International Airlines Group, the owner of British Airways, reported a 125 per cent rise in full-year operating profit of €2.32bn following a bumper year of strong demand and low fuel costs.

The group, which was created out of the 2011 merger of BA and Iberia, on Friday revealed that total revenue for the year to December 31 rose 13.3 per cent to €22.8bn, on the back of higher passenger revenue of €20.3bn, writes Tanya Powley, Transport Correspondent.

The strong results come as IAG announced that Javier Sanchez-Prieto will become the new chief executive of its low-cost brand Vueling, replacing Alex Cruz who it previously announced will become the new boss of British Airways in April.

Full-year operating profit, including its purchase of Irish carrier Aer Lingus, rose to €2.34bn, which was at the top end of guidance and beat consensus of €2.29bn.

Willie Walsh, chief executive of IAG, said:

These results are in line with our recent target and have exceeded our original 2015 operating profit target of €1.5 billion that we set in 2011.

However, he warned that the year had been challenging with “extreme volatility” in the currency and fuel markets:

The benefits gained from lower fuel prices have been partially offset by the stronger US dollar.

For 2016, IAG said it expected to generate a similar operating profit increase to 2015. It noted that revenue trends in the first quarter were broadly in line with the fourth quarter of last year.

Last October, the group announced plans to make the first dividend payment in its four-year history — in a sign that the group’s restructuring since its formation was delivering sustained profit. Before the merger between BA and Iberia, neither airline had paid a dividend since 2008.

Mr Walsh has spent the past few years extracting productivity gains across the group’s airlines. The group is starting to show sustained progress with the turnround of Iberia, the Spanish flag carrier that was running up large losses.

In recent years, IAG has fared better than its main European rivals — Lufthansa and Air France-KLM — which have been hit by strikes over cost-cutting plans, and heightened competition from Middle Eastern and budget rivals.

However, even Europe’s struggling legacy airlines have benefited from recovering consumer confidence. Last week, Air France-KLM posted its first annual net profit for five years after cheaper fuel and continued cost-cutting helped boost performance at the Franco-Dutch airline.

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