US jetsetters help BA profit to take off

PROFITS at British Airways owner IAG soared as demand for its transatlantic routes grew.

Flights to Miami, New York and Los Angeles were popular and pre- tax profit rose 64.4pc to £1.3bn. Revenue for the year to the end of December grew 13.3pc to £16.4bn.

Its North American business is the largest part of the IAG group. Passenger load factor – how full its planes are – improved by 0.9 percentage points.

There was good news for investors on the dividend front. As revealed in October, IAG it will pay out around 25pc of its underlying profit in dividends.

Yesterday it announced a fullyear dividend of €0.20 (0.14p) a share – the first in its four-year history. IAG was created by the merger of British Airways and Iberia. Neither firm had paid a dividend since 2008.

All the groups’ airlines are now profitable after a turnaround at previously loss-making Spanish carrier Iberia.

The company, which also owns Spanish budget airline Vueling and recently bought Irish carrier Aer Lingus, did warn that the strong dollar had wiped out gains from the low oil price.

Chief executive Willie Walsh ( pictured) said the benefit of the falling oil price was ‘offset by the weakening euro and pound in reaction to the strong dollar’.

His comments on the oil price worried some investors and its shares slipped 17.5p, or 3.1pc, to 541p.

IAG buys fuel three years in advance and Walsh said the benefits of the fall in the oil price will be felt this year.

Walsh said the strong results reflected the progress made at Iberia. Revenue from passengers rose by 14.2pc to £14.6bn and in the fourth quarter of the year it increased by 3.1pc.

However he said there was an impact from the Paris attacks in November and there had been a fall in demand in certain parts of Africa due to political unrest and Ebola.

He said demand will increase for European holiday locations such as Spain as an alternative to north African destinations amid fears of terrorism.

The British and European markets remained ‘ very competitive’ but it has been helped by expansion into Asia.