British Airways Owner IAG Lifts Earnings on Long-Haul Recovery

British Airways-owner IAG SA boosted profit 9.7 percent in the traditionally sluggish first quarter and said full-year earnings are also set to gain as demand and pricing on key long-haul routes show signs of improving. Three-month operating profit before one-time items increased to 170 million euros ($187 million) from 155 million euros a year earlier, the London-based company said in a statement Friday. Analysts had expected a figure of 163 million euros, based on four estimates compiled by Bloomberg. IAG’s earnings surged 9 percent last year as June’s Brexit vote had less of an impact on traffic than the company had anticipated, with demand gaining in the second half. That trend has continued into 2017, with yields on services to North America improving and Asian tourists traveling more after staying way from Europe following a string of terrorist attacks. “This is a record performance in the first quarter, traditionally our weakest quarter, with the improving trend in passenger unit revenue continuing,” Chief Executive Office Willie Walsh said. At current fuel prices and exchange rates, operating profit should show an improvement year-on-year, he added. Revenue at the company, which also owns Spain’s Iberia, Aer Lingus of Ireland and discount specialist Vueling, advanced 2.8 percent to 4.94 billion euros, held back by the timing of Easter and the weakness of the pound, which reduces the value of British receipts when translated into euros. The company plans to target more U.K.-bound travel to offset the currency effect. First-quarter traffic, or the number of passengers carried times the distance flown, increased 3.3 percent, led by a 12 percent gain in the Asia-Pacific market. Travel on premium routes surged 6.9 percent in March and the second-quarter will also see fares improve, the company said. Walsh’s comments come after Air France-KLM Group, Europe’s largest airline, said Thursday that it had a strong start to 2017, with business bookings leading a fares recovery and cash flow on the increase. Deutsche Lufthansa AG posted a first-quarter profit for the only time in almost a decade last month, though the gain came mainly from aircraft-maintenance work and cargo shipments.