Shares in International Airlines Group, the owner of British Airways, fell on Friday after a raised earnings target for 2015 fell short of analysts’ expectations.
IAG said it expected to generate a slightly higher operating profit of between €2.25bn and €2.3bn for the full year, excluding newly acquired Aer Lingus, up from its previous target of more than €2.2bn.
Gerald Khoo, analyst at Liberum, said the minor improvement to IAG guidance might disappoint given recent improved profit targets by European rivals such as Ryanair and easyJet. Last month, Ryanair increased its full-year guidance 25 per cent.
Shares in IAG were down 3.1 per cent at 579p in Friday afternoon trading in London.
Willie Walsh, IAG’s chief executive, said the group did not believe in holding back information to surprise people. “We’re just narrowing the [earnings target] range to the top end of [guidance],” he added. “We’ve probably become a little bit predictable now because we just deliver what we say we will deliver.”
It came a day after IAG announced plans to make the first dividend payment in its four-year history — in a sign that the group’s restructuring since being formed from the merger of BA and Iberia was delivering sustained profit.
The group will pay a gross interim dividend a share of 10 euro cents, and said it planned to pay out 25 per cent of its 2015 underlying profit after tax, which could total about €400m.
IAG’s third-quarter results were the first since the group completed its purchase of Aer Lingus, the Irish flag carrier, for €1.4bn in August.
Group operating profit in the three months to September 30 rose 38.9 per cent to €1.3bn before one-off costs. Aer Lingus contributed €45m of earnings.
Mr Walsh said IAG was not actively pursuing any acquisitions after adding Aer Lingus to its stable of airlines, which also include Vueling, the Spanish low-cost carrier.
In the past year, IAG has recorded a much stronger share price performance than Air France-KLM and Lufthansa, its main European rivals, which have been struggling with strikes related to their cost cutting plans.
IAG’s shares have risen 68 per cent in the past 12 months, and this partly reflects steady progress with the turnround of Iberia following the cutting of thousands of jobs at the Spanish flag carrier.
In the third quarter, BA posted a 35 per cent rise in operating profit to €825m. Iberia recorded a 23 per cent rise in profit to €200m.
Vueling provided the best return on capital in the third quarter at 13.6 per cent, above IAG’s target of 12 per cent. The equivalent figures for BA and Iberia were 11.4 per cent and 7.5 per cent respectively.
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