International Airlines Group steered a course around post-Brexit turbulence in the UK economy when it announced pre-tax profits growth in 2016 at a better-than-expected 31 per cent and said it expected further improvements this year.

The group’s performance was driven by increases in operating profits before exceptional items at all three of its legacy airline brands – British Airways, Iberia and Aer Lingus – although profits fell at its Spanish low-cost subsidiary, Vueling.

The figures come across the backdrop of a European airline industry struggling with economic uncertainty, terrorism and a glut of new capacity that is driving down fares.

The figures were also reduced by €460m by adverse currency movements, mainly because of the effect of Sterling’s weakness following June’s Brexit referendum on British Airways.

The group’s pre-tax profits for the year were €2.36bn, against €1.8bn for 2015, on revenue down 1.3 per cent to €22.6bn. Earnings per share for the year, which rose 26 per cent to 88.5 euro cents, comfortably outperformed analysts’ consensus forecast of 83.1 cents.

Willie Walsh, chief executive, called the performance for 2016 “a good performance in a challenging environment”.

“We’ve made good progress and continue to build on all we’ve achieved in our first five years,” Mr Walsh said, referring to the period since the group was created through the merger of British Airways and Iberia.

The company is also proposing a 17.5 per cent increase in the full-year dividend, to 23.5 cents and said on Friday it planned to buy back €500m of its own shares during 2017.

For the present year, the company said that, at current fuel prices and currency exchange rates, it expected to record a year-on-year improvement compared with 2016.

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