British Airways owner hands cash to investors

Operating profit rose to €2.54b from €2.34b in 2015, IAG said

British Airways owner IAG SA boosted full-year earnings 8.6 per cent and said it will return €500 million ($530 million, Dh19.4 billion) to shareholders after fuel costs fell and the company limited capital spending in response to last year’s Brexit vote.

Operating profit excluding one-time items rose to €2.54 billion from €2.34 billion in 2015, London-based IAG said in a statement yesterday. The company forecast a figure of about €2.5 billion in October and analysts have predicted €2.52 billion.

‘Bright prospects’

IAG, which also owns Spain’s Iberia and Aer Lingus of Ireland, cut its 2016 guidance twice last year as it reined in spending and slowed capacity growth after June’s vote to quit the European Union. While the pound’s slide hurt the value of sterling sales, wiping €460 million from earnings, the company said demand improved in the second half and that profit will gain this year.

“We’ve made good progress and continue to build on all we’ve achieved in our first five years,” Chief Executive Officer Willie Walsh said. “We have great confidence in IAG’s future prospects and are increasing cash returns to our shareholders.”

Shares of IAG rose as much as 2.9 per cent and were trading 2.6 per cent higher at 517.50 pence as of 8.03am in London. They’ve gained 17 per cent this year following a 28 per cent decline in 2016, mostly in the wake of the EU poll. IAG will implement the share repurchase programme over the course of this year via one or more buybacks, Walsh said. The company’s cash position improved by €572 million to €6.43 billion during 2016.

Sales at Europe’s secondbiggest airline group fell 1.3 per cent to €22.6 billion, clipped by a decline in fares following a spate of terror attacks across the region, the decline in fuel prices and market softness after the Brexit vote. Yields showed signs of a revival toward the end of the year, Walsh said.