Upbeat British Airways owner IAG sees 40 percent profit growth this year

By Sarah Young

LONDON (Reuters) - British Airways-owner IAG (ICAG.L) forecast a more than 900 million euros ($991 million) or 40 percent profit rise this year as Chief Executive Willie Walsh said he planned to steer the group towards further growth.

IAG, whose portfolio also includes Iberia, Vueling and Aer Lingus, will this year benefit from lower fuel prices, a long-term strategy of reducing costs and growing demand for travel.

But the company faces uncertainty in the shape of volatile currencies, Britain's June vote on leaving the EU, and pressure on ticket prices from increased competition in Europe and on transatlantic routes.

Walsh said IAG was well positioned to grow in spite of those headwinds. "Clearly it will a challenging environment but the good news is that we're very confident in terms of our performance," he told reporters on Friday.

The 54-year-old, who once said he would retire at 55, is also planning to stick around to oversee that growth for at least 18 months. "I'll still be 55 until October of 2017, until my 56th birthday, so there's still time for me," he told BBC radio.

The forecast of 40 percent growth in the current year represents a slower pace than the 65 percent jump in operating profit it reported for 2015.

That guidance puts it on course to post a result of 3.2 billion euros, slightly behind the 3.4 billion euro consensus forecast according to Reuters data.

IAG stock initially spiked to its highest in more than a month in reaction to the results, before trading down 2.9 percent at 543 pence by 1025 GMT.

RBC analyst Damian Brewer said he was confident in the group's prospects. "We see IAG having the ability to deliver EPS and EBITDAR (core earnings) without just depending on what external GDP or fuel prices do," he said.

Like many European airlines, IAG will this year be helped by an oil price which has almost halved over the past 12 months, as long-term fuel hedges fall away allowing more of the benefits to be felt.

The challenge for IAG is to retain the benefits of cheaper fuel amid pressure on ticket prices from operators such as budget airline Ryanair (RYA.I).

Recent falls in the pound on uncertainty about the outcome of a referendum on Britain's EU membership are also a risk to IAG because its major expenditure is on fuel, priced in dollars.

As for the vote itself, Walsh said that outcome would not affect IAG. "We don't believe it would have a material impact on our business," he told the BBC.

($1 = 0.9042 euros)

(Editing by Paul Sandle and David Holmes)