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Cargo sales fall 12pc as IAG profits rise 19pc to US$442 million

IAG (International Airline Group) after tax second quarter profit has increased 19.2 per cent year on year to EUR396 million (US$442.5 million), drawn on revenues of EUR5.7 billion, up 0.91 per cent.

But quarterly cargo revenue fell €12 per cent to EUR241 million during the same period, the company said.

Said CEO Willie Walsh: "Although visibility of revenue trends for quarter 4 remains low, we already have 74 per cent of our expected revenue booked for quarter 3."

The company also expects full year equity free cash flow to be within long-term EUR1.5 billion to EUR2.5 billion range.

Based on current fuel price and currency levels, and given high visibility over the second-half period cost reductions, the company now expects low double digit percentage growth in pre-exceptional operating profit in 2016.

"Trading conditions have become more competitive in 2016. Flat demand for consolidated general cargo and excessive freighter capacity in the industry is causing supply to continually outstrip demand," said IAG Cargo chief Drew Crawley.

"These challenges are not solely restricted to air freight, with increasing competition and capacity coming from road, rail and sea freight, exerting significant price pressures.

"These challenges are not new and despite these conditions, we have grown our revenue share. We continue to concentrate on the growth of our premium products, strong cost control and precision management of our capacity and yields," said Mr Crawley.