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British Airways-owner IAG confident on profit growth in 2019-2023

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British Airways-owner IAG confident on profit growth in 2019-2023

British Airways-owner IAG confident on profit growth in 2019-2023
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Neil Hall(Reuters)
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LONDON (Reuters) - British Airways-owner IAG <ICAG.L> said most of its financial goals for 2019-2023 were the same as those made in a long-term plan last year, sticking to a target to post an operating profit margin of between 12 and 15 percent.

The group, which also owns Iberia, Aer Lingus and Vueling, issued a confident outlook on Friday despite a sharp rise in the oil price this year, as it continues to outshine rival European airlines Lufthansa <LHAG.DE> and Air France-KLM <AIRF.PA>.

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IAG, whose shares opened up 3 percent, gave guidance that average earnings per share would grow more than 12 percent per year from 2019-2023, in line with what it said last year.

It raised its outlook for core annual earnings (EBITAR) to an average forecast of around 7.2 billion euros (£6.3 billion) from 6.5 billion euros.

Chief Executive Willie Walsh and other senior management will present the outlook to investors in London later on Friday.

On 2018, IAG said last week that annual profit would increase by 200 million euros. That compared to Lufthansa's outlook for adjusted earnings (EBIT) this year to show a slight fall from 2017's record.

Air France-KLM has spent the year struggling with costly strikes before it finally agreed a pay deal with unions in October. It has faced tough competition from low-cost carriers and from IAG and Lufthansa but has been unable to overhaul costs and services the way others have.

In its outlook, IAG raised its forecast for capital expenditure to 2.6 billion euros a year from 2.1 billion a year, and said it would grow available seat kilometres, a measure of capacity, by 6 percent a year, up from 5 percent previously.

It gave no further details on the capacity growth, which will include its fast-growing low-cost long-haul carrier Level and Level's new short-haul operation based at Vienna.

IAG did not provide an update on its plans with regard to Norwegian <NWC.OL>, the carrier which rejected two IAG takeover approaches this year.

(Reporting by Sarah Young; Editing by James Davey and Edmund Blair)

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