IAG warns of dip in earnings after British Airways strikes

Bloomberg

British Airways owner IAG SA warned that challenges facing the European airline industry are set to continue into 2020 after cutting profit guidance for this year.
IAG lowered capacity growth in the final quarter and will provide details in November of a decrease next year, Chief Executive Officer Willie Walsh said on a call with analysts. Earnings for this year will be about 6 percent lower than forecast in the wake of strikes at British Airways, its biggest unit, and depressed ticket prices at low-cost operations Vueling and Level.
The gloomier outlook provides further evidence of tribulations
in the travel industry as a European economic slowdown gathers pace. UK tour operator and airline Thomas Cook Group Plc collapsed this week, while eight other European carriers have folded within a little more than a year.
In addition to the dispute with pilots, IAG is facing persistent overcapacity in Europe and a fluctuation in fuel prices.
“Most airlines are moderating their capacity-growth plans,” said Walsh, adding that more bankruptcies are likely to follow Thomas Cook’s demise. “A number of airlines, weaker ones, are either disappearing or significantly reducing capacity.”
At IAG, full-year capacity growth is expected to be about 4 percent, compared with an earlier forecast of 5 percent. Operating profit before exceptional items will be 215 million euros ($235 million) lower than 2018 on a pro forma basis, the carrier said.