IAG, owner of British Airways to raise investment outlay of $571m annually

British Airways said it expects average seat kilometres, a measure of capacity, to increase by 6 per cent per year

(FILES) In this file photo taken on October 27, 2017 A British Airways airplane waits on the runway with the towers and buildings of the Canary Wharf financial district in background before taking off at London City Airport in London. IAG, owner of several major airlines including British Airways and Spanish carrier Iberia, said on October 26, 2018 that its net profit climbed 12 percent in the third quarter despite higher fuel costs. Profit after tax grew to 1.1 billion euros ($1.25 billion) in the three months to September, compared with the third quarter a year earlier. / AFP / Daniel LEAL-OLIVAS
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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.

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