IAG share price grounded even as full-year profit jumps

on Feb 26, 2016
Updated: Oct 21, 2019

Shares in International Consolidated Airlines Group (LON:IAG) have failed to take off in London this morning even as the British Airways and Iberia parent delivered full-year profits at the top end of its guidance and flagged further growth going forward. The company, which has benefitted from lower oil prices alongside other airlines, however, noted that the stronger US dollar had partially offset gains from cheaper fuel.

As of 09:36 GMT, IAG’s share price had lost 1.97 percent to 547.50p, underperforming the blue-chip FTSE 100 index which currently stands 1.32 percent higher at 6,092.18 points. The shares have lost 1.78 percent of their value over the past year, as compared with a 12.32-percent fall in the Footsie.
IAG, which also owns Aer Lingus and Spanish low-cost carrier Vueling, said in a statement this morning that its operating profit for the year ended December 31 had surged to €2.30 billion (£1.8 billion), excluding the Irish carrier, up from €1.39 billion (£1 billion) in 2014. Including Aer Lingus, whose acquisition completed in the third quarter, the FTSE 100 group’s operating profit came in at €2.34 billion. The result was at the top end of IAG’s forecast of profits of between €2.25 billion and €2.30 billion.

The company, which announced its first-ever payout to shareholders in October, proposed a final dividend per share of 10 euro cents, taking its full-year payout to 20 euro cents.
“These results are in line with our recent target and have exceeded our original 2015 operating profit target of €1.5 billion that we set in 2011,” IAG’s chief executive Willie Walsh said in the statement. He, however, added that while 2015 had “undoubtedly been a good year”, it had “also been challenging with extreme volatility in the currency and fuel markets,” with benefits gained from lower fuel prices partially offset by the stronger US dollar.
This year, the British Airways and Iberia parent expects to deliver a profit increase similar to last year. The company, however, cautioned that revenue trends in the first quarter appeared to be broadly in line with the last three months of 2015 when IAG’s revenue slipped 3.7 percent at constant currency.
As of 10:24 GMT, Friday, 26 February, International Consolidated Airlines Grp share price is 550.25p.