BA owner cuts profit target on Brexit fallout

BA owner IAG lowered its 2016 profit target as the UK’s vote to leave the European Union threatens to extend a drop in demand that started in June in the run-up to the historic referendum. Operating profit this year will no longer increase at a level similar to the 70% surge posted in 2015, CFO Enrique Dupuy said in a statement issued hours after the vote became public. The company didn’t provide a scale for the earnings adjustment beyond saying that 2016 growth will still be “significant.” Even before the profit warning, IAG, which has key hub at London’s Heathrow airport, was hit harder than other European airlines as investors tallied the fallout for different industries in the market turmoil sparked by the vote. Aviation is particularly exposed because of the volatility of demand. Also, a Brexit threatens agreements that allow EU and UK airlines to fly freely across the region. The result of the UK’s vote is “a shock and a disappointment,” said Kenny Jacobs, head of marketing at Ireland’s Ryanair Holdings, which had actively campaigned for the UK to remain in the EU. “We are going to have a period of great uncertainty for the next two years as the UK has to figure out how do you dismantle the past 40 years.” Despite the profit warning, IAG downplayed the possible lasting impact of a British exit from the EU. <br/>