Daily Times

LONDON: International Airlines Group, owner of BA and Iberia, lowered its annual earnings forecast on Friday following the recent Brexit vote.

The group, which also owns Ireland’s Aer Lingus and Spain’s Iberia, predicted that operating profit would see “low double-digit percentage growth” in 2016. That contrasted sharply with the 70 percent increase that was forecast prior to the shock June 23 EU exit vote.

IAG had already warned one day after the referendum that it would unlikely meet its target, given the slumping pound and post-Brexit economic uncertainty.

“In the lead up to the vote we witnessed softer than expected trading, principally with UK corporates,” said IAG chief executive Willie Walsh on a conference call.

“Had the vote gone the other way we would have expected that to bounce back. Clearly that didn’t happen and that trend has continued.”

Walsh said a recovery would come “at some point,” but suggested it was too early to say whether that will be this year or in 2017.

IAG added Friday that its operating profit rose about five percent to 555 million euros in the second quarter or three months to June, compared with a year earlier.

The group took a foreign exchange hit of 148 million euros for the period, following the Brexit-driven collapse in the pound.

“Numerous external factors affected our airlines including the impact of terrorism, uncertainty around the UK’s EU referendum and Spain’s political situation and increased weakness in Latin American economies,” added Walsh in the results statement.

“This led to a softer than expected trading environment, especially in June.

“In addition, the airlines’ operations have been considerably disrupted by 22 air traffic control strikes in Europe so far this year. This has impacted our passenger revenues.”