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BA-owner IAG sees strong profit rise BA owner IAG sees strong profit rise
(about 1 hour later)
IAG, the parent firm of British Airways and Spain's Iberia, has reported an increase in annual profits.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. href="http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-rnsArticle_Print&ID=1667085&highlight=" >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.
Revenue rose by 10% to 16.3bn euros, despite an increase in fuel costs of 29.7%.
The company said the improvement was against the backdrop of a particularly difficult year in 2010.The company said the improvement was against the backdrop of a particularly difficult year in 2010.
In 2010 it was affected by disruption from the Icelandic ash cloud, strikes and a weaker economic environment. In 2010, it was affected by disruption from the Icelandic ash cloud, strikes and a weaker economic environment.
IAG's chief executive, Willie Walsh, said demand for its North Atlantic routes remained strong while European trading depended on developments in the eurozone. IAG's chief executive, Willie Walsh, said demand for its North Atlantic routes had remained strong.
Revenue rose by 10% to 16.3bn euros, despite seeing fuel costs increase by 29.7%. The airline also said it had cut non-fuel costs by 5.6% last year and increased revenue per passenger by 3.6%.
However, IAG reduced non-fuel costs by 5.6% and increased revenue per passenger by 3.6%. Analyst Keith Bowman at Hargreaves Lansdown stockbrokers said IAG's results were encouraging.
"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 Exposure to a recovering US economy is considerable, while outdated work practices at Iberia are being addressed.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."
Olympics impact
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. IAG continued its criticism of Air Passenger Duty (APD), which is applied to almost every ticket on a flight originating in the UK.
Another rise in the duty applied to passengers leaving UK airports of 8% is due in April. The company said British Airways had paid almost £500m in APD last year, and said that, as a result of the increase to APD due in April, it was reducing by about half the number of new jobs it would create this year.
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. IAG is planning to expand by buying the BMI airline from Germany's Lufthansa, something that would allow it to boost its services from London's Heathrow airport.
The company said was was hopeful this would be forthcoming. However, the deal - which has been strongly opposed by rival carrier Virgin - still needs the approval of regulators.
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. The company said it was hopeful this would be forthcoming.
"On the downside, fuel costs continue to take their toll, denting expected performance in the first half of 2012."