IAG profits fly higher despite €460m blow from Brexit storm

British Airways’ owner showed today that it kept a steady hand during Brexit-fuelled turbulence, as profits surged by a third despite sterling’s plunge costing the airlines group €460 million (£390 million) last year.

“Brexit is painful,” said Willie Walsh, chief executive of International Airlines Group which also owns Iberia, Aer Lingus and Spanish budget carrier Vueling. “But it’s worn off, we’ll move on. The general environment last year was okay, and in 2017 we think it’s going to be okay again.”

IAG’s runway rivals — including easyJet and Ryanair — have struggled in the face of increased capacity and lower fares after the EU vote, as well as the impact of terrorism.

But although IAG cut capacity to Angola, Nigeria, Morocco, Tunisia and Uganda, it managed to grow pre-tax profits for the year to €2.36 billion, from €1.8 billion a year before, beating City expectations.

But the pace is slowing and Walsh said capacity this year would grow about 2.5%, compared with 9.4% in 2016. BA particularly saw a “softening” in lucrative corporate bookings for business-class flights before and after June’s Brexit vote.

Bankers are still grounded or sitting at the cheap end of the plane, Walsh explained. “Financial services [bookings] are down year-on-year. There’s a lot of restructuring in the banks.” But, he added: “Other sectors are growing — pharmaceuticals, technology, biotech. There are still lots of interesting conversations to be had in the [premium] lounges.”

IAG gave investors a sweetener of a €500 million buyback and shares rose almost 2% to 514.5p. Walsh, who set up IAG with a “shopping list” of 12 airlines, said it still had enough cash “to move if the right opportunity comes up, but right now we’re not actively pursuing anything.”