant currency
Non-fuel unit costs before exceptional items for the quarter down 0.3 per cent, up 3.5 per cent at constant currency
Fuel unit costs before exceptional items for the quarter down 10.4 per cent, down 13.2 per cent at constant currency
Operating profit before exceptional items for the half year €975 million (2016: €710 million), up 37.3 per cent, including the adverse foreign exchange impact for the half year of €44 million
Cash of €7,944 million at June 30, 2017 was up €1,516 million on 2016 year end
Adjusted net debt to EBITDAR improved by 0.4 to 1.4 times
Willie Walsh, IAG Chief Executive Officer, said:

"We're reporting a very strong performance in quarter 2 with an operating profit of €805 million before exceptional items which is up from €555 million last year.

"The underlying trend in unit revenue improved, benefitting partially from Easter and a weak base last year.

"Non-fuel unit costs before exceptional items are up, at constant currency. These costs include the financial impact of the power failure which affected British Airways' customers.

"In June, LEVEL started longhaul flights from Barcelona to four destinations. Sales continue to be well ahead of our expectations. We've ordered three additional aircraft and are considering other European bases for the operation."
Source: http://www.iairgroup.com/phoenix.zht...int&ID=2289772

Apparently, the IT fiasco has/will cost 58m.

Source: http://www.bbc.co.uk/news/business-40750168
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Old Jul 28, 17, 2:59 am
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A breakdown of the profits.

'IAG's operating profit for the six months to June 30, 2017 was 975 million before exceptional items, an improvement of 265 million from last year. British Airways made a profit of 741 million before exceptional items (2016: 631 million); Iberia made a profit of 84 million (2016: loss 6 million); Aer Lingus made a profit of 59 million (2016: 42 million) and Vueling's loss was 6 million (2016: loss 54 million).'
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Old Jul 28, 17, 3:03 am
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"Ticket prices should rise in the second half when stripping out currency effects, IAG said, joining Air France-KLM in suggesting that network carriers may enjoy a prolonged period of rising airfares. "
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Old Jul 28, 17, 3:08 am
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I believe WW was on Radio 4 earlier, but I missed him, and only heard Simon Caulder (and a lady who's name I cannot recall) speaking.

M
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Old Jul 28, 17, 3:13 am
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Originally Posted by rossmacd View Post

Apparently, the IT fiasco has/will cost 58m.

Source: http://www.bbc.co.uk/news/business-40750168
I read it as 'has' and there may be further costs booked in H2.
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Old Jul 28, 17, 3:16 am
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I thought the results might be more mixed following the strike and IT failure. But instead I see good results that presumably will only encourage BA to conclude that it's strategy is right.

I don't see that BA will be changing its cost-cutting focus anytime soon.
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Old Jul 28, 17, 3:29 am
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Originally Posted by Dan72 View Post
I thought the results might be more mixed following the strike and IT failure. But instead I see good results that presumably will only encourage BA to conclude that it's strategy is right.

I don't see that BA will be changing its cost-cutting focus anytime soon.
Sadly, I agree.
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Old Jul 28, 17, 3:55 am
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Well, there you go. The people voted with their feet.
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Old Jul 28, 17, 4:14 am
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And Walsh was quoted during an interview with the BBC saying they will get BA back into a Top 10 carrier over the coming years after being challenged about the "fall" from Worlds Favourite to number 40!!

No substance given though
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Old Jul 28, 17, 4:19 am
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Originally Posted by Dave_C View Post
I read it as 'has' and there may be further costs booked in H2.
"Other provisions includes a 65 million provision recognised during the period on additional compensation fees and baggage claims related to operational disruption at British Airways due to a power failure in quarter 2, 2017."

They should be taking a charge of the full excepted costs, not just the payouts to date, and appear to have done so.
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Old Jul 28, 17, 4:20 am
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Revenues were always going to go up when they started charging for something that used to be free. There is no surprise there.

A key figure is another fall in passenger revenue per RPK, although dont they usually break this up by airline?

Last edited by 1010101; Jul 28, 17 at 4:54 am
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Old Jul 28, 17, 4:25 am
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Originally Posted by 1010101 View Post
A key figure is another fall in passenger revenue per ASK, although dont they usually break this up by airline?
Isn't that inherent to the LCC / no-frills airline model ?

Increased profits though volumes rather than increased margins?
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Old Jul 28, 17, 4:31 am
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So they are sticking with the 'power failure' excuse? Making it sound like it was the fault of their electricity supplier / national grid rather than one of their own staff / contractors!

but 58m is pretty bad. Bet they are breathing a sigh of relief it's not a lot more due to people not claiming.
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Old Jul 28, 17, 4:54 am
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Originally Posted by Tafflyer View Post
Isn't that inherent to the LCC / no-frills airline model ?

Increased profits though volumes rather than increased margins?
Yes, especially considering passengers are now paying for food that was previously free. They're filling more aircraft but they're doing it with lower fares. Whether the strategy works wont be shown for a couple of years yet.
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Old Jul 28, 17, 5:13 am
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Originally Posted by 1010101 View Post
Revenues were always going to go up when they started charging for something that used to be free. There is no surprise there.
Not if people stopped flying with them, as many suggested would happen.
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