IAG, the owner of British Airways, has said it will offer fewer seats than planned on its aircraft because demand has weakened following the Brussels attacks.
The airline group was the biggest FTSE 100 faller in Friday morning trading after it said the bombings in March at Brussels airport and on the city’s metro system had hit ticket sales. Shares fell almost 5% to 526p.
Willie Walsh, IAG’s chief executive, said he would limit capacity-growth plans in the short term in response to the softer demand.
“We are reacting fast to what we believe is a softening in some markets,” Walsh said. “That’s a feature of our business now. We don’t wait around to see what the impact is. The pattern of behaviour after the Brussels events is very similar to what we saw in the market post the attacks in Paris, however I think it went a bit deeper.”
IAG, which also owns Iberia, Aer Lingus and Vueling, said lower fuel prices and ongoing cost cutting contributed to a first-quarter operating profit of €155m (£121m), up from €25m in the same period last year. It beat analysts’ expectations of a €145m profit.
Walsh said that while January and February’s revenue was in line with the trends seen in the final quarter of 2015, there was a slowdown at the end of the quarter in March.
“March revenue was affected by the timing of Easter and the Brussels terrorist attacks with the latter continuing into quarter two,” he said. Weaker demand for premium travel was also evident in the second quarter so far, he added.
Over the first quarter, passenger unit revenue was down 4.7%. Despite the warning on weaker demand for air travel, IAG maintained its profit forecasts for the year.
“In 2016, IAG still expects to generate an absolute operating profit increase similar to 2015,” it said. Profit increased 64% in 2015 to €1.8bn.
