BA Owner Warns Of Lower Profits After Brexit

The owner of British Airways has warned profit growth will be in the "low double digits" after revenue was hit by terror attacks, the EU referendum and industrial action.

International Airlines Group, which operates other airlines including Iberia and Aer Lingus, had been forecasting a 40% rise in yearly profits until the UK voted Out on 23 June.

As the Brexit vote has caused the pound to collapse, IAG has taken a €148m (£125m) foreign exchange hit - but this was partially offset by lower fuel prices.

The prospect of poorer exchange rates has also deterred some British customers, with IAG reporting a "weaker trading environment" in its UK point-of-sale business, which accounts for a third of the group's revenue.

In its half-year results, IAG said air traffic control strikes were causing considerable disruption to its short-haul services - with 22 walkouts causing more than 1,000 flights across Europe to be cancelled.

Operating profits for the three months to 30 June stood at €555m (£468m), and although this is up 4.7%, it was slightly behind the consensus forecast of €562m (£474m).

IAG is the latest company to warn of an impact on financial performance because of the Brexit vote and terrorist incidents - but none of the results reported so far have taken into account recent attacks in France and Germany, as well as the attempted coup in Turkey.

On Wednesday, Air France (Paris: FR0000031122 - news) warned its finances were likely to suffer in the aftermath of an attack on Bastille Day in Nice (Milan: NICE.MI - news) which killed 84 people, and the murder of a priest by two men at a parish church in Normandy.

Thomas Cook (Xetra: A0MR3W - news) also made a £25m operating loss in the three months to the end of June, with continued weak demand in Turkey driving bookings down by 5%.

The British travel operator has been increasing its capacity on other routes, with Spain, long-haul destinations such as the US and smaller countries such as Bulgaria and Cuba all experiencing an uptick in bookings (Other OTC: UBGXF - news) .