Thank you very much, and good morning, everyone. Thank you for joining us. As you can see, these are good underlying results. The quarter was negatively affected by the bulk pilot strike at British Airways. Our operating profit of $1,425,000,000.
That's a margin of 19.5% The impact of the strikes and disruption in the 3rd quarter is 155,000,000. If you remember on the 26th September, we indicated a total of $215,000,000 impact for our full year. So $155,000,000 of that has affected the 3rd quarter and the balance $60,000,000 will be in the 4th quarter. We continue to have very strong ROIC performance with the last four quarters equating to about 14.8% and we've continued with our January cash returns. I'm pleased to say the, Board of IAG yesterday approved an interim dividend of 14.5 per share, which will be payable in December.
And our guidance for full year 2019 remains unchanged from the we gave you on the 26th September. Our 4th quarter capacity growth will now be one point 9%, and that will give us a full year capacity growth of 4%. So to take you through the details of the financial results and got hand over now to, Steve Gunning. Steve over to you.
Thanks, Willie. Good morning. We turn to Slide 5, as Willie said, the operating profit of 1425. That's $105,000,000 down year on year, as Willie said, $155,000,000 of the deterioration is the consequence of the strike and disruption. And the slight softening we saw of welling in Q3.
It's also despite an increase in the fuel bill of 1,000,000 in the quarter. And clearly, there's been a little bit of FX help going the other way of about $41,000,000. So that's the operating profit. If you look at ASKs We originally guided you to 5.2 percent ASK growth for Q3 when we were doing the half one results. Actually, our ASK growth for the quarter has only been 2.8%.
So 2.4 points of ASK decline compared to previous guidance. 1.5 points of that relates specifically to the BA strike. So not really a surprise there, but that explains the deterioration. If we then look at passenger unit revenue, it's down 1.1% constant currency. I'll take you through a slide in a moment on that to get under the skin and give you some color as to what's going on on passenger unit revenue.
But if you look at total unit revenue, it's also down 1.1%. And that probably masks 2 offsetting factors. You've got the cargo business, in a challenging environment at the moment. Global trade seems to be slowing and across the air freight industry we are seeing a reduced demand. And so air cargo for us in Q3, the revenue was down 7% Offsetting that, we are seeing good performance in BA Holidays and the Iberia third party MRO business and third party handling business.
So those 2 are largely offsetting one another and hence, while total unit revenue looks pretty much the same as passenger unit revenue. On a performance. In terms of non fuel unit costs, they're up 1.1%, clearly impacted by the disruption, and strikes not only because that increases our costs, but it's also reduced our ASKs. If you strip out the non ASK driven businesses in our groups such as VA Holidays and Iberia, MRO, which I've just alluded to on the revenue side, actually our non fuel unit costs are largely flat. And then if you look at total unit costs, You can see they're up 1.9%.
And that's factoring in the fuel bill as well as the non fuel unit costs. And What we're seeing with fuel is, although the commodity price is down, the net impact of our hedging year on year is up and hence, it's increased our costs as I said earlier, the overall fuel bill year on year is $136,000,000 higher. So those are the sort of highlights. Let me turn to the next slide, which should give you a bit of a feel as to what's going on with unit revenues in the quarter. And as you can see, we've turned this as mixed revenue performance There's various different things going on in different regions.
Overall, as I said, ASKs were up 2.8% and RAS was down 1.1%. But if I quickly take you through, the each of the regions and give you a flavor of it, domestics 80 7 percent of the domestic ASKs relate to Welling and Iberia flying to the Canary Islands and the Balieric Islands. And What we're seeing there is strong revenue growth again in Q3. You're not seeing the dramatic RASK improvement that we saw in Q2. Simply because we're now cycling over the resident discounts that were introduced last year.
So still strong revenue growth but not quite the same level of RASK improvement that you saw in Q2. In terms of Europe, you see the RASK is similar to the Q2 performance, but offer lower ASK growth. One of the reasons for that is, last year, 2018, Q3 Europe performance was particularly strong. We were seeing RASK performance last year, up 4.5% on 6% ASK growth. And that was largely driven by BA and Welling last year.
If I look at Iberia and Erlingus their performance in Q3 has been very similar to that as Q2. In terms of welling MBA, we've seen some degree of softening softening partly attributed to some of the disruption that we've seen in the quarter. And furthermore, when we gave you the re guidance on the 26th September, we talked about we saw some softening happening in dwelling demand, and, you know, consistent with that, France and Italy seem to be the roots in particular. That are softening there. If I turn to Asia Pacific, bear in mind, 91% of the ASKs of this region relate to British Airways.
And so the strike and disruption impacts will have a significantly distorting effect on Asia Pacific. And as you can see, the RASK is minus 3.7 compared to up 1.9% in Q2. Factors over and above the strike, impact in Asia Pacific are 1 Hong Kong. Hong Kong's clearly going through a period of unrest, as we know. And we're seeing a RAS decline in Hong Kong, you know, low double digits.
So, we're certainly seeing that come through on that route. And the other development in Asia Pacific that's coming through is with regards to mainland China. Particularly Beijing where we're seeing a lot of competitive capacity coming in. If we look at Africa, Middle Eastern, South Asia, Once again, 90% of the ASK for this region relates to British Airways and so the strike will have had an impact there. But other factors that we're seeing in that region are post, the Nigerian election sort of at the end of Q1, we saw a little uptick in performance in Nigeria in Q2 because there were some pent up demand.
Clearly, that come off of there in Q3. In terms of Middle East, the timing of aid compared to the school holidays, has had an adverse impact. And we've also mentioned to you that we did divert capacity away from South Africa into India with the demise of Jet, that's come through, but when you bring so much capacity across in a quick period of time, you will see some degree of rest decline, and that's what we've seen in AMISA. With regards to Latin America and the Caribbean, a slight improvement on the RASK from Q2. In terms of Argentina and Brazil, both have shown some improvement in Q3.
Argentina is not a structural change. We just saw a sort of small bubble of increased demand ahead of the elections in Argentina, we would expect some deterioration on the other side of that as a consequence. In terms of Brazil, more positive comment with actually do see some signs of improvement in Brazil, which is encouraging. If we look at the sort of non Argentina and non Brazil part of this region, actually we're still seeing double digit revenue growth, across the board and a strong performance. And then last but by no means lease, North Atlantic, once again, BA's 68% of the case there.
So the strike impact will have had a noticeable impact in this region. It's the first time, we've seen North America reduce ASKs since 2013. If you look at the non BA element of the North Atlantic, you'll actually obviously, the RASK is up broadly 2% on ASK gross of about 3%. And that's particularly driven by Aerlingus performing well and Iberia performing solidly. So North Atlantic, we're not seeing an underlying deterioration.
We did see clearly some strike impact in North America. So that gives you a bit of a flavor as to what's going across going on across the regions from a revenue perspective. We turn to Slide 7, talk about non fuel unit costs. As I say, they're up 1.1%, but if we strip out the non ASK driven businesses were up 0.2% on an adjusted basis. Quickly running through these.
In terms of employee costs, 2 drivers for the improvement. 1 is productivity improvements overall across the group, particularly in Iberia and Ailingus, but also the cost per head has improved. Now this is not a structural change, but we, as we indicated, when we re guided, we have released the BA bonus provision in the quarter. And as a consequence, that benefits coming through in these numbers. If we look on the supplier line, the cost, non fuel unit costs for supplier are up 2.4%.
Basically driven by BA in Iberia. For BA, it's the impact of strike and disruption, so compensation costs, etcetera, coming through. And also for BA, it's the growth in the BA holidays cost base, which corresponds to the growth in the revenue with Iberia, you're seeing the engineering costs up largely related to the 3rd party MRO business. And then in terms of ownership in this, IFRS 16 world, the ownership costs, depreciation costs coming through on the aircraft, And we've had a number of new aircraft deliveries in the quarter or in the year, which are affecting the quarter's cost. And as we returned to fuel, as I alluded to earlier, commodity price is actually down.
It's down from about 700 jet dollars per metric ton to about $6.18 for the quarter, but actually it's the impact of a hedging that's driving up the unit costs. Few more details on fuel. If you turn to the next slide, several comments on this. Firstly, you can see that our fuel bill for 2019, we estimate will come out at CHF 6,000,000,000. That very slightly down on what we guided before, but to be honest, it's before we were rounding up to 6.1 and on this one, we're rounding down to 6.0 We're 96% hedged for the rest of the year, so the fuel bill should not move a great deal based on commodity price.
And as you can see, with the detailed chart that we've shown you here, which is basically, overlaying a 30 jet price and a $110 to euro exchange rate onto our hedge book, to give you a feel for what we'll see in 2020. And as what you can see there is we'll have gone from a fuel headwind that we've experienced in 2019 to a fuel tailwind in 2020. And we slide has really alluded to in his summary at the beginning. It's been a strong quarter from a margin perspective at 19 a half percent despite some of the challenges we faced in the quarter with fuel and disruption. That's also meant that the return on invested capital is very close our 15% target.
And so we're pleased to see that resilience coming through in the business. And, as you can see, all 4 of our major airlines are performing strongly in the quarter. If I turn to the next page, Slide 10, in terms of leverage and cash, You can see our net debt to EBITDA is at 1.2x. That's consistent with where we were in December. Our cash is at a very healthy 1,000,000,000.
It was at 1,000,000,000 at the half year. Number of things have been happening on the cash front during the quarter. Clearly, we did our debut bond issuance, which raised 1,000,000,000. We actually redeemed our 2022 convertible, which was about 1,000,000,000. And we've also, as we alluded to earlier, paid a final and special dividend during the quarter as well.
So strong cash position and strong leverage We go to the next slide. It's worthy of note that last Friday we put out an R and S to say that we've concluded our triennial valuation for the NAPP's pension scheme. Just to take you through a few of the highlights, the deficit, the actuarial deficit came down from $2,800,000,000 to $2,400,000,000. We have been up to this point been paying off, up to 2027, a hit contribution of $300,000,000 per annum plus a cash sweep of up to $150,000,000 per annum as well. To be frank, in the previous 2 or 3 years, we'd always paid out at the 150.
So we've basically been paying out 450 every year. What we've done under the new agreement is gone from 300+1 50 to 450,000,000 fixed. But those payments go out to 2023, rather than 20 in the last agreement for the trustees, which sort of said, if we paid out the dividend higher than 35% profit after tax, then we needed to make, other benefits or handover other benefits to the trustees. We've now increased that level from 35% to 50%, which gives us more flexibility in moving cash up from British Airways keen as part of this agreement to, introduce over funding, protection mechanism. So as this scheme matures and Now it's close to future accrual comes into land.
We wanted to make sure that we didn't make payments into the scheme that were ultimately unnecessary. And so under this mechanism, When we get to a 97% funding level, we then start making payments into escrow rather than straight into the scheme. And when we reach 100 percent funding, we cease paying whilst the formal valuation is carried out. And last but not least, with regards to NAPS, as we've indicated before in the annual report and accounts, etcetera, there was a 250,000,000 contingent liability that we knew we were going to have to pay either to apps the older scheme or to maps, the scheme we've just been talking about We were very keen it went across to NAPS because that was the scheme of the very significant deficit and as part of this arrangement with NAPS and also our discussions with APS I'm pleased to say that 250,000,000 will go into the NAP scheme. Just one comment with regards to apps no real change from what we've updated before, which is we've reached agreement with the trustees.
The trustees are seeking court approval and that process is ongoing, and we would hope to hear about that, during quarter 4. So good progress on the pension arrangements compared to where we were. I think that's it in terms of the financial summary. I'll now hand back to Willie.
Thank you, Steve. But as you can see from the next chart, we've continued to decelerate the capacity growth as we've gone through the year with 4th quarter capacity growth plans now is 1.9%. That's a significant reduction from previous guidance and giving us, say, full year capacity growth of 4%. So consistent with what we said at the beginning of the year, if we the opportunity to trim capacity, we would do so. And you can see the capacity plans for all of the airlines on the charts.
And finally, before taking your questions, just to reiterate that our guidance remains unchanged from the guidance we gave you on the 26th September update. So at current fuel prices and exchange rates, I expect its 2019 operating profit before exceptional items to be 1,000,000 lower than 2018 pro form a, which was 1000000000. Passenger unit revenue is expected to be slightly down at constant currency and non fuel unit costs are expected to improve at constant currency. So I'll hand back now to the operator, and we will start taking your calls.
You, ladies and gentlemen. We'll take our first question from the line of Daniel Roeska from Bernstein Research. Please go ahead.
Thank you. Good morning, everybody. Two questions then. One on LatAm and the delta move. Could you comment a little bit how this changes kind of your view on joint venture prospects to South America?
And generally, how you would view the South American market, with the Delta LatAm JV in place, and your competitive position vis a vis that? And then secondly, could you update us on the current level of non European ownership and maybe any chance or any thoughts about how to address the permitted maximum and what's the timeframe for that?
Hey, thank you. I suppose I should start by complimenting Delta on their move to acquiring a 20% stake in LatAm, which, for them, I think was a very good strategic move. As you know, our close partner Katar has a 10% stake in LatAm, and we continue to have a good relationship with LatAm, but this clearly does potentially change the nature of that relationship, like others, we were disappointed when the Chilean courts refused permission for our joint venture with LatAm to Chile. We did have or do have approval to Brazil but clearly having approval in one country and that another does create logistical challenges to see how that could operate. So we continue to have discussions with LatAm in relation to that.
The market is an important segment for us. We have a lot of direct services, and that's one of the strengths of IAG, particularly at the Iberia network with the direct distribution that we have into Latin America, and it remains an important focused market for us. So we will give you some updates at Capital Markets Day on Friday week in relation to that. And on your second question, nothing new to say. And again, we may well, in fact, we will have some comments to make when we talk to you on Friday week at our Capital Markets Day presentation.
Thank you. Our next question comes from the line of Savi Syth from Raymond James.
Hey, good morning. Just I know you don't really necessarily like to break out premium, but we've had, I've heard some commentary, from the U. S. Carriers as well as airframe. On softness on the premium cabin and premium demand.
I was wondering if you can provide any color on what you're seeing there from kind of a corporate and premium basis. And then just second on the cargo side, any color on what if there's any change in trends or or if there's any kind of change in strategy in response to the softness there? Thanks.
Yeah, we don't stood out premium. But just to comment, our premium traffic continues to be very much in line with our plans. Corporate traffic is good. We're not seeing any change in trends as we've gone through the year. So there's, I'm not sure what others are seeing, and I haven't had the chance to, look at the specific comments from Air France KLM, but, we're not seeing anything that would cause us to highlight a change in the performance or in trends at the very much as we would have expected.
And on cargo, I think what the cargo or cargo is seeing a structural, continuing structural disconnect between the supply of capacity and the demand. And we had been talking about this for many years. And in fact, if you go back to when Steve was running the cargo business, he took the decision. I was actually 4 years ago, maybe, yeah, probably a bit longer to get out of dedicated freighters. And to rely solely on belly hold cargo space because we were seeing structural change at that stage.
So where I would argue performing better than the industry in terms of our performance. So although our cargo revenues are down, I think they're, ahead of where the industry would be. And that's largely because of the decisions we took strategically a number of years ago. And our focus on premium air freights rather than the traditional bulk air freights. So Our business, like oil air freight is being challenged by the combination of excess capacity and weaker demand, but I think we're performing better than the industry and it reflects the strategic focus of our cargo people.
Got it. Thank you. Thank you. Our next question comes from the line of Jared Castle from UBS. Your line is open.
Thank you, and good morning. Can you give an update on kind of thinking around, Thomas Cook slots, please? And then secondly, I don't know if you can say anything, but obviously 1.9% capacity growth in Q4 for this winter quarter. Should we be thinking about lower number in Q1, just given the base effect on all? Thanks.
Thanks, Jared. Good morning. In relation to Thomas with expressing interest in a very limited number of slots at Gatwick. The general slot portfolio that the Thomas Cook Health at Gatwick wasn't that particularly attractive. And with the exception of some limited slots, we have no interest in any of the residual assets or activities of the Thomas Cook group.
And as you will expect me to say, I think you're going to have to wait until tomorrow week for an update on capacity plans for 2020 and beyond. The one thing that I would say and we've been saying this now for some time is that given that we have seen softening macroeconomic conditions in 2019. And we've adjusted our capacity to reflect that We've been very clear that we do have the ability to adjust capacity quickly. We still see growth opportunities next year. So you should expect us to, give you ASK growth figures for 2020 and beyond, but it's clearly not going to be anywhere close to the guidance we would have given at Capital Markets last year, but we will update you tomorrow week.
Thank you. And our next question comes from the line of James Holland from Exane. Please go ahead.
Hi, good morning. Just one for me actually. I if you could give us an update on the BA pilot strikes. I think, Willie, you were quoted this morning saying the fact they've not called for more is a good sign. Maybe just say, is that a good sign where early.
And if you're a betting man, does this get dealt with positively quite soon? Thanks.
Thanks, James. I don't think I gave any quote this morning, but, I am confident that this will be resolved and, Yeah, I know that the team at British Airways are, very much focused and engaged fully in resolving the issue. And I am very confident that we will see a resolution in the very near future.
Thank you. Our next question comes from the line of Neil Glynn from Credit Suisse.
Good morning. If I could also ask 2 questions, please. The first one on your property IT, another cost line. I appreciate you, your report multiple things in there, but it's flat year on year. And I'm just looking towards understanding how we should think about spending on IT, on maintenance and system upgrades versus the utilization of suppliers you've talked about in the past?
And it's possible to give color on that because it is down 5% year on year on an per ASK basis? And then second question of the North Atlantic, obviously, the underlying performance suffered from European point of sale, dominance or overstatements in the third quarter. Should the change in mix U. S. Versus European point of sale have a meaningful impact on 4th quarter unit revenue trends on the North Atlantic?
Thanks, Neil. In relation to IT, we continue to invest. In fact, our IT spend going forward will show an increase. We have a new CIO in place, his initial comments to us where that in fact, he thinks we've got opportunities to reduce spend in some areas and use that to invest and where possible accelerate some of the structural change that we're making. But going forward, we will see further investment in IT infrastructures.
We continue with our plan moves, as most people are doing to hybrid clouds, technology. So we may give you some feel for that, on Friday week when we update you on our plan. And on North Atlantic, no, I don't expect any issues in relation to the North Atlantic in Q4. Our assessment of Transatlantic is good. We see good demands, good corporate activity, good premium activity, It was clearly impacted in the 3rd quarter by the, free share based pilot strike But as Steve mentioned in his, update you there, the Linger's performance in the quarter was particularly encouraging and just reinforces the strategic decision to acquire Erlingus and to continue to invest in their transatlantic growth, which is proven to be very attractive for us.
And you should expect that to continue going forward as Erlinda takes delivery of more A321s A330s and then beyond that, the A321x general. So Transatlantic is good. We see opportunities to expand the network, and we may have some news in relation to that. So that would apply to BA, Erlingus and to Iberia. So it's clearly an area that is continuing to perform well for us.
Thank
you. And our next question comes from the line of Andrew Lobbenberg from HSBC. Your line is open.
Oh, hi there. Can I again, this is a risk you want to delay discussing it until next week, but can you tell us anything what's happening at level, where I think there was a change of leadership? Are we going to see that set up as an AOC or as a specific company, where are we going with that? And then a second question relating to the ongoing CMA, the competition markets authority review, of the North Atlantic and the JV between you guys and and American. There was something in the press saying that the CMA expected to report by December.
Do you know if that's still on track given that the transfer from the EU to them was all predicated on Brexit having happened anyway. So have you got any color as to what plays out there?
I have to be honest, Andrew, no, we don't have any more color than you have in relation to that. So that CMA activity continues I'm not clear and certainly our competition lawyers are not clear at this stage as to whether there will be an update in December They have asked for information as we've gone through the year and we continue to supply them with information, but I have no update that I can give you and we'll just wait for them to issue their findings or to issue an update. On level, yes, we will clearly say a little bit more about that on Friday week. We appointed Fernando Candela as the CEO, Fernando has got a great track record in low cost, having established Iberia Express is probably one of the best low costs, certainly in terms of a low cost subsidiary of an airline Iberia Express is a fantastic success story, and he's now in charge of level. We've given him, I think he's there 6 weeks now, so he's he's pulling plans, his plans together for that.
And we'll, give you some more flavor around that when we talk to you on Friday week.
Okay, thanks.
Thank you. Our next question comes from the line of Jamie Roebotham from Deutsche Bank.
Morning. Just one from me. There's been some kind of interlining agreement between JetBlue and Norwegian. And at the same time, I think Norwegian do seem to be making some progress with their turnaround. Have either of those things surprised you?
And does it impact how you're thinking about the ambitions of level in the long haul market? Thanks.
No, neither of those developments surprise us as you know, we interline with JetBlue through Erlingus, we've got a loan established and very successful and constructive relationship with JetBlue, from an Erlingus point of view. We know the team very well there. Robin and Steve, the CFO, Steve Preese, are both XBA people. So, you know, we know JetBlue very well. Good business and clearly, have ambitions, but we work with them through Erlingus and we will continue to do that.
So I wasn't surprised It's very limited in terms of their interlining with Norwegian, given the Norwegian network into North America And we continue to wish Norwegian well. And they've done what they needed to do, which is what we said, they would have to start significantly reducing growth and in many cases, putting capacity if they were to improve the financial performance clearly not out of the woods yet, and I think they still have a long way to go, but their initial measures are what you would have expected. And I hope they continue to turn the business around, but, no surprises in either JetBlue or reaching them what they're doing.
Okay, thanks.
Thank you. Our next question comes from the line of Damian Brewer from the Royal Bank of Canada. Please go ahead.
Good morning. 2 from me. First, I know you don't like pulling this out, but could you maybe elaborate a little bit more given that the 7 87 issues still seem to be ongoing, we've had further delays to the 3 21 LRs. What the sort of direct impact of that has been on your profitability. Very wary of other CEO comments on aerospace Companies, requirement to pick up the bill for this rather than your airline shareholders.
So could you tell us a little bit more what that has been both directly but also maybe indirectly on the need to sort of rent an aircraft, but also reducing your flexibility to respond to events in markets like Hong Kong. And then just secondly, with Norwegian out of the Irish market effectively for transatlantic, could you give us a little bit of feel about what the Q4 is starting to look like on Air Lingus across the Atlantic, please?
Okay. Thanks, Damien. Yes, as you know, we are disappointed with the issues with regard to Rolls Royce engines on the 787s. As we've previously indicated, we can't share with you the commercial agreements that we've reached with roles to compensate us because they are confidential But, the financial impact is not the issue. It's very much, as you've said, it's the customer impact and it's the impact on the flexibility that we have.
We are seeing an improvement. So I think roles are certainly delivering better to what they had previously indicated, but there's still work to do there. On the 321, we spent a lot of time with Airbus It's very clear that the 321 Hamburg issues that Airbus have, are going to take some time to fix So we are anticipating delays on deliveries to 321s, and we've now replanned our network particularly in regard to the Erlungus Transatlantic, to reflect planned 321 LR delays which we see continuing through 2020 2021 and maybe into the early part of 2022. So it's disappointing But, I suppose the good news is we've got a better sense of the extent of these delays We also have a better understanding as to what Airbus is doing to address them. And we've got greater confidence in the, Airbus plan to actually resolve the issue.
So I spent some time with the Airbus team a couple of weeks ago and, Guillaume Forag, I think gave me the best and clearest undertaking that I've had for some time in relation to what Airbus are doing there. Norwegian out of the Irish market, I have to be honest, it hasn't really changed anything. It's what we see with this low cost and very much with what we've seen with a level impact. It tends to stimulate additional market demands, and when Norwegian went in with the prices they went in with, which were clearly unsustainable from a profitability point of view They stimulated some new demands, but it's at a very low price and that demand doesn't continue to, exist if, these artificially low fares are removed from the market. So I don't anticipate any impact, positive or negative on no wages departure from the Irish market.
It wasn't really impacting on earnings as well. And I think the evidence of that was the continuing strong performance of our linguists through the periods of competition with no vision in the Irish markets.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Martie Schulz from Commerzbank. Your line is open.
Hi. Also two questions from my side. Maybe can you give us a little bit of update on how do you see particular level in France and Italy developing over the past month or it's a little bit over a month now since the profit morning, just to get some more color of if you see any recovery trends there? And second of all, you said on trans Atlantic also Ellington and Iberia quite strong. And how much of these strong results were that they just took over parts of VA passengers in the strike and how much was organic improvement?
Thank you. No, I think all the evidence is was organic improvement, very limited transfer of customers from BA to Erlingus and no evidence of transfer from VA to Iberia. So it's organic improvements. And on, the issue that we highlighted back in September on level of dwelling, particularly in France and Italy, It's as we had expected. So as you can see, we've held our guidance, to what we had given you on the 26 of September, which should indicate you that we're seeing it very much in line with what we had predicted at that stage.
So, Steve mentioned earlier that it's principally a weakness in France and Italy, and that has continued to be the case. So we've not seen a change in the trends that we had identified, which I had mentioned was really became of evidence in the maybe the end of the 1st 2nd week in September. It was pretty much at the end of 2nd week in September when we were seeing this change in activity. So the volumes are okay, but it's a as a significant yield discount. So it's not so much a volume issue as a yield issue, and it is very much related to the low cost segment and it's very much related to France and Italy.
Thank you.
Thank you. Our next question comes from the line of Johannes Brown from MainFirst. Your line is open.
Yes, hi, good morning. Thank you. Just one for me, on the Thomas Cook in Solvency, to what extent does EA holidays benefit from the insolvency. So was there a strong uptick in bookings recently? And also on a bigger picture, would you expand VA holidays in the medium term to, to seize opportunities in the to operating market on the back of the demise Thomas Cook.
So what's the potential there?
Yes, I think it's fair. We did see, I would say it was a little uptick in business at BA holidays. As you would expect at the premium end, And yes, we do see an opportunity with BA Holidays to continue to expand the business. It's a business that's been doing very in recent years. And I think both the network and the quality, particularly focused on premium, but not solely focused on premium.
But we did see an uptake in the premium holiday and at BA holidays picked up after the demise Thomas Cook, and we would expect that to continue into 2020 and beyond.
Well, so just as a follow-up, with an expansion of BA holidays also involve a change in the business model of BA holidays, I'm thinking about taking commitment for hotel capacities and all that?
No, we're not looking at a change in the business model. We think business model is right and appropriate for BA holidays in an IG context. We are We do see an opportunity for BA holidays to work, more with the other airlines in the group as well. So that's an opportunity for us. It is principally working with BA, but we do see an opportunity for BA holidays to work, and we are doing some work with their linguist and BA holidays.
So, we think the business model is right, and we're not looking to changes. In light of the demise of Thomas Cook.
Our final comes from the line of Mark Simpson from Goodbody. Please go ahead.
Yes, good morning.
Two questions. On the unit costs on staff looked good in the quarter. Just wondering if you can say where the main wins were coming from. And then just circling back on your comments with regards of Welling initially in France, Other carriers, low cost carriers say they haven't seen this. Is this an issue you think, which is specific to winning, or do you think that it's a broader market issue?
Clearly, we think it's a broader market issue, but if others aren't seeing us, maybe we're we're wrong, but certainly the indications we have, it's a broader market issue. I think you've got to look at the dwelling network as well. Some of the particular weakness we saw there was in the domestic markets in Italy. So we've been cutting capacity there and it may be that there was some Barcelona impact in this as well given that they would serve France and Italy to Barcelona, but it's very clear that the areas that they're seeing is in relation to France initially. And I'll hand over to Steve just to go back on what he said on the
in terms of the employee costs, we sort of look at it in sort of 2 lenses, the productivity levels and the cost per head. And as I touched on earlier, it was primarily Iberia and Erlingus that were showing good productivity improvement. In terms of BA and swelling, slightly impacted by disruption to actually product activity slightly dampened down. So that overall, it was an improvement, but driven primarily by Iberia and Erlingus. And then in terms of cost per head, the big movement in the quarter was as a result of the BA bonus provision being released.
Clearly, that's not structural change. That's just a one off is coming through.
In terms of Capital Markets Day, we begin with a bit more on the structural shifts occurring on that front?
Yes, we will touch on the we will touch on the Capital Markets Day next week.
Okay, Ken. I thank everybody for joining us on the call. And we look forward to seeing you all on a Friday week as it's order side for our Capital Markets Day presentation.