IAG to launch dividend in 2015 as October traffic rises

7th Nov 2014 07:15

The owner of British Airways and Iberia, International Airlines Group (IAG), pledged to launch a dividend payment to shareholders in 2015 after saying it was confident of hitting its targets for the year.IAG also said group traffic measured in revenue passenger kilometres increased 7.5% last month versus October 2013. Premium traffic, such as business and first class travel, rose 6.9%.The carrier last week said it expected 2014 operating profits to improve by between €550m and €600m, from €770m in 2013. Third-quarter operating profit before one-off items came in at €900m and revenue rose 6.9%.IAG said on Friday that it had made significant progress during 2014 and was confident of hitting 2015 financial targets, which it said it saw as the trigger to introducing a dividend. "Therefore we anticipate making a declaration in 2015 as the first step in our plan to introduce a sustainable dividend payment," it said in an update accompanying its annual capital markets day. "The initial dividend would be based on a payout ratio of 25% of our underlying profit after tax."IAG also said its long-term planning goals for 2016-2020 included a real-terms return on invested capital of 12% or more, an operating profit margin of 10% to 14%, average earnings per share growth of 10% or more a year and average underlying earnings of about €5bn a year.