Investors may be surprised to see British Airways-owner International Consolidated Airlines (IAG) is flush with cash as it plans to pay out €700m in special dividends despite rising oil prices and low fares.
In the last three months of 2018, operating profit soared 19.1% to €655m, up from €550m over the same period in 2017.
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In the year ending 31 December 2018, operating profit rose 9.5% to €3.2bn, better than analysts’ expectations of €3.1m. Overall sales of €24.4bn also beat consensus forecasts of €24.3bn.
International Consolidated Airlines’ performance is impressive as fuel prices rose 30% and there was a foreign exchange impact of €129m over this period, as well as disruption from air traffic control strikes.
After the UK stock market closed on Wednesday, International Consolidated Airlines revealed it recommended a special dividend of €0.35 per share, amounting to €700m in total. The airline also announced a full year dividend of €0.31 per share, up from €0.27 per share in 2017.
Over the last year, the airline’s takeover attempts of embattled Norwegian have weighed on the share price, up only 1.2% over the last year over concerns the dividend could be cut.
In January, International Consolidated Airlines abandoned its takeover plans after two failed attempts.
WHY HAVE SHARES IN THE AIRLINE FALLEN THIS WEEK?
It’s been a difficult week for International Consolidated Airlines after its decision to cap the level of shares non-EU investors can hold in the firm at 47.5% resulted in its removal from several MSCI global equity indices.
It appears the airline is unlikely to be booted from the FTSE 100 as the change does not affect EU investors.
According to EU regulations, airlines must be majority owned by shareholders in the bloc to keep flying rights. Unfortunately, this conflicted with MSCI index requirements, which requires a sufficient amount of shares are available for non-EU investors.
