British Airways said it expects average seat kilometres, a measure of capacity, to increase by 6 per cent per year
IAG, owner of British Airways to raise investment outlay of $571m annually
International Airlines Group, the Anglo-Spanish parent of British Airways is stepping up its growth plans for the next five years, lending a voice of confidence from one of the biggest players in a European airline market shaken by rising fuel prices and overcapacity.
The airline group, which owns carriers including Spain’s Iberia and Ireland’s Aer Lingus, is holding an investor day Friday to outline plans for increased investment of about 500 million euros ($571 million) a year. The aim is to boost annual profit by an average of 700 million euros a year to 7.2 billion euros for 2019-2023, an 11 per cent increase from the 2018-2022 forecast.
Shares of IAG jumped as much as 5.2 per cent in early trading in London, the biggest intraday jump since May, as investors welcomed the higher earnings guidance. The stock was trading up 2.9 per cent as of 8:10 am, giving the carrier a market value of 12.6 billion pounds.
A statement issued ahead of the presentation didn’t spell out details, but British Airways said it expects average seat kilometres, a measure of capacity, to increase by 6 per cent per year, one percentage point higher than its earlier goal. The company has recently been adding transatlantic routes with its two low-cost units Aer Lingus and Level. They compete in a cutthroat market that’s been rattled by discount carrier Norwegian Air Shuttle ASA.