Profit at IAG up over 20pc as passenger unit revenue increases

IAG re-confirmed a €65m hit as it paid out compensation following a power failure that caused severe disruption at British Airways over the May bank holiday weekend.

The London market was trading higher but shares in British Airways owner IAG dropped almost 5%, despite the airline group reporting higher profits.

Pre-tax profits in the nine months to September were up 21.7pc to €1.8bn, while revenues rose 1.3pc to €17.5bn.

CEO Willie Walsh told analysts that stripping out Aer Lingus, Level and three new BA transatlantic routes, unit revenue had grown by slightly over 1 percent on the North Atlantic routes.

"However, there may be short-term concerns about unit revenue trends, with the Q3 improvement (+2.2% constant currency) slower than Q2 and Lufthansa's Q3 outturn".

But Mr Walsh said consolidation was good for the industry and consumers and left opportunities for more efficient players such as IAG. He said Vueling could expand in Germany and Italy. Monarch's administrators are seeking court approval to sell the slots.

IAG said in a statement this morning that its operating profit before exceptional items had climbed to €1.46 billion in the third quarter, up from €1.21 billion in the prior-year period.

Shares in International Consolidated Airlines Group (LON:IAG) have fallen deep into the red in today's session, even as the British Airways and Iberia parent posted a rise in profits for the third quarter of the year.

IAG's stock has already risen by almost 50% this year.

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