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LONDON, Feb 23 (Reuters) - British Airways owner-IAG expects to post higher profits this year after growing them 19 percent in 2017, as it said it would return an extra 500 million euros to shareholders, such is its confidence in its future performance.
IAG's reported operating profit before exceptional items of 3.015 billion euros in 2017, compared to a consensus forecast of 3.046 billion euros, and it guided to 2018 showing a further increase, without giving further details.
That represents an upgrade from current expectations which show that for 2018 analysts had been forecasting operating profit of 2.7 billion euros, according to Reuters data.
The airline, which also owns Iberia, Vueling and Aer Lingus, said it would return 500 million euros to shareholders during 2018 in its second share buyback in two years, as it also lifted its full-year dividend by 15 percent to 27 cents per share.
IAG's airlines last year benefited from strong travel demand thanks to robust economies and low oil prices, and the company said it expected to continue to grow.
"Our confidence in IAG's future remains undaunted and today we're announcing our intention to undertake a share buyback," IAG chief executive Willie Walsh said in a statement on Friday.
With fuel prices set to rise this year, and investors fretting over wage inflation, there is more pressure on airlines to show that they can keep costs down.
IAG said that it expected to improve its unit costs excluding the price of fuel this year on a constant currency basis. (Reporting by Sarah Young, Editing by Paul Sandle)