Keith Williams is to step down as the head of British Airways, it was announced on Friday, as parent group IAG raised its long-term profit targets.
Mr Williams, chief executive and chairman, will retire next April. He is to be replaced by Alex Cruz, chairman and chief executive of Spanish low-cost carrier Vueling, which is also part of IAG.
Shares in IAG closed up 3.7 per cent at 602p as investors responded positively to upgraded financial goals for the next five years.
The group, which was created out of the 2011 merger of BA and Iberia, raised its outlook on earnings growth to more than 12 per cent, from above 10 per cent previously, for the 2016 to 2020 period.
It is now targeting an operating profit margin of 12-15 per cent, up from 10-14 per cent, and a return on invested capital of 15 per cent, up from more than 12 per cent.
“We’re increasing all our targets. These are ambitious targets. We know we can deliver on them,” Willie Walsh, IAG chief executive, told investors at its capital markets day yesterday.
The new investment aims come a week after IAG reported a 38 per cent rise in third-quarter operating profit to €1.3bn, and announced plans to make the first dividend payment in its four-year history — in a sign that the group’s restructuring since 2011 was delivering sustained profit.
Enrique Dupuy, chief financial officer, said synergies across the group should reach €800m, double the target laid out by BA and Iberia in 2010.
The improved outlook provides another boost to the airline group, which has fared better than its main European rivals — Lufthansa and Air France-KLM — who have been hit by strikes over plans to cut costs, and increasing competition from aggressive Middle Eastern and budget rivals.
IAG said its updated financial targets did not include the outlook for Aer Lingus, the latest airline to join its stable. It said it planned to update the market at its full-year results in February.
Mr Walsh paid tribute to Mr Williams, telling investors he was a “legend”. Mr Williams, who was instrumental in the creation of IAG as chief financial officer of BA, has been at the airline for 18 years.
Mr Cruz founded Spanish airline Clickair in 2006, which merged with Vueling in 2009, when he became chief executive. Vueling was acquired by IAG in 2013 and the fast-growing carrier has become one of the biggest contributors to IAG’s profits.
“Keith is not only British Airways’ executive chairman, he was fundamental to the creation of IAG. IAG is as much his legacy as is his leadership of BA,” said Mr Walsh.