IAG profit rises despite higher fuel prices, currency headwinds

British Airways and Iberia parent International Consolidated Airlines Group posted a 9.5% jump in full-year operating profit on Thursday despite rising fuel prices and currency headwinds, but said profit for 2019 would likely be flat.

In the year to the end of December 2018, operating profit before exceptional items increased to €3.23bn from €2.95bn on total revenue of €24.40bn, up 6.7% from the previous year.

Pre-tax profit, meanwhile, was up 9.8% to €3.04bn. Passenger revenue grew 6.2% to €21.55bn and IAG said fuel unit costs for the year rose 8%, or 12.5% at constant currency.

Chief executive officer Willie Walsh said: "This was a very good performance despite three significant challenges: fuel prices increasing 30%, considerable Air Traffic Control disruption and an adverse foreign exchange impact of €129m."

Walsh said IAG will return more than €1.3bn to its shareholders via ordinary dividends of €615m and a special dividend of around €700m. This is approximately €260m higher than in the previous year.

As far as 2019 is concerned, at current fuel prices and exchange rates, the group expects operating profit before exceptional items and impacts of IFRS16 to be broadly in line with the €3.23bn reported in 2018. Passenger unit revenue is expected to improve at constant currency and non-fuel unit cost is expected to be flat.

At 0830 GMT, the shares were up 3.6% to 621.60p.