Sterling’s slump sees British Airways’ owner IAG suffer £389m hit

THE OWNER of British Airways has taken a £389m Brexit hit following the collapse in the value of the pound, but still managed to report rising profits last year.

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

Boss Willie Walsh said: “Our performance was affected by an adverse currency impact of 460 million euros. In particular, this was due to the weak pound following the UK’s EU referendum.”

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

IAG issued a profit warning after the referendum on June 23, and in October warned that ticket prices may have to rise as a result of sterling’s slump.

But the group, which also owns the Aer Lingus and Iberia airlines, said overall operating profit rose 7.2 per cent to £2.1bn in the year.

In 2016, the firm carried more than 100 million passengers – double the number British Airways and Iberia carried in 2010, when IAG was formed. Mr Walsh added: “We’ve made good progress and continue to build on all we’ve achieved in our first five years.”

IAG’s British Airways transatlantic business, based at London’s Heathrow, has held up well compared to Europe’s highly competitive budget market. Heathrow on Friday reported record passenger figures in 2016.

Mr Walsh was bullish in the face of an announcement by Norwegian Air that it would offer transatlantic flights on 10 new routes, with tickets starting at $65.