London / AFP
International Airlines Group, owner of British Airways (BA) and Iberia, said that net profit surged 52 percent last year on tumbling fuel prices and its purchase of Irish carrier Aer Lingus.
Profit after tax jumped to 1.495 billion euros ($1.654 billion) in 2015 compared with 982 million euros one year earlier, IAG said in an earnings statement.
“We’re reporting very strong full year results,” said IAG chief executive Willie Walsh, adding that Aer Lingus had made a contribution of 35 million euros in operating profit since it joined the group in August.
“It’s undoubtedly been a good year but it’s also been challenging with extreme volatility in the currency and fuel markets.
“The benefits gained from lower fuel prices have been partially offset by the stronger US dollar,” Walsh added.
IAG said it expects to make further strong operating profit gains in 2016 but its share price slid 2.24 percent to 546 pence as investors booked recent profits ahead of the weekend pause.
London’s FTSE 100 index, which includes IAG, was up 1.26 percent overall at 6,088.83 points in late morning deals.
“IAG shares slipped to near the bottom of the FTSE 100 despite (the company) reporting a 64-percent rise in annual pre-tax profits, near the top end of analyst estimates,” said Jasper Lawler, analyst at CMC Markets trading group.
“Chief executive Willie Walsh’s warning that a strong dollar offsets some the gains from the low oil price took the edge of the results, especially with oil prices rising today.”
Citing a bright outlook, IAG’s British Airways last month said it would recruit nearly 2,000 pilots and cabin crew in 2016, its largest ever intake in a single year.
IAG meanwhile acquired Aer Lingus last year to boost its share of the lucrative transatlantic market and is seeking to modernise Iberia after the Spanish carrier suffered severe financial troubles in recent years.
Airline companies are benefitting from much lower costs for jet fuel that is refined from crude oil a commodity that itself has seen prices plunge over the past year.
Air France-KLM last week posted its first annual operating profit since 2008 as lower fuel prices offset falling ticket sales.
in the wake of the Paris attacks in November.
IAG meanwhile on Friday said that its fuel unit costs before exceptional items for the fourth quarter dropped 13.4 percent.
“Clearly a low oil price and resulting lower fuel costs has been the single biggest factor in IAG’s as well as the other European airlines’ success over the past year,” said Lawler.