British Airways Parent Company Reports Huge Earnings Jump in 2015
Jeff Edwards March 01, 2016
A British Airways 787 Dreamliner G-BBJA in Formation with the Rolls-Royce Spitfire Mk19 PS853 (G-RRGN) flying together over Derby 's Rolls Royce sites. The pilot of the Rolls-Royce Spitfire is there Chief Test Pilot, Phill O’Dell and in the cockpit of the British Airways 787 is Captain Simon Scholey and Senior First Officer Mitch Preston.
IAG, the owner of British Airways and Iberia, projects profits will grow by as much as 40 percent again in the coming year.
Fresh off the acquisition of Aer Lingus, International Airlines Group (IAG) reported soaring profits last year with a 65 percent increase over its 2014 profits. Adjusted profits of €2.3 billion ($2.5 billion) far outpaced the nearly €1.4 billion ($1.5 billion) reported in 2014. The company is expecting similar growth in 2016, projecting a vigorous 40 percent increase in earnings over the four quarters of this year.
The record-shattering increase marks a number of firsts for IAG, which was formed in 2011 following the merger of British Airways and Iberia. The company has since grown to include Barcelona-based ultra-low-fare carrier Vueling and the newly acquired Aer Lingus. Aer Lingus reported its first contribution to the AIG coffers, turning in €35 million ($38 million) in profit.The airline conglomerate announced its first ever dividend payments to shareholders in October 2015, while more recently announcing it will offer a full year dividend payment of €0.20 ($0.22) per share based on the record-setting profits.
Like other competitors, IAG Airlines reported greatly increased profits, while at the same time admitting to a marked decline in per passenger revenue. The company says a combination of increased demand, low fuel prices and cost-cutting measures helped to more than overcome that decline.
“It’s undoubtedly been a good year, but it’s also been challenging with extreme volatility in the currency and fuel markets,” IAG CEO Willie Walsh said of the company’s extraordinary jump in profits last year. “The benefits gained from lower fuel prices have been partially offset by the stronger U.S. dollar.”
In fact, IAG expects potential currency fluctuations to again present a challenge this year. In the latest earnings report, officials also cited competition from ultra-low-fare airlines like Ryanair and a decline in market share on transatlantic flights as potential strains on revenue. One thing IAG doesn’t expect to hamper its growth is the upcoming vote that could result in the U.K. exiting the European Union (EU). “We don’t believe it would have a material impact on our business,” Walsh told BBC.
[Photo: British Airways]
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Point taken, but that other airline is not limited to flights to/from Ireland, but instead operates in practically every country across Europe and, as the LCC leader, is a household name the world over. Aer Lingus is none of those things.
Well...let's not forget that the other "Irish regional airline" is Europe's biggest, with a market capitalisation that dwarfs that of IAG, and which is on course for a profit of €1.2bn in the current financial year...
Well, you know, a dollar sign and a seven together are a proxy symbol for the euro sign: $7 = € [rolls eyes] Honestly, how did that pass the smell test? A regional Irish airline pulling in a third of IAG's profit, when BA and IB are in the mix?
"Aer Lingus reported its first contribution to the AIG coffers, turning in $735 million in profit." Aer Lingus's full year 2015 profit was €124 million. Its contribution to IAG's 2015 numbers for the 4.5 months of the year it was an IAG airline was just €35 million. http://centreforaviation.com/analysis/iag-has-its-best-ever-profit-in-2015-helped-by-fuel-and-strategic-vision-and-pragmatism-269039 "The airline conglomerate also announced its first ever dividend payments to shareholders last week" IAG announced its maiden dividend in October, 2015, which was paid out in December, 2015. http://www.ft.com/fastft/2015/10/29/british-airways-owner-iag-pay-maiden-dividend/ "Like other competitors, IAG Airlines reported greatly increased profits, while at the same time admitting to a marked decline in per passenger revenue" Revenue actually grew by 13.3%. Each of Iberia, Vueling and Aer Lingus reported double-digit percentage growth, with only BA reporting a slight decline (of 1%).