British Airways owner IAG targets higher core earnings in coming years

IAG sticks to its targets for margins and earning-per-share growth

IAG said it expected profits to rise by nearly 20 per cent this year (Getty)

British Airways owner IAG said it was aiming for annual core earnings around 20 per cent higher than previous targets on Friday as it stuck to its goals for earning-per-share growth and margins for the coming years.

IAG shares rose 1.7 per cent after it said that it was targeting core earnings (EBITDAR) of €6.5bn (£5.80bn) per year between 2018-2022, compared to a goal of an annual €5.3bn between 2016-2020.

For the same period, the airlines group also provided higher targets for capital expenditure and capacity growth, measured in available seat kilometres (ASK) - a key metric for airlines.

IAG, which also owns Iberia, Aer Lingus and Vueling, a week ago said it expected profits to rise by nearly 20 per cent this year. On Friday its senior management will update analysts at a capital markets day (CMD).

The group stuck to its target for return on invested capital (ROIC), which one analyst said was a disappointment.

“No increase in ROIC target of 15 per cent, which is disappointing and we expect today’s CMD to focus on how profit guidance is being raised but no lift to the return target,” analysts at Goodbody said in a note.

The group said it was still targeting average EPS growth of over 12 per cent each year, and its target for an annual operating profit margin between 12-15 per cent was also unchanged.

Reuters