IAG operating profit soars above £2bn despite pound's Brexit collapse
The owner of British Airways has taken a 460 million euro (£389 million) Brexit hit following the collapse in the value of the pound, but still managed to report rising profits last year.
International Airlines Group (IAG) said weaker sterling saw operating profit suffer after revenue slid 1.3% to 22.57 billion euros (£19.1 billion) in the year to December 2016, with Brexit also affecting demand at British Airways.
Boss Willie Walsh said: "Our performance was affected by an adverse currency impact of 460 million euros. In particular, this was due to the weak pound following the UK's EU referendum."
Sterling has fallen 16% versus the US dollar since the referendum and 10% against the euro.
IAG issued a profit warning after the referendum on June 23, and in October warned that ticket prices may have to rise as a result of sterling's slump.
But the group, which also owns the Aer Lingus and Iberia airlines, said overall operating profit rose 7.2% to 2.48 billion euros (£2.1 billion) in the year.
In 2016, the firm carried more than 100 million passengers - double the number British Airways and Iberia carried in 2010, when IAG was formed.
Mr Walsh added: "We've made good progress and continue to build on all we've achieved in our first five years."
Pre-tax profits rose more than 30% to 2.41 billion euros (£2 billion) in the year and shares were up almost 2% in afternoon trading.
As well as currency headwinds, increasing competition and terrorism have affected the airline and travel sectors.
George Salmon, equity analyst at Hargreaves Lansdown, said: "While a low oil price helped boost profitability, 2016 was a difficult year for the airlines. As economic uncertainty rocketed, sentiment around the sector plummeted, taking share prices with it.
"IAG was at the sharp end; after all BA's premium service (and price) means IAG is more exposed than most should the economy splutter. While things might be up in the air for the time being, it's encouraging to see the group making reasonable progress. Costs are heading in the right direction and the dividend is being rebuilt."