Sterling clips IAG’s wings

The owner of British Airways has taken a £389 million Brexit hit following the collapse in the value of the pound, but still managed to report a rise in profits.

International Airlines Group (IAG) said weaker sterling saw operating profit suffer after revenue slid 1.3% to £19.1 billion in the year to December 2016, with Brexit also affecting demand at British Airways.

Sterling has fallen 16% versus the US dollar since the referendum and 10% against the euro.

IAG issued a profit warning after the referendum on June 23, and in October warned ticket prices may have to rise.

But the group, which also owns the Aer Lingus and Iberia airlines, said overall operating profit rose 7.2% to 2.48bn euros (£2.1bn) in the year.

In 2016, the firm carried more than 100m passengers – double that of 2010, when IAG was formed.

British Airways parent group IAG saw profits rise in 2016.