Business

BA owner IAG's profits hit by weak pound

BA planes Image copyright PA

British Airways and Iberia owner IAG says currency movements cost it €148m (£124m) in the latest quarter of trading, mainly due to the weak pound.

IAG reported underlying operating profits of €555m for the April-to-June period, up from €530m a year ago but slightly below forecasts.

The airline group said its business had been affected by a number of factors.

These included the impact of terror attacks, strikes and the uncertainty around the UK's EU referendum.

"This led to a softer than expected trading environment, especially in June," said IAG chief executive Willie Walsh.

The airline group has also scaled back its forecasts for profit growth across 2016. It now expects operating profit to rise by a "low double digit percentage" this year, compared with earlier predictions of a rise of about 40%.

'Weaker environment'

Europe's airline sector has been under pressure, with both Lufthansa and Air France-KLM warning recently on the impact of recent terror attacks, and with air traffic control strikes in France also affecting services.

Earlier this year, IAG said it had slowed plans to fly more routes this year, and in its latest results it also said its capacity and investment plans for next year were under review.

Image copyright Reuters

Regarding the outlook for the rest of the year, IAG said it had "continued to experience a weaker trading environment in our UK point-of-sale business, which represents around one third of total revenue".

"On top of this, continued pound sterling weakness would reduce pound sterling profits when translated into euros in what is traditionally the most profitable part of the year."

However, speaking to the BBC's Today programme, Mr Walsh played down the impact of the UK's vote to leave the EU.

He said he firmly believed that "business will settle down" in the wake of the vote.

"People will continue to fly", so in the long term it would not have a material impact on the business, he said.

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