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BA profits lift IAG to top of London index

London's equity markets enjoyed a boost in early trade on Friday, picking up the momentum after strong gains in Asia, with airline group IAG leading the pack after better than forecast earnings.

IAG's two largest divisions - British Airways and Spain's Iberia - performed well in the third quarter, the airline operator said, as operating profit rose 30.4 per cent to €900m in the period.

Although revenue per passenger unit eased 0.9 per cent, this was mitigated by falling costs as fuel unit costs declined 7.5 per cent. The company said it now expects to generate a €550m to €600m improvement in full-year operating profits. The shares gained 2.8 per cent to 401.6p.

"This upgrade is being driven by strong trading at BA's transatlantic operations, strong growth in premium cabin and lower fuel costs." said Robin Byde at Cantor Fitzgerald, maintaining a hold rating and a 470p price target.

Despite taking a pre-emptive hit to the tune of £400m to cover potential costs of a forex probe, Royal Bank of Scotland still managed to turn a £1.27bn profit in the third quarter, compared with a £634m loss in last year's corresponding period. The shares gained 1.6 per cent to 371p.

"Results were consistent with our buy thesis," said Joseph Dickerson at Jefferies. "The outlook statement contained management's usual 'health and safety' warning around future litigation and conduct charges."

Overall, the FTSE 100 was up 0.9 per cent to 6,518.21 - a strong end to the week in which the Federal Reserve ended its third round of quantitative easing and the Bank of Japan announced it was expanding its easing programme. Tokyo's Nikkei 225 jumped 4.3 per cent and markets across Asia and Europe received a boost.

Intu Properties gained 2 per cent to 342.1p after reporting it had secured a new revolving credit facility of £600m.

Shares in WPP eased 0.2 per cent to £12.06 after the advertising group's results showed evidence of a strong pound constraining earnings. The multinational group said third-quarter revenues were up 3.1 per cent to £2.76bn - ahead of market forecasts.

The company added, however, that 2014 was another demanding year as a strong pound and weak growth market currencies took their toll on profits.

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