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IAG, Airbus lift aviation sector

Friday, July 31, 2015 - 01:38

Gains in passenger jets offset more bad news from the A400M Transporter for Airbus - while a 40% rise in quarterly profits strengthens BA-owner IAG as it braces for an airline price war. David Pollard reports.

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European airlines are said to be bracing for a brutal price war this winter. Led, it's expected, by cost-cutting Ryanair. IAG may be a bit better placed to deal with it, after reporting a 40% rise in operating profits to 530 million euros. The owner of BA, Iberia, Vueling and soon Aer Lingus - says it's on track to meet annual targets after beating forecasts in Q2. Through its purchase of Aer Lingus, IAG will get lucrative new transatlantic slots at Dublin. Today coming out against a plan for a third runway at London's Heathrow for what IAG chief Willie Walsh called its ''outrageous costs''. The bid for the Irish airline seen as making sense, says Panmure Gordon's David Buik - in a way that Walsh's takeover of Iberia wasn't. (SOUNDBITE) (English) DAVID BUIK, MARKET COMMENTATOR, PANMURE GORDON, SAYING: ''He went for Iberian airways and everybody thought it was a complete dog and it's opened up the skies for British Airways or IAG. And Aer Lingus is, because of the natural correlation between North America and Ireland - there's a a very close association between the two - I think it makes an enormous amount of sense.'' Airbus's showcase transporter, the A400M, was initially costed at 20 billion euros. But cost overruns and delays have landed the project with provisions of over 5 billion - and that bill just got bigger. Airbus is taking a fresh charge of 290 million euros - an A400M crash during a test flight in May reportedly adding another 3 months to development. Airbus shares though shot up on a stronger-than-hoped for set of results - operating profit for the first half up by 6% on gains in its passenger jet and helicopters divisions.

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IAG, Airbus lift aviation sector

Friday, July 31, 2015 - 01:38