BA owner IAG cuts medium-term capacity and profit forecasts

IAG, which owns British Airways, is buying the Spanish Air Europa. (AP)
Updated 08 November 2019

BA owner IAG cuts medium-term capacity and profit forecasts

LONOND: British Airways owner IAG scaled back its forecast for capacity growth for the next three years on Friday, hitting its outlook for earnings per share but potentially providing relief for rivals in a weak global economy.

IAG said available seat kilometers, a measure of passenger-carrying capacity, was estimated to grow by 3.4 percent a year between 2020 and 2022, compared to a previous forecast of 6 percent growth a year for the 2019-2023 period.

The airline group, which also owns Iberia, Aer Lingus and Vueling, said the capacity growth cut would lower its forecast for growth in earnings per share (EPS) to 10 percent-plus a year from a previous forecast of 12 percent-plus a year.

IAG shares were down 3 percent in early trade.

The airline industry has struggled to maintain margins in the face of industry overcapacity and a muted economic outlook which has produced fierce competition over ticket prices.

Chief Executive Willie Walsh said last week that he expected global macroeconomic softness to continue in 2020. The company has also taken a hit from industrial action at British Airways, which knocked its outlook for profits this year.

IAG said the forecasts for capacity growth numbers were not adjusted for the impact of the pilot strikes. After 48 hours of action in September, no further industrial action is scheduled although the dispute over pay remains unresolved.

The issues at BA, which was forced to ground 1,700 flights during the walkout, was cited by easyJet as helping its performance in the last quarter, while Lufthansa has also said slower capacity growth at rivals was providing relief.

In a further sign of an easing of industry overcapacity, Ryanair is set to grow at its slowest rate in seven years in the year to March 31, 2021, as it expects further delays to its Boeing 737 MAX deliveries and may be without the jets next summer.

Friday’s strategy update comes after IAG said on Monday it would buy Spain’s Air Europa to boost its presence on routes to Latin America and the Caribbean.

IAG said it expected the deal, which will be funded through external debt, to close in the second half of next year and for it to add to its earnings in the first full year after the closure.

Algeria to cap wheat imports in bid to save foreign currency

Updated 49 min 57 sec ago

Algeria to cap wheat imports in bid to save foreign currency

  • Algeria is one of the world’s biggest buyers of the commodity
TUNIS: Algeria has decided to cap soft wheat imports at 4 million tons a year, instead of 6.2 million tons, the government said in a statement.

The decision aims to “preserve foreign currency and reduce Algerian imports of cereals, especially soft wheat,” it said in the statement late on Wednesday.

The government has also set the actual needs of the domestic market for soft wheat at 4 million tons instead of 6.2 tons imported each year, it added.

Algeria is one of the world’s biggest buyers of the commodity. However, hit by lower oil prices since 2014, it is trying to reduce its imports.