International Consolidated Airlines profit grows as fuel costs fall

International Consolidated Airlines Group reported operating profits of €3,015m for the year to the end of December, up 18.9% from a year ago, benefitting from reduced fuel costs for most of the year.

The group also announced its intention to carry out a €500m share buyback programme in 2018.

Fourth quarter operating profit was €585m before exceptional items, down from €620m.

Operating profits were weighed by a charge of €288m during the year related to restructuring costs. More than half of cost, €180m, was related to a collective redundancy programme, as part of Iberia's transformation plan Plan de Futuro II.

Revenue for the year rose by 1.8% to €22,972m and passenger unit revenue was up 1.5% at constant currency.

Fuel unit costs for the year before exceptional items was down 7.8%, down 9.1% at constant currency.

Non-fuel unit costs for the year before exceptional items was down 1.3% and up 2.7% at constant currency.

Profit after tax rose 12.7% to €2,243m and diluted earnings per share rose by 14%.

The full year dividend was up 14.9% 27 cents.

Overall capacity increased 6.3% and the fastest growing regions were the Middle East, Europe and Asia, with passenger load factors down on the Middle East.

Overall passenger load factor improved 0.9 points to 81.4%, having improved for more than five consecutive years. Europe saw the highest load factor, up 1.5 points, followed by North America, although the latter's load factor was broadly flat against last year.

At current fuel prices and exchange rates, IAG expects its operating profit for 2018 to show an increase year-on-year. Both passenger unit revenue and non-fuel unit costs are expected to improve at constant currency.

Chief executive Willie Walsh said: 'All our airlines performed extremely well with their best-ever individual financial results, strong operational performances and commitment to customer service. The turnaround in Vueling, following the challenges of 2016, has been particularly outstanding.'

'In quarter 4 we reported an operating profit of €585 million, down from €620 million last year. Our strong performance continued with passenger unit revenue up 2.4 per cent at constant currency. The operating profit was impacted significantly by changes in the employee bonus provision in the quarter compared to the previous year.'

'We're pleased to confirm that the Board is proposing a final dividend of 14.5 euro cents per share. This brings the full year dividend to 27.0 euro cents per share, subject to shareholder approval at our AGM in June. With the dividend and share buyback, we returned more than €1 billion to our shareholders last year.'

'Our confidence in IAG's future remains undaunted and today we're announcing our intention to undertake a share buyback of €500 million during 2018.'

At 8:28am: (LON:IAG) International Consolidated Airlines Group share price was -20.2p at 602.4p