BA owner IAG hit by weak pound
October 28, 2016
International Airlines Group (IAG) announced Friday it was lowering its annual earnings forecast after already cutting its prediction following the UK's pro-Brexit vote.
IAG said it now expected full-year operating profit of 2.5 billion euros ($2.73 billion). That's 7 percent higher compared with 2015, but down from the 10-percent increase the company predicted at the end of July.
Britain's vote to leave the European Union has triggered a plunge in the pound to 31-year lows against the dollar and 7.5-year troughs versus the euro.
'Negative impact'
The owner of British Airways, which is also in charge of Spanish carrier Iberia and Ireland's Aer Lingus, said its third-quarter was affected by "a very significant negative currency impact of 162 million euros."
IAG CEO Willie Walsh noted the group was grappling with sterling weakness and continued disruption as a result of air traffic control strikes.
A weaker pound makes it more expensive for Britons to travel abroad. Secondly, costs for dollar-denominated fuel purchases have gone up considerably.
Despite the current problems, IAG posted a 10-percent rise in net profit for the three months to the end of September year on year.
Low-budget airlines Ryanair and Easyjet had also lowered their earnings forecasts in the wake of the looming Brexit.
hg/jd (AFP, Reuters)