IAG to make operating profit of €1.5bn in 2015

International Consolidated Airlines (IAG) rose strongly on Friday after saying that it expects to make €1.5bn in operating profits in 2015, significantly higher than €6m achieved in 2010.

In its Capital Markets Day, the firm will reveal its target which it expects to achieve through an increase from €400m to €450m in synergy targets (from the merger of British Airways and Spain's Iberia) from year five, €400m of structural profit improvements and €150m in organic growth.

Iberia Express, the group's recently launched short- and medium-haul network, as well as hub improvements at Madrid's Barajas airport are expected to create a "financial benefit" of at least €100m each.

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Furthermore, capacity is estimated to grow at an organic rate of 2.5% oer annum and introducing new aircraft into the fleet is expected to save the firm €250m. The "optimisation" of the transatlantic joint business with American Airlines will deliver at least €150m (from a 2010 base).

Capital expenditure is expected to be €1.1bn in 2011, rising to €1.6bn in 2015.

Shares were up 4.3% at 147.8p by 09:07.

BC