IAG reports strong profit surge in 2018

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International Consolidated Airlines Group (IAG) has reported improved profits for 2018 and awarded a special dividend to shareholders totalling €700 million.

For the period until 31 December 2018, IAG said pre-tax profits surged 40 per cent to €3.5 billion on total revenues of €24.4 billion, up 6.6 per cent from 2017. Profits after tax before exceptional items came in at €2.4 billion up 11.2 per cent.

IAG – the parent company of British Airways, Iberia, Vueling, Aer Lingus and Level, said last year – passenger unit revenue was up 0.1 per cent and up 2.4 per cent at constant currency. Fuel unit costs for the year were up eight per cent, and up 12.5 per cent at constant currency.

IAG said the final proposed dividend was 16.5 € cents per share and a proposed special dividend of 35 € cents per share, approximately €700 million.

The results came the same day that IAG ordered 18 Boeing 777-9 aircraft – plus 24 options – to upgrade the British Airways fleet, as reported here.

IAG chief executive officer, Willie Walsh said: “In 2018, we’re reporting an operating profit of €3,230 million before exceptional items, up 9.5 per cent compared to last year. Yet again, we’ve improved our operating profit this year and our adjusted earnings per share grew by 15.1 per cent.

“This was a very good performance despite three significant challenges: fuel prices increasing 30 per cent, considerable Air Traffic Control disruption and an adverse foreign exchange impact of €129 million.

“At constant currency, passenger unit revenue improved by 2.4 per cent while non-fuel unit costs decreased by 0.8 per cent on capacity growth of 6.1 per cent.

“In quarter 4, we reported an operating profit of €655 million before exceptional items, up 19.1 per cent compared to last year. Our strong revenue performance continued with passenger unit revenue up 1.5 per cent at constant currency.

“In 2018, we completed our second share buyback which was worth €500 million. We are also returning more than €1.3 billion to our shareholders via ordinary dividends of €615 million and a special dividend of approximately €700 million. This is around €260 million higher than in the previous year”.

As for the future, at current fuel prices and exchange rates, IAG expects its 2019 operating profit before exceptional items and impacts of IFRS16 to be in line with €3.2 billion reported in 2018.

Passenger unit revenue is expected to improve at constant currency and non-fuel unit cost is expected to be flat at constant currency.