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British Airways owner’s profits climb despite currency headwinds

By Alys Key, Press Association City Reporter
Fuel costs were also higher last year.

British Airways owner International Consolidated Airlines Group (IAG) has posted rising revenue and profit despite an adverse impact from foreign exchange rates and higher fuel costs.

The company reported a 6.7% increase in revenue to 24.4 billion euros (£20.88 billion) for 2018.

Profit before tax was up 9.8% to 3.04 billion euros (£2.6 billion).

However, foreign exchange rates had an adverse impact of 129 million euros (£110.35 million) during the year.

Passenger unit revenue – a key industry metric measuring the profitability per available seat – inched up just 0.1% during the period. But with currency effects stripped out, the increase was 2.4%.

Meanwhile, fuel unit costs climbed 8% thanks to last year’s oil price rally.

Asked whether IAG’s airlines had been hit by costs from Brexit on BBC Radio 4’s Today programme, chief executive Willie Walsh said: “There are issues from Brexit that we need to address, but these are issues that the industry at large – and certainly IAG – can address without too much concern.”

He added: “We remain confident that there will be a comprehensive air transport agreement between the EU and the UK. If you go back a year, people were saying ‘will we be able to fly at all?’ I dismissed all of that and I think I’ve been proven correct.”

Earlier this month, IAG placed a limit on non-EU shareholders, but said that UK residents would be treated in the same way as those from the EU even after Brexit.

Mr Walsh said: “This is nothing to do with Brexit. It’s actually been in our articles since we created IAG back in 2011. It was in all of the merger documentation that we issued to shareholders and was approved by shareholders.”

The company announced separately on Thursday that it has placed an order for 18 Boeing 777-9 aircraft, which will replace some of its existing fleet between 2022 and 2025.

The new model is 30% more fuel efficient than the 747. It costs around 442.2 million US dollars (£332.96  million), but IAG said it had negotiated a substantial discount.