IAG upgrades 2015 profit forecast as capacity rises

British Airways-owner International Airlines Group upgraded its 2015 profit forecast by more than 20 percent, after reporting a slightly better than expected 81 percent jump in profit last year.

IAG, in the process of trying to acquire Ireland's Aer Lingus, on Friday reported 2014 operating profit of 1.390 billion euros, ahead of a company-supplied consensus forecast of 1.373 billion euros.

A commercial airliner lands at Washington Dulles International Airport.
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A commercial airliner lands at Washington Dulles International Airport.

The airline said it now expected operating profit of 2.2 billion euros in 2015, compared to the 1.8 billion euros it had said it was targeting, helped by lower fuel costs and as it grows capacity.

The upgrade is the latest in a series from IAG, which raised its 2014 forecast last October, buoyed by its exposure to strong demand for North Atlantic travel and the return of its Spanish arm Iberia to profitability.

IAG, which owns low-cost Vueling in Spain as well as British Airways and Iberia, wants to add Aer Lingus to its portfolio but its 1.36 billion euros approach is yet to get the backing from the Irish government, which owns a 25 percent stake.

Earlier this week, Ireland presented IAG with a list of demands over Aer Lingus, including more clarity over job cuts and guarantees over connections between Ireland and London.

IAG, the biggest European airline by market capitalisation, has outshone strike-afflicted continental rivals Air France and Lufthansa, which are now playing catch up trying to make cost savings.

The British-based group said it was benefiting from its focus on lowering costs, particularly in its Iberia unit.

"The airline's (Iberia's) turnaround has been remarkable, both financially and operationally," Chief Executive Willie Walsh said in a statement.