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BA-owner IAG sees strong profit rise BA-owner IAG sees strong profit rise
(40 minutes later)
IAG, the parent firm of British Airways and Spain's Iberia, has reported an increase in annual profits and revenues. IAG, the parent firm of British Airways and Spain's Iberia, has reported an increase in annual profits.
The company made a pre-tax profit of 503m euros (£425.6m; $677.8m) in the year to December 2011, after a profit of 84m euros the year before.The company made a pre-tax profit of 503m euros (£425.6m; $677.8m) in the year to December 2011, after a profit of 84m euros the year before.
IAG's chief executive, Willy Walsh, said demand for its North Atlantic routes remained strong. The company said the improvement was against the backdrop of a particularly difficult year in 2010.
He added its European trade depended on developments in the eurozone. In 2010 it was affected by disruption from the Icelandic ash cloud, strikes and a weaker economic environment.
The profit comparison with last year is complicated by factors resulting from BA's merger with Iberia and the formation of the IAG group. IAG's chief executive, Willie Walsh, said demand for its North Atlantic routes remained strong while European trading depended on developments in the eurozone.
Revenue rose by 10% to 16.3bn euros, despite an increase in fuel costs of 29.7%. Revenue rose by 10% to 16.3bn euros, despite seeing fuel costs increase by 29.7%.
However, IAG reduced non-fuel costs by 5.6% and increase revenue per passenger by 3.6%. However, IAG reduced non-fuel costs by 5.6% and increased revenue per passenger by 3.6%.
IAG warned that this summer's Olympics in London could depress business from the UK, noting that past experience in other host cities suggested that demand could be dampened during the games.IAG warned that this summer's Olympics in London could depress business from the UK, noting that past experience in other host cities suggested that demand could be dampened during the games.
However, the carrier said the event would be "positive for the long-term position of London as a global destination".However, the carrier said the event would be "positive for the long-term position of London as a global destination".
British Airways paid almost £500 million in air passenger duty last year and its parent company warned that the cost would limit the number of new jobs it would create this year.
Another rise in the duty applied to passengers leaving UK airports of 8% is due in April.
IAG is planning to expand by buying the airline bmi from Germany's Lufthansa, something that would allow it to boost its services from London's Heathrow airport, but it needs the approval of regulators.
The company said was was hopeful this would be forthcoming.
Analyst Keith Bowman at Hargreaves Lansdown stockbrokers said the results were good: "Revenues per passenger are up, whilst non-fuel related costs are down. Exposure to a recovering US economy is considerable, while outdated work practices at Iberia are being addressed.
"On the downside, fuel costs continue to take their toll, denting expected performance in the first half of 2012."