IAG Grows Profit As Vueling Completes Transformation

IAG Grows Profit As Vueling Completes Transformation

Total revenues rose 1.8 per cent to €22.97 billion and passenger unit revenue growth, a key industry benchmark, rose 1.5 per cent at constant currencies.

The plans to expand capacity so forcefully come amid rising costs as it expands, particularly those linked to baggage handling and engineering.

International Consolidated Airlines Group SA reported on Friday a rise in profit for 2017, with all of its airlines performing strongly and Vueling enacting an "outstanding" turnaround.

The group said that its board was proposing a final dividend to shareholders of 14.5 euro cents per share, bringing its full year dividend to 27.0 euro cents per share, subject to shareholder approval.

Davy Research's Stephen Furlong is impressed by the continued strong performance of Irish airline Air Lingus, flagging operating profit flew €36m higher to €269m previous year, driven by 12.1% more capacity.

"Our strong performance continued with passenger unit revenue up 2.4 per cent at constant currency".

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Walsh singled out low-priced carrier Vueling, which had seen a "particularly outstanding" turnaround, he said.

Gerald Khoo, at Liberum said revenue was slightly light of its forecasts in the fourth quarter, fuel costs worse than expected but non-fuel costs slightly better. Fuel and other costs dipped 0.9% to €316m, while employee costs rose 5.3% to €345m.

IAG also sounded an upbeat note going forward, expecting this year's operating profit to show an increase year-on-year.

"Cheap fuel and stronger economic growth have helped IAG fly with tailwinds over 2017". While CEO Walsh praised the results as "very good" in the face of a transformational period, the results don't necessarily leave investors any clearer as to how current restructuring will benefit the group in the long-term.

Shares in rival Air France-KLM fell earlier this month over worries about its ability to reduce costs.

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