BA owner IAG profits hit after vote but reassures on long-term
British Airways and Aer Lingus owner IAG yesterday became the first company to warn on profits in the wake of the UK's decision to leave the EU.
The company’s share price dived by more than 22.5 per cent on the announcement although it said it believes the vote will not have a “long-term material impact on its business”.
In a stock market statement IAG, which also owns Iberia and Vueling, said: “Following the outcome of the referendum, and given current market volatility, while IAG continues to expect a significant increase in operating profit this year, it no longer expects to generate an absolute operating profit increase similar to 2015.”
It said it had experienced “a weaker than expected trading environment” in the run up to the referendum. Shares closed down 119p at 409p.
EasyJet also issued a statement to the market saying it was confident that the vote outcome “will not have a material impact on its strategy or its ability to deliver long term sustainable earnings growth and returns to shareholders”.
It said the company’s initial focus will be work to ensure that the UK remains part of the single EU aviation market.
“This would enable EU airlines to fly freely within the UK and between the UK and EU, allow UK airlines to fly freely across Europe and would ensure that consumers continue to benefit from low fares and would mean easyJet and other airlines can continue to operate as they do now. EasyJet will also continue to develop its alternative options that will fully maintain its existing network and operations,” it said.
EasyJet is confident that its unique network, digital leadership, cost advantage and financial strength will enable it to continue to execute on its strategy and to deliver long term sustainable earnings growth and returns to shareholders.”
Carolyn McCall, EasyJet chief executive said: “We remain confident in the strength of EasyJet’s business model. We have written to the UK Government and the European Commission to ask them to prioritise the UK remaining part of the single EU aviation market, given its importance to trade and consumers.” Shares in EasyJet closed down 220p at 1,313p.