Profits at International Airlines Group topped the €2 billion mark in 2017 despite a fall in fourth quarter operating earnings.

The owner of British Airways, Aer Lingus, Iberia, Veuling and Level, saw after tax profits rise by 12.7% year-on-year from €1.9 billion to €2.2 billion.

This came as operating profits for the three months to December 31 dropped to €585 million from €620 million in the same period in 2016.

Operating profits for the full year rose by almost 9% to more than €3  billion

Annual passenger revenue rose by 1.6% to €20.2 billion as the group carried more than 104 million passengers, an increase of 4.1% from 2016.

Selling costs increased 11.8% to €982 million excluding currency. Costs rose by around four percentage points from the new distribution model, “which increased both expenses and revenues while allowing the group to bring more direct access to the customer”.

IAG added: “Selling costs were also higher from the increase in passenger bookings and from marketing initiatives including Iberia’s 90th year anniversary.”

The figures cover the year which included a major computer failure in the late May back holiday causing the cancellation of flights affecting 75,000 British Airways passengers.

IAG today said it expects the 2018 operating profit “to show an increase year-on-year”.

CEO Willie Walsh, said: “We’re reporting a very good full year performance with an operating profit of €3,015 million before exceptional items, up 18.9% compared to last year.

“Passenger unit revenue improved 1.5% at constant currency and we benefitted from reduced fuel costs for most of 2017 though our fuel bill started to rise in quarter four.

“All our airlines performed extremely well with their best-ever individual financial results, strong operational performances and commitment to customer service.

“The turnaround in Vueling, following the challenges of 2016, has been particularly outstanding.”

He added: “In quarter four we reported an operating profit of €585 million, down from €620 million last year. Our strong performance continued with passenger unit revenue up 2.4% at constant currency.

“The operating profit was impacted significantly by changes in the employee bonus provision in the quarter compared to the previous year.

“We’re pleased to confirm that the board is proposing a final dividend of 14.5 euro cents per share. This brings the full year dividend to 27 euro cents per share, subject to shareholder approval at our AGM in June.

“With the dividend and share buyback, we returned more than €1 billion to our shareholders last year.

“Our confidence in IAG’s future remains undaunted and today we’re announcing our intention to undertake a share buyback of €500 million during 2018.”

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