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Falling pound clips IAG's wings

Friday, October 28, 2016 - 01:17

British Airways-owner IAG has cut its 2016 forecast for profit growth to around 7 percent from the low double-digit percentage. As Hayley Platt reports, it - like other airlines - has been hit by the fall in the value of the pound and weaker trading after the Brexit vote.

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IAG, owner of British Airways made an underlying profit in the third quarter of 1.2 billion euros. It was as expected by analysts. But it could have been more had it not been for the sharp fall in the pound. Profits fell 4 percent from the same time last year. SOUNDBITE (English) CITY INDEX MARKET ANALYST, KEN ODELUGA, SAYING: "Of course for the IAG's who are doing a big chunk of their business in sterling, clearly they're taking a hit on their bottom line because of that, maybe not as much as a hit as easyJet which is probably the most challenged British airline at the moment." The impact from air traffic control strikes in France didn't help either. And British Airways are still dealing with compensation claims from that. Falling fares have been a problem too. And stiff competition this winter means they could drop even more. But IAG's Willie Walsh calmed investor's fears, saying prices were probably stabilising. That boosted shares more than 6 percent. Despite news of a downgrade on the year. IAG is now predicting operating profit will increase by around 7 percent. Previously it had forecast growth in the low to double-digits.

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Falling pound clips IAG's wings

Friday, October 28, 2016 - 01:17