IAG is to pay its first ever dividend and British Airways is due to return to profit

The parent group that owns British Airways, IAG, have said that they are now making profits and will give their first dividend, probably in November.  This is their first dividend since they were created in 2011 through the merger of British Airways and Spain’s Iberia. IAG has also bought bmi and Spanish budget carrier Vueling since its formation. Analysts believe shareholders will receive their first payment at the end of IAG’s 2015 financial year at the latest, as the controversial turnaround at Iberia, which required the loss of some 4,500 jobs and sparked strikes and political outcry in Spain, has stemmed the losses. IAG posted a €96m pre-tax profit for the six months to June 30 this year, up from a €503m loss at the same time in 2013.  IAG says it is on track to improve operating profit this year by “at least” €500m, from €770m in 2013. British Airways’ CEO, Willie Walsh said in August that BA had now returned to profit for the first time since 2007, the start of the financial crisis. BA has barely paid any UK corporation tax for years – it may pay round £61 million for the 2013 financial year. 

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British Airways’ owner clears path for maiden dividend

International Airlines Group, the parent company of British Airways and Iberia, is expected to lay out a road map towards its first dividend at a capital markets day in November

International Airlines Group is clearing a flight path towards paying its first dividend since its creation in 2011 through the merger of British Airways and Spain’s Iberia.

The airlines giant, which has also swallowed up bmi and Spanish budget carrier Vueling since its formation, is expected to set out a road map towards its first payout to shareholders at a capital markets day on November 7. Invitations to the event were sent out last week.

Analysts believe shareholders will receive their first payment at the end of IAG’s 2015 financial year at the latest, as a controversial turnaround at Iberia, which sparked strikes and political outcry in Spain, drives an improvement in profits.

In August, IAG revealed that Iberia had finally flown back into the black following two years of painful restructuring, which has claimed more than 4,500 jobs at the Spanish flag carrier. IAG posted a €96m (£75m) pre-tax profit for the six months to June 30, up from a €503m loss at the same point the previous year, after Iberia eked out an operating profit of €16m.

The company said it is on track to improve operating profit this year by “at least” €500m, from €770m in 2013.

Oliver Sleath, airlines analyst at Barclays, said IAG is targeting a threshold of €1.8m of earnings before interest and taxes (Ebit) before it will have the confidence to pay a dividend.

He said: “I am expecting IAG to articulate a dividend policy at the capital markets day for a well-covered, regular dividend. Timing will be conditional on IAG’s confidence of hitting their €1.8bn target, but it will probably come at some point in 2015.”

Gerald Khoo, analyst at Liberum, is forecasting a dividend of 12 euro cents a share for 2015.

Mr Khoo said: “2015 seems to me to be the most likely financial year when dividends will start, because it ties in with the medium-term targets management set itself (originally in November 2011, but since raised). The underlying principle was that these targets equated to delivering adequate margins and return on capital for shareholders, justifying additional investment but also opening the door to dividend payments.”

easyJet recently raised the proportion of profits after tax that it will pay shareholders through an ordinary dividend, from one third to 40pc, at its own capital markets day. But analysts believe IAG’s dividend policy will involve a far lower percentage, as payments for new aircraft accelerate.

A spokesman for IAG said: “It is our stated objective to get the business to a position by which we can reintroduce and sustain a dividend payment”

http://www.telegraph.co.uk/finance/newsbysector/transport/11124736/British-Airways-owner-clears-path-for-maiden-dividend.html


 

A comment below the article says:

I understood from previous DT articles that BA owed its pension fund a great deal of money.  Does this article mean that these debts have been paid off?

The answer is apparently that this is an IAG dividend, not a BA dividend. BA will have come to some agreement with its pension fund trustees about how much they need to pay into the fund each year. Those payments have to be balanced with dividend payments. If they paid no dividends, they could not raise any money through shareholders; the business might then do badly …. and subsequently be unable to pay the pension fund in future. So it is a balance.


 

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British Airways boss Willie Walsh hails return of aviation industry as profits jump

IAG chief celebrated return to figures seen before the Lehman collapse

1 August 2014

British Airways chief Willie Walsh has heralded the return of the aviation industry after six years of turbulence as his airlines group enjoyed a 55 per cent surge in profit to land its best second quarter since 2007.

“We’re back to the figures we saw before the collapse of Lehman Brothers in September 2008,” Walsh, chief executive of BA and Iberia-owner International Airlines Group, said.

“The UK’s GDP figures are good, and Spain’s are improving. The economies are obviously not as strong as they were in 2007, but the airlines have improved. We’re more efficient.”

IAG’s operating profit hit €380 million (£301 million) in the second quarter, up from €245 million a year earlier, as Iberia turned around a loss to fly into profit, and BA continued to soar. Walsh said the World Cup damaged demand for flights to Latin America.

“It had a dilutive effect. Business people avoided the area, just as with the London Olympics.” But despite the violence in the Middle East, Walsh said British Airways’ decision not to halt flights to Tel Aviv, as airlines such as easyJet did, was backed by passengers.

http://www.independent.co.uk/news/business/news/british-airways-boss-willie-walsh-hails-return-of-aviation-industry-as-profits-jump-9642878.html

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BA owner IAG will pay its first dividend since its creation in 2011, by the end of IAG’s 2015 financial year


Tax is a mysterious thing. All highly complex. BA pays various other taxes. But BA hasn’t recently been a high payer of UK corporatoin tax


British Airways Annual Report & Accounts 2010 show they paid no UK corporation tax in 2009 or 2010


British Airways Annual Report & Accounts for year ended 31st Dec 2011 shows they paid £6 million in Corporation tax


British Airways Annual Report & Accounts for year ended 31st Dec 2013 shows they paid £61 million in Corporation tax


British Airways Annual Report & Accounts for year ended 31st Dec 2012 shows they paid £1 million in Corporation tax


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