Shares in Aer Lingus owner IAG fell by almost 4% after the group warned that full-year profit will be hit by a pilots’ strike at its British Airways subsidiary and weaker sales by budget stablemates Vueling and Level.
Shares in Europe’s third largest airline group had fallen by over 5% at one point after it said recurring operating profit will fall €215m to €3.27bn this year in the wake of a strike that grounded thousands of BA flights this month.
The September 9-10 strike dealt a heavy blow to British Airways, still reeling from a third major computer failure in two years, which seriously disrupted operations in August. Pilot unions called off a second walk-out this week but said industrial action was likely to resume unless progress was made on a pay dispute.
“Any further industrial action will additionally impact IAG’s full-year 2019 operating profit,” the group cautioned.
IAG’s setbacks add to strains across the industry - including weaker demand, rising fuel costs and low-cost competition — which contributed to travel group Thomas Cook’s collapse and pose a threat to second-tier airlines.
But further bankruptcies among competitors will help to support IAG’s growth next year, group chief executive Willie Walsh told analysts.
“A number of weaker airlines are either disappearing or significantly reducing their capacity,” he said, predicting a “slightly softer” environment in 2020.
Reuters and Irish Examiner