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British Airways owner IAG SA reported a drop in third-quarter earnings after the U.K. carrier’s first pilot strike since 1979 disrupted flights and held back sales.
The airline group, which also includes Spain’s Iberia and Aer Lingus of Ireland, had an adjusted operating profit of 1.43 billion euros ($1.6 billion), according to a statement Thursday, down 7% compared with 2018 on a pro forma basis. Analysts had predicted a figure of 1.44 billion euros.
Key Insights
Full-year earnings will be 6% or 215 million euros lower than first forecast due to the strikes and depressed fares at low-cost arms Vueling and Level, IAG said, confirming guidance from last month.
The September walkout upset travel plans for close to 200,000 people and led to a hit of 155 million euros on operating profit. Chief Executive Officer Willie Walsh said that the walkouts aside, the company had reported "good underlying results.”
IAG has lowered capacity growth this quarter, trimming the 12-month figure to 4%, while also reining in expansion for 2020. Walsh has said he won’t provide details until a capital markets day next month.
Like its peers, IAG has been grappling with the impact of a glut of seats across Europe together with fluctuations in fuel prices -- factors that contributed to the collapse of U.K. tour operator Thomas Cook Group Plc and eight other carriers in a little more than a year.
Market Reaction
IAG shares had declined 10% this year as of Wednesday’s close, cutting its market value to 10.3 billion pounds ($13 billion). German rival Deutsche Lufthansa AG is down 21% while Air France-KLM has advanced 14% amid turnaround efforts under new CEO Ben Smith.
