British Airways owner International Airlines Group has cut its profit forecast for the second time since the EU referendum, blaming the weaker pound and poor trading.
IAG, which also owns Vueling, Iberia and Aer Lingus, had a bumpy ride in the third quarter as profit took a €162m (£145m) hit from the pound’s tumble and air traffic control strikes, which led to repeated flight cancellations. This comes on top of a €148m currency hit in the second quarter.
Bookings also suffered because of the Brexit vote, especially for business travel.
The IAG chief executive, Willie Walsh, said: “The group experienced weak trading conditions in June leading up to and following the vote, with an emphasis in premium cabins.
“The vote to exit also created volatility in the foreign exchange markets. Weakening of the pound sterling impacted the translation of the group’s sterling subsidiaries and reduced the group’s profits, net assets and other reserves.”
At current fuel prices and exchange rates, operating profit this year would come in at about €2.5bn, Walsh said.
That would be 8% higher than the €2.3bn last year, but a downgrade from the “low double-digit” percentage growth estimated in late July and City forecasts of €2.6bn. The company was quick to warn on profits the day after the Brexit vote.
In the three months to September, IAG’s operating profit excluding one-off items fell by 3.5% to €1.2bn, with revenues down by 4% to €6.5bn.
Ryanair and easyJet have also been affected by the weak pound, but German airline Lufthansa lifted its profit target for 2016 last week after enjoying better than expected business bookings.
