March 4, 2019 / 10:48 AM / 3 months ago

British Airways owner IAG forecasts free cash flow to be lower in 2019, shares fall

FILE PHOTO: British Airways logos are seen on tail fins at Heathrow Airport in west London, Britain, February 23, 2018. REUTERS/Hannah McKay

LONDON (Reuters) - IAG shares hit a two-month low on Monday after the owner of British Airways and Iberia issued a clarification to say its 2019 free cash flow would be lower than last year.

IAG said that it had clarified its commentary around free cash flow, saying that it would be lower in 2019 as it was increasing capex against a forecast of flat operating profit.

At 1105 GMT, the stock was down 3.3 percent, making it the biggest loser on the FTSE 100.

Broker Goodbody said there had been confusion during a call with analysts last Thursday after IAG’s full-year results, due in part to the adoption of new accounting standards.

The airline said it expects equity free cash flow to fall this year due to operating profits being similar to 2018 and an increase in capex to 2.6 billion-2.7 billion euros (2.2 billion pounds - 2.3 billion pounds) from 2.2 billion euros in 2018.

Reporting by Helen Reid and Alistair Smout; writing by Josephine Mason; editing by Jason Neely and Alexander Smith

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