The company said that during the first half of 2016 it continued to experience a weaker trading environment in its United Kingdom point-of-sale business, which accounts for approximately one third of total revenue.
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Aer Lingus contributed operating profit of €42m to IAG group over the first half of the year as the group, which includes British Airways and Spain’s Iberia, recorded a 67% rise in profit compared to the first half of 2015.
News of the likely expansion of the Aer Lingus network came as its parent said it was cutting back on planned capacity growth in light of varous factors, including continued problems with air traffic control strikes in France.
IAG said there would be an intensification of its cost control and capacity discipline.
On the currency markets, the pound edged up 0.1% against the dollar to $1.3234 and was 0.2% higher against the euro at €1.1854. Passenger unit revenues (defined as passenger revenues per available seat kilometer) fell 10.2 percent, to €6.67 ($7.17).
“Cost initiatives now in the planning stage will benefit our earnings from 2017”, the Group said.
The group said it expects 2016 underlying operating profit to rise by a “low double digit” percentage.
“This is on top of very significant fuel cost reductions as our historic hedges unwind”.
In addition, attacks in Europe and a failed coup in Turkey have hit demand for travel, prompting rival airlines easyJet (EZJ.L), Lufthansa (LHAG.DE) and Air France-KLM (AIRF.PA) to warn on the impact of political upheaval and security concerns.
The company expects full year equity free cash flow to be within long-term 1.5 billion euros to 2.5 billion euros range.
Operating profit in the second quarter, which ended a week after the European Union poll, increased to 555 million euros ($615 million) from 530 million euros a year earlier, boosted by lower fuel costs and the purchase of Ireland’s Aer Lingus.
IAG, whose shares have fallen by approximately a third since the beginning of the year, is the latest in a list of airline stocks to cite post-Brexit uncertainty and terrorist attacks.
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IAG’s share price has dropped by a quarter since the UK’s referendum vote to leave the EU.
