British Airways parent company International Consolidated Airlines Group (IAG) is expecting a significant impact on its annual profits owing to recent pilot strikes, which caused more than 2,000 flight cancellations.
In its updated full-year 2019 operating profit guidance, the group warned that the financial impact may cause profit losses amounting up to €170m (£150m).
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On 9 and 10 September, pilots union British Airline Pilots’ Association (BALPA) went on strike over a payment dispute, leading to the cancellation of 2,325 flights.
The net financial impact of the strikes is estimated to be €137m. IAG is taking an additional €33m hit for the disruptions, as well as the impact of threatened strikes by Heathrow Airport employees.
IAG also estimates a €45m hit caused by the dull booking trends in its low-cost airline segments (primarily Vueling and LEVEL).
Excluding exceptional items, its overall annual operating profit will be €215m lower than last year’s €3.49bn, based on current fuel prices and exchange rates.
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By GlobalDataIAG expects passenger unit revenue to slightly drop at constant currency and full-year capacity to grow by about 4%, compared to the previously planned 5%.
The guidance report confirms that there have been no further talks between British Airways and BALPA to resolve the payment issues.
In a statement, IAG said: “The airline’s offer of an 11.5% pay increase over three years still stands and has been accepted by British Airways’ other unions, representing 90% of the airline’s employees. Clearly any further industrial action will additionally impact IAG’s full-year 2019 operating profit.”
