British Airways owner IAG has reported a 75 per cent jump in profits in the first three months of the year, but kept tight-lipped on the future of its proposed takeover of Norwegian Air.
IAG shares were on the up after it revealed profits in the first quarter surged to €280million, racing ahead of the €206million forecast by analysts and marking a jump of €120million since last year.
Total revenues rose 2.1 per cent to more than €5billion and the group said it was on track to hit full-year targets.
Profits soared in the first three months of the year for the owner of British Airways.
Willie Walsh, IAG Chief Executive Officer, said: ‘We’re reporting another strong quarter performance with an operating profit of €280million before exceptional items, up from €160million last year.
‘Our positive passenger unit revenue trend continued with an increase of 3.5 per cent at constant currency. This trend benefited partially from the timing of Easter. Non-fuel unit costs before exceptional items were down 0.9 per cent at constant currency.
‘Despite higher market prices, our fuel unit costs have gone up by just 0.6 per cent in euros.’
He added that British Airways had put in place a ‘flexible defined contribution pension scheme’ to replace the New Airways Pensions Scheme and BA Retirement Plan.
IAG boss Willie Walsh (pictured) said it had been a ‘strong quarter performance’ but refused to divulge any information about the group’s potential takeover of Norwegian
The group bought a 4.6% stake in Norwegian this year but has not yet said what it plans to do with the business
IAG said very little on its potential takeover of Norwegian, despite it buying a 4.6 per cent stake in the struggling airline in April.
It later emerged that Norwegian had in fact turned down two offers from IAG, with its bosses claiming it had had ‘serious’ offers from other airlines sparking rumours of an imminent bidding war for the airline.
The lack of an imminent offer sent shares in Norwegian down eight per cent in early trading, IAG had only said it was ‘currently considering its options’.
Neil Wilson, chief market analyst at Markets.com, said the Norwegian deal would keep investors interested ‘for the time being’, and that deal made good business sense for the BA owner.
On Norwegian’s rebuffal of two IAG takeover bids, Wilson said: ‘Whilst the conditions of Norwegian still suggest it needs a bidder, on balance the rebuttal reduces the immediate likelihood of a transaction.
‘At the same time, if IAG cannot get a deal done quick it definitely raises the prospect of a counter from another suitor and a potential bidding war.
‘Shares in Norwegian have slumped, suggesting the market believes the former is a shade more likely.’
IAG shares on the other hand jumped five per cent higher on Friday morning following the solid results for the first quarter.
Wilson added: ‘Whatever the case, as long noted, the European airline sector is still stretched and capacity growth is only making things tougher – consolidation is a certainty and Norwegian is a prime candidate.’