International Airlines Group, the company formed by the merger of British Airways and Iberia, has said it is planning its first dividend since the merger three years ago.
IAG, which is headed by former Aer Lingus chief Willie Walsh, said it was confident of increasing profit by more than 10 per cent a year between 2016 and 2020. This is on top of the fact that the company's operating profit could increase by around 78 per cent this year and by a further 31 per cent next year to €1.8 billion. These improvments should enable a dividend to be paid.
IAG said it anticipates making a declaration in 2015 "as the first step in our plan to introduce a sustainable dividend payment." The company said that the dividend would be based on a payout ratio of 25 per cent of its underlying profit after tax.
Since the $8 billion merger in 2011, IAG has benefited from restructuring, the use of more fuel efficient planes and the acquistion of Spanish budget airline Vueling last year. The improved economic situation in the UK and US has also assisted IAG's profits.