British Airways owner IAG profit alert triggered by corporate cutbacks and weak pound

British Airways owner IAG today cut its profit forecast for the second time since Brexit after businesses booked fewer flights and the plunging pound cost the airlines group €162 million (£145 million) in just three months.

Chief executive Willie Walsh also warned passengers will face higher prices next year: “People will start to see inflation as our supplier costs increase,” he said.

“The weaker pound will lead to sterling prices increasing. For anybody travelling abroad, it’s going to be more expensive.”

Since IAG reports in euros, sterling’s decline has hit it twice: by pushing up the cost of converting earnings from British Airways, and by reducing demand from British passengers.

Walsh said companies were booking fewer tickets, hitting demand for BA’s crucial premium cabins. “UK corporate activity softened in the lead-up to the vote, and that’s still going on,” Walsh said.

“We haven’t [even] seen Brexit yet — but corporates are booking less, and trying to get a fix on where the pound is likely to be is a challenge for everybody.”

IAG — which also owns Spain’s Iberia and Vueling and Ireland’s Aer Lingus — now says operating profit in 2016 will be €2.5 billion (£2.24 billion), up 7% but well below the ‘low double-digit percentage’ announced in July, itself a post-Brexit downgrade. Third-quarter operating profit fell 4% to €1.2 billion.