London - British Airways owner IAG reported a 3.6% decline in third-quarter profit as the weaker pound hurt the value of UK sales translated into euros, and said earnings will gain less than expected for the full year.
Operating profit fell to €1.21bn from €1.25bn a year earlier, according to IAG, which is based in London but reports in the single currency. That matched the forecast of analysts, based on the average of five estimates.
At current exchange rates and fuel prices IAG anticipates 12-month earnings of about €2.5bn, chief executive officer Willie Walsh said in a statement on Friday. That would represent a gain of less than 7% compared with 2015’s €2.34bn.
Walsh in July forecast that earnings would grow by a low double-digit percentage as a result of sterling’s decline after Britain’s June 23 vote to quit the European Union, rather than match 2015’s advance of €950m.
The company also reined in capacity growth and placed spending under review as the decision threatened to compound a decline in demand prompted by weakening economies and a spate of terrorist attacks.
"These results were affected by a tough operating environment with a very significant negative currency impact," Walsh said in the release, adding that sterling’s weakness cost IAG €162m in the quarter.Read Fin24's top stories trending on Twitter: Fin24’s top stories