British Airways owner International Consolidated Airlines Group (LON:IAG) shares flew higher as it raised its annual profit target for 2018-2022.
The company, which also owns the Iberia and Vueling airlines, is aiming to reach underlying earnings before restructuring costs (EBITDAR) of €6.5bn per year on average for the period, compared to €5.3bn per year on average for 2016-2020.
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Shares rose 1.43% to 640p in morning trading.
IAG is looking to achieve an average equity free cash flow of €2.5bn per year after an annual range of €1.5bn to €2.5bn for 2016-2020.
Capital expenditure is expected to rise to €2.1bn per year from €1.7bn previously as the company invests in expanding its operations.
As part of its expansion, IAG has added new budget long-haul unit, Level, serving trans-Atlantic routes. The airlines started flying in July and IAG plans to grow to more locations in Europe with 30 planes by 2022.
Growth in available seat kilometres, a measure of an airline flight's passenger carrying capacity, is aimed at 5% per year after 3% per year for 2016-2020 .
The target for the operating profit margin was left at 12% to 15% and the group continues to strive towards average earnings per share growth of 12% per year.
READ: British Airways parent IAG shares fall as it reports slowdown in quarterly passenger unit revenue
IAG’s new targets have been released a week after its third quarter trading statement , which revealed forecast-beating profits but a slowdown in passenger revenue growth.
Profits were supported by the group’s restructuring efforts and a drop in fuel unit costs while the revenue growth slowed in the face of fierce competition, severe weather and terrorism.
IAG said in the quarterly update that it expects to deliver a record operating profit for the 2017 full year of around €3bn, compared to €2.5mln in 2016.