IAG grows profit despite revenue dip

On an adjusted basis, operating profits for 2016 came in at €2.54bn, up 8.6 per cent year on year and pretty much bang in line with expectations. However, exchange rates put a €460m dent in the reported figure. Chief executive Willie Walsh said that was mostly down to the substantial devaluation in the pound following last year's referendum, but insisted that IAG had made "good progress" despite the "challenging environment". Crucially, since warning in October that ticket prices might rise as a result of sterling's fall, a sharp drop in fuel costs - normally charged in US dollars - has helped counter some of the adverse currency movement. What's more, the group managed to grow annual profits despite a 1.3 per cent dip in revenues, the result of passenger unit revenue per available seat falling 10.4 per cent in aggregate.

Last year IAG carried more than 100m passengers - double the number British Airways and Iberia carried in total in 2010, the year before IAG was created. As such, it's hardly surprising to see a 4.3 per cent rise in IAG's capacity recorded last year, although encouragingly a load factor of 81.6 per cent remains flat year on year and above the International Air Transport Association (IATA) average. IAG's capacity growth also looks conservative against the wider industry rise of 6.2 per cent.

Prior to these results, analysts at Liberum expected EPS of 81.4¢ for the year ending December 2017, compared with 88.5¢ in 2016.