British Airways owner IAG has seen earnings knocked by a 155 million euro (£134 million) hit from a summer of strike action as the UK carrier faced the first industrial action by pilots in its history.
The group revealed a 6.9% drop in third-quarter underlying operating profits to 1.4 billion euros (£1.2 billion) and reiterated last month’s profit warning that the impact of the strikes would leave 2019 earnings 215 million euros (£186 million) – or 6% – lower.
It comes after the unprecedented action by BA pilots saw the airline cancel thousands of flights early last month amid a long-running dispute over pay.
Members of the British Airline Pilots’ Association (Balpa) were due to walk out for another 24 hours on September 27, following the 48-hour stoppage, but the further action was called off to allow talks.
Balpa said if BA refuses meaningful new negotiations, it retains the right to announce further strike dates.
IAG chief executive Willie Walsh said it was a “good” performance on an underlying basis.
He added: “As we said in September, our performance has been affected by industrial action by pilots’ union Balpa and other disruption, including threatened strikes by Heathrow Airport employees.
“In addition, our fuel bill increased by 136 million euros (£117 million) during the quarter, with fuel unit costs up 4.2% at constant currency.”
IAG – which also owns Spanish carrier Iberia, Ireland’s Aer Lingus, Vueling and Level – said pre-tax profits were 10.4% lower at 1.26 billion euros (£1.09 billion) in the three months to September 30.
For the first nine months of the year so far, underlying earnings were 9% lower at 2.5 billion euros (£2.2 billion).
Passenger revenues per available seat kilometre – a closely-watched measure in the industry – rose 0.6% over the nine months, but passenger unit revenue fell 1.1% with currency movements stripped out.
Gerald Khoo, an airline analyst at Liberum, said: “The results were as expected, but impacted by the costs of the strike at BA, disruption costs and higher fuel costs.
“Margins were also squeezed by weaker unit revenue and higher non-fuel unit costs.”