28th Feb 2019 09:00
(IAG issued a correction Thursday saying it expects its 2019 non-fuel unit costs to be flat at constant currency.)
LONDON (Alliance News) - International Consolidated Airlines Group SA on Thursday reported a strong set of annual results with both revenue and profit rising on the prior year, but failed to mention its plans for Brexit which analysts had been keen to learn.
IAG is the owner of airlines British Airways, Spain's Iberia and Vueling, Level in Austria, and Aer Lingus in Ireland.
For 2018, the FTSE 100 listed airline operator posted pretax profit of EUR3.49 billion, up from EUR2.48 billion a year prior.
Revenue rose 6.3% to EUR24.41 billion from EUR22.88 billion in 2017, while operating profit, IAG's key performance indicator, came in at EUR3.68 billion, up 38% from EUR2.66 billion last year.
Before exceptional items, operating profit rose 9.5% to EUR3.23 billion from EUR2.95 billion.
IAG's results came slightly above analysts' expectations. According to consensus forecasts, the company's operating profit before exceptional items was expected to rise 4.6% to EUR3.16 billion.
Analysts also guided for single-digit profit growth and revenue of EUR24.36 billion.
Chief Executive Officer Willie Walsh said: "Yet again, we've improved our operating profit this year and our adjusted earnings per share grew by 15%. This was a very good performance despite three significant challenges: fuel prices increasing 30%, considerable Air Traffic Control disruption and an adverse foreign exchange impact of EUR129 million."
Late Wednesday, IAG announced a special dividend, saying it will return EUR700 million to shareholders. This is in addition of a EUR327 million regular final dividend proposed by the airline group.
The company said it will pay a special dividend of 35.0 Euro cents per share and a final one of 16.5 cents for 2018.
The final payout, together with the interim dividend paid in December, brings the full year dividend to 31.0 cents, representing a total dividend of EUR615 million for the year.
The final and special dividend will be paid on July 8 to shareholders on the register on July 5.
Looking ahead, Brexit regulation was one of they key concern topics for analysts as the UK's exit from the EU scheduled for March 29 approaches.
In early January, Brussels warned IAG that it will have to show that it is more than 50% owned and controlled by EU investors to retain flying rights in the bloc. In response, IAG started banning non-EU investors to comply with the requirement and also said it would class its UK shareholders as part of the EU, a move which Brussels called "totally absurd".
In its results statement, IAG made no mention of Brexit or its plans regarding the possible disruption arising from it.
However, the company said that, at current fuel prices, it expects 2019 operating profit before exceptional items to be "broadly in line" with 2018. Passenger unit revenue is expected to improve at constant currency, while non-fuel unit costs are expected to be flat on the previous year.
Furthermore, IAG said it ordered 18 Boeing 777-9 aircraft, plus 24 options, for British Airways.
The new planes will replace 14 Boeing 747-400 and four Boeing 777-200 between 2022 and 2025.
IAG shares were trading up 2.2% at 613.20 pence each Thursday morning in London.
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