British Airways owner IAG's profits hit by weak pound and strikes

The owner of British Airways has blamed a weak pound and air traffic control strikes for a rocky third quarter.

International Airlines Group (IAG) said operating profits had fallen by 3.5% to £1.08bn in the three months to the end of September, while revenue before exceptional items was down by 4% to £5.2bn.

The group said that it had come under pressure during the past nine months, with lower fuel prices only only partially offsetting the effects of Britain's vote to leave the European Union, overseas terrorist attacks, air traffic control strikes and currency movements.

It said it suffered "weak trading conditions" in June - both before and after the Brexit vote - with its premium cabins bearing the brunt of the slowdown.

However, it added that it had not faced any "immediate regulatory impact" in the aftermath of the EU referendum result.

Chief (Taiwan OTC: 3345.TWO - news) executive Willie Walsh said: "While strong, these results were affected by a tough operating environment with a very significant negative currency impact of €162m (£145m), primarily due to sterling weakness and continued disruption due to air traffic control strikes.

"At current fuel prices and exchange rates, IAG expects its operating profit for 2016 to be around €2.5bn (£2.2bn) and has seen no significant change in its short-term trading conditions."

George Salmon, equity analyst at Hargreaves Lansdown (LSE: HL.L - news) , said: "With (Other OTC: WWTH - news) the outlook for the UK and world economy shrouded in uncertainty, the airline sector could be set for some turbulent times."

On Wednesday, IAG announced a new pensions agreement at British Airways, capping any extra contributions the airline could be forced to make.

This is expected to give BA more space to pay dividends to IAG.

On Tuesday, Mr Walsh had warned that the cost of a new runway at Heathrow would "make or break" the project, adding that the UK and travelling public must "get the benefits from the runway - not the airport's owners".

IAG shares were up just over 2% in early trading.