The owner of the British Airways (BA)brand International Airlines Group (IAG) said it is to return 500 million euros ($529 million) to investors after reporting higher annual profits on Friday, helped by lower fuel costs and internal cost-cutting. The currency slump - devaluation of the £sterling, clearly not helping matters. BA in the UK is currently facing waves of cabin staff strikes and industrial action from its 'mixed fleet' [allegedly] lower paid recenrtly recruited employees.
Europe's largest airline groups Willie Walsh hoping for continuing open skies agreement post Brexit. IAG annual operating profit rose 8.6 percent to 2.5 billion euros, in line with expectations, sending shares up 2 percent. IAG expected higher profits this year.
IAG's British Airways transatlantic business, currently based at London's Heathrow, held up well compared to Europe's highly competitive budget market. London Heathrow has last Friday reported record passenger throughput during 2016.
Walsh said that across IAG he expected 2.5 percent capacity growth in 2017, with Irish airline Aer Lingus expected to grow at a faster rate than British Airways. For 2016, operating profit before exceptional items rose despite revenue slipping by 1.3 percent to 22.57 billion. Benefitting from a lower fuel prices and deep cut cost savings, all contributing.
IAG suffered from adverse currency rates to the tune of 460 million euros triggered by a slump in the British pound sterling following Britain's June 23 vote to leave the European Union. Fund managers now going long on the dollar, although one bank Nomura says this position might well be reversed by the year end in December.
"IAG has reported solid and in-line Q4 and (2016) earnings despite a tough yield environment and currency headwinds," claimed analysts at Cantor Fitzgerald.
Analysts equqqlly expect IAG, which also owns Spain's Iberia, to achieve a 2017 profit of 2.5 billion euros, in line with this year.
IAG said it planned to carry out a share buyback of 500 million euros this year, and announced a final dividend of 12.5 euro cents per share. ($1 = 0.9459 euros)
Source: CNS, IAG, Reuters, Ratnews
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