International Consolidated Airlines Group (IAG) has blamed the pound's decline and lower trading after the Brexit vote for its decision to cut its profit growth for 2016.
The owner of British Airways said on Friday (28 October) it now expects operating profit for the current financial year to grow 7% from 2015 to £2.2bn, compared with the lower double digit figure it forecast in July.
The news came as the group, which also owns Iberia and Aer Lingus, posted third quarter profit of €1.21bn, down from €1.25bn a year earlier. The weaker pound resulted in a negative currency impact of €162m, on top of the €148m hit the company suffered in the previous three months.
IAG added passenger unit revenue for the quarter fell 13.7% year-on-year and was down 5.9% on a constant currency basis, while the load factor — a key gauge in the industry, as it measures the number of seats filled on each aircraft – rose from 81.7% to 82.1%.
The pound has lost approximately 18% of its value against the dollar since Britain voted in favour of leaving the European Union on 23 June, making it more expensive for Britons to travel abroad and making purchasing fuel – which is dollar denominated – much more expensive for British airlines.
Earlier this month, budget airline Ryanair cut its profit outlook by 5% on the back of sterling's ongoing decline, while its rival easyJet also lowered its earnings forecast, as it estimated the falling price of sterling since the Brexit vote in June would cost it £90m.
Group chief executive Willie Walsh said IAG had performed well in the quarter, but warned the outlook remained challenging.
"While strong, these results were affected by a tough operating environment with a very significant negative currency impact, primarily due to sterling weakness, and continued disruption due to air traffic control strikes," he said.