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International Airlines Group Backtracks Capacity Growth Predictions

On Friday, British Airways owner International Airlines Group scaled back its prediction for capacity growth for the next three years. This was after hitting its point of view for earnings per share as the expectations for the global economy remained shaky.

IAG also stated that the available seat kilometers and a measure of passenger carrying capacity were projected to grow 3.4% a year between 2020 and 2022.

This is in comparison to the prior estimate of 6% growth a year for the 2019-2023 period.

Meanwhile, the airline group, which also owns Iberia, Aer Lingus, and Vueling, decreased its forecast for growth in earnings per share (EPS) to 10%+ a year from a previous estimate of 12%+ a year.

The reduction was due to the lower planned capacity growth.

Last week, Chief Executive Willie Walsh indicated that he anticipated global macroeconomic softness to continue in 2020.

Moreover, the company has also taken a hit from industrial conflict at British Airways. The conflict has also damaged the outlook of profits this year.

Plan of Action for the Capital Markets

IAG stated that the forecasts for capacity growth figures were not adjusted for the impact of the pilot strikes.

In September, after 48 hours of action, no further industrial action has been scheduled. This is despite the fact that the disagreement over pay remains unresolved.

Today, Walsh and other associates of IAG’s management will update investors on its strategic plans at a capital markets day.

The strategic update comes after IAG said on a statement last Monday that it would buy Spain’s Air Europa. The sales is to boost up its presence on routes to Latin America and the Caribbean.

Elsewhere, IAG also indicated it had expected the deal.

The contract will be functioning through external debt. It is also projecting to close in the second half of next year.

Moreover, the closure is for it to add its earnings in the first full year after the closing.

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