IAG moves into black in first half and buys Airbus jets - UPDATE
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British Airways and Iberia owner International Airlines Group (IAG) moved into the black in the first half, said cost-cutting should help it boost annual profits and announced it was buying 16 Airbus jets.
IAG made first-half operating profit of €230m against an operating loss of €33m a year ago, while second quarter operating profit was €380m versus €245m before one-off items.
The group said it expected to improve annual operating profit by at least €500m from €770m in 2013, although passenger unit revenues would stay relatively flat, with margin expansion driven by a reduction in unit costs.
Referring to airline safety after the Malaysia Airlines crash in Ukraine, chief executive Willie Walsh reportedly told BBC Radio 4's Today programme that BA stopped flying over Ukraine's conflict zone in early March, months before the downing of flight MH17.
Libya and Syria are also no-fly zones for the airline group, although Iraq is judged to be safe. IAG said airline safety was under constant review by risk assessors.
IAG has been slashing costs by cutting jobs and changing working practices at Spanish flag carrier Iberia, including an announcement last week of up to 1,427 jobs.
It said the cuts would allow it to buy eight Airbus A350-900s and eight Airbus A330-200s to replace older aircraft in Iberia's long-haul fleet.
IAG secured commercial terms for the A350s as part of the group long-haul order announced in April 2013.
It will acquire the eight A330s either by converting existing options from its Airbus order in 2011 or from the operating lease market, depending on financial and delivery terms.
IAG said it was trimming planned group seat capacity by around three percentage points for the winter 2014 season.
BA's operating profit was €332m in the quarter, up from €247m last year while Iberia made an operating profit of €16m, compared to an operating loss of €35m last year. Spanish budget carrier Vueling's operating profit was €30m, up from €27m last year.
Walsh said:"This performance shows we are making further solid progress."
Shares in IAG rose 4.4p or 1.3% to 335.2p at 12:33 in London.
PW