British Airways owner International Airlines group expects 2019 profits to be “broadly in line” with last year’s level of €3.2 billion.
The operating profit for 2018 was up by 9.5% over the previous year, with a pre-tax profit up by 9.8% to €3 billion.
Passenger numbers rose by 7.7% to almost 113 million as capacity increased by 6.1% across all regions except Asia Pacific routes. The load factor reached a record high for IAG of 83.3%, up 0.7 percentage points year-on-year.
CEO Willie Walsh said: “This was a very good performance despite three significant challenges – fuel prices increasing 30%, considerable air traffic control disruption and an adverse foreign exchange impact of €129 million.
The ATC disruption impacted Vueling resulting in both the Spanish budget carrier and the group missing its 2018 net promoter score target of 20.
Iberia’s 2018 score was broadly flat versus its target, while BA and Aer Lingus exceeded their 2018 targets.
Selling costs increased 6.5%, excluding currency up 8.2%.
“Selling costs rose from higher volumes, point of sale mix and changes in the group’s distribution model,” IAG said.
“The group launched a new distribution model in November 2017 increasing our selling costs with a corresponding rise in fares and more direct access to our customers.”
Average overall staff numbers rose by 2.1%, bringing the workforce to 64,734. Productivity increased 3.9% with improvements at BA, Iberia, Vueling and Aer Lingus.
Walsh said: “Yet again, we’ve improved our operating profit this year and our adjusted earnings per share grew by 15.1%.
“At constant currency, passenger unit revenue improved by 2.4% while non-fuel unit costs decreased by 0.8% on capacity growth of 6.1%.”
Looking forward, the group said: “At current fuel prices and exchange rates, IAG expects its 2019 operating profit before exceptional items and impacts of IFRS16 to be broadly in line with €3,230 million reported in 2018.
“Passenger unit revenue is expected to improve at constant currency and non-fuel unit cost is expected to be flat at constant currency.”
Meanwhile, IAG revealed an order for 18 Boeing 777-9 long-haul aircraft, plus 24 options, for BA.
They will be used to replace 14 Boeing 747-400 jumbo jets and four Boeing 777-200s between 2022 and 2025.
Each aircraft will have 325 seats in a four-class configuration.
Walsh said: “The new B777-9 is the world’s most fuel efficient longhaul aircraft and will bring many benefits to British Airways’ fleet.
“It’s the ideal replacement for the Boeing 747 and its size and range will be an excellent fit for the airline’s existing network.
“This aircraft will provide further cost efficiencies and environmental benefits with fuel cost per seat improvements of 30 per cent compared to the Boeing 747. It also provides an enhanced passenger experience.”
BA has 135 widebody long-haul aircraft in its fleet with 12 more Boeing 787 Dreamliners, four B777-300ERs and 18 A350s on order.
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