IAG flying in profits from north Atlantic routes - UPDATE

29th Feb 2012 07:07

British Airways and Iberia owner International Consolidated Airlines Group (IAG) reported a five-fold increase in pre-tax profit during 2011, beating analyst forecasts and giving the share price a lift in morning trading.Pre-tax profit surged 499% from €84m to €503m, on revenues that grew 10.4% from €14,798 to €16,339m, despite a €317m adverse currency impact.The market consensus had been for pre-tax earnings of €369.3m and revenues at €16.44bn.The performance was boosted by net cost and revenue synergies worth €74m, €64m more than its target, in the first year since the merger.The company has, however, faced strong headwinds from the cost of oil, with fuel costs up 29.7% on the year at €5,068m.IAG also has a significant debt load, of €1,148m, a rise of €253m on the previous year.Where things have gone well for IAG is in the north Atlantic routes controlled by British Airways which have seen a 12% rise in passenger numbers. Across the group passenger traffic has increased 7.2%.Interestingly, IAG warns that the London 2012 Olympics may restrict demand for flights into the UK as people decide to steer clear of the world's biggest sporting event. Nevertheless, IAG says demand from London has remained strong through the first two months of 2012.The other issue for the firm is that Iberia is losing money. Its operating loss for 2011 was €61m. IAG's Chief Executive, Willie Walsh, blames structural costs for the loss and has described them as "unacceptable".IAG will not be paying a dividend for 2011.The stock was up 2.8% by 10:19. Over the last 12 months IAG shares have fallen by 25%Note: the figures are based on the combined results for BA, Iberia and IAG the company for the full-year to December 31st 2011 and 2010, and include the 21 days pre-merger at the start of January 2011.BS