Aer Lingus owner IAG today posted an unexpected profit increase as strong demand in Europe helped shield it from rising fuel prices that have hit the industry.
IAG, which also owns British Airways and Iberia, beat consensus expectations of a fall in profits even as jet fuel prices increased beyond what the airline group had planned for.
"The fuel price is certainly higher than we had expected but the general trading environment is good," IAG's chief executive Willie Walsh said, noting Europe had been especially strong without saying what destinations had been in particular demand.
"We've seen high oil prices before, and we know what to do," he added.
Analysts said that not only is the group adding more flights, it is managing to fill more seats on its planes while also getting a benefit from pricing.
They said that when the impact of higher fuel prices and unfavourable currency moves are taken out, it becomes clear IAG is doing some pretty impressive work on underlying operating improvements.
IAG said its profit for 2018 would increase by €200m, having previously said it would show an increase for the year without giving a figure.
Its third-quarter operating profit before exceptional items reached €1.46 billion, ahead of a company-compiled consensus of €1.43 billion and up from €1.45 billion last year.
Fuel unit costs for the three months to September 30 rose 15% at constant currency rates, IAG said, echoing comments earlier this week by budget airline Norwegian Air, which rebuffed a bid from IAG earlier in the year.
Norwegian, which competes with British Airways on transatlantic routes, posted results which lagged estimates due to the higher fuel price.
Fellow Nordic airline Primera Air went bust earlier this month and Walsh said it was no surprise that smaller airlines which can not hedge their fuel costs had gone out of business.
"I would expect to see more of this during the remaining part of this year and going into the early part of next year, given the fuel price where it is," Willie Walsh said.
He said there was nothing new to say in relation to IAG's interest in Norwegian. In August he said IAG remained interested in buying Norwegian but there were no active discussions.
Walsh also declined to comment when asked to estimate the cost of a theft of customer data at BA after IAG said that hackers may have stolen the personal information of a further 185,000 customers, taking the total number of payment cards potentially affected by the hack to 429,000.
