BA owner sticks to main targets, trims capacity plans

British Airways-owner IAG stuck to its main long-term earnings and margin growth targets but scaled back its plans to expand capacity in a sign of the tough environment in which airlines are operating. IAG, which also owns the Iberia, Aer Lingus and Vueling airlines, confirmed forecasts for average annual earnings per share growth of at least 12% and an operating profit margin of 12 to 15% for the 2016-2020 period. Those are targets it first set out this time last year. The group did, however, trim its forecast for core earnings, saying it expected this to average E5.3b per year, down from the E5.6b it had previously said. IAG has already cautioned that currency effects would drag on its earnings this year after the pound weakened 14% against the euro and 16% since the dollar since Britain voted to leave the EU in June. IAG lowered its 2016-2020 capacity growth plans, measured in available seat kilometres, to around 3% a year, compared to the 3-4% previously targeted, and said it would invest less on capital expenditure each year. The airline group also said it was focused on shareholder cash returns, highlighting its strong outlook for equity free cash flow targets and its strong balance sheet.<br/>