Credit: Josh Hallett/Flickr

British Airways owner boosted by oil slump

IAG's profits are up by more than 60%, thanks in part to the falling cost of fuel.

by Jack Torrance
Last Updated: 26 Feb 2016

The plunging price of crude has been catastrophic for Britain’s North Sea oil companies – UK Oil & Gas boss Deirdre Michie described it as ‘an industry at the edge of a chasm' on Tuesday. But what’s bad news for Shell and BP is a boon for transport firms.

The latest airline company to rejoice in the low price of fuel is British Airways owner IAG, which just announced a 64.4% jump in pre-tax profits to €1.8bn (£1.4bn) for 2015. That was helped along by a 6.3% drop in the unit cost of fuel, which would have been a 17.2% if it wasn’t for the enduring strength of the dollar.

It wasn’t just falling costs that helped IAG’s fortunes soar. Its acquisition of Aer Lingus and growth of its low-cost carrier Vueling helped boost passenger numbers by 14% to 88.4 million, pushing up total revenue by 13% to €22.9bn.

‘These results are in line with our recent target and have exceeded our original 2015 operating profit target of €1.5 billion that we set in 2011,’ said chief exec Willie Walsh. ‘It's undoubtedly been a good year but it's also been challenging with extreme volatility in the currency and fuel markets.’

IAG seems optimistic about the year ahead, and with oil prices remaining low that’s no surprise. But like the demanding passengers who populate its First class cabins, the company’s shareholders seem hard to please. IAG’s share price dipped as much as 4.8% this morning.

Perhaps the 10 cent dividend they will be getting simply isn’t good enough. Or maybe the discovery of bed bugs on a BA flight last week has simply left them with itchy feet. 

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