Profit slumps by over 60pc at Aer Lingus owner

British Airways is the largest airline in IAG the group that also owns Vueling Iberia Aer Lingus and Level

British Airways is the largest airline in IAG the group that also owns Vueling Iberia Aer Lingus and Level

But shares rose as International Airlines Group (IAG) said full-year profits would replicate 2018's success, when income rose nearly 10 per cent to €3.2bn (£2.76bn).

Profit before tax fell 61.3 per cent to €86m year on year between January and March 2019, International Airlines Group revealed.

Revenues rose 5.6 per cent to €5.3 billion in the first three months of the year after the airline saw passenger numbers rise 6.2 per cent to 24.2 million.

IAG said average fuel prices were slightly lower than a year earlier but its fuel unit costs rose 15.8% because of unrepeated hedging gains in 2018 and the stronger United States dollar.

Demand was also dented by the later timing of Easter compared with 2018. Non-fuel unit costs are now expected to improve, whereas before they were seen flat.

However, shares still flew higher this morning, climbing up 4.5 per cent to 511.40p.

"IAG are in a better position to weather the storm of higher fuel costs".

"Brexit is hanging over the stock, and now that the UK's exit from the European Union has been deferred to possibly late October, some of the potential pain might be deferred too", Madden added.

Passenger revenue per available seat kilometre, a key industry metric for profitability, was down 0.8% to 6.16 euro cents, versus 6.21 cents past year.

He repeated his earlier guidance that full-year operating profit before exceptional items will be in line with 2018, with passenger unit revenue flat where before it had been expected to rise.

The airline sector has seen numerous issues in the past year, with price wars, rising fuel costs, industrial action from crews and an increasing number of Brits "staycationing" over Brexit uncertainty all taking their toll on airlines.

Despite reporting a 60% fall in operating profit over the first quarter to €135m and a 0.8% dip in revenue per passenger, a key metric in the industry for determining profitability, IAG's shares have actually risen 2% to 500p.