Chief executive Willie Walsh highlighted “adverse currency impact” following June’s referendum vote as the reason for the profits hit.
Despite the shortfall, IAG, whose carriers include Aer Lingus, Iberia and Vueling, saw operating profits rise by 8.6% to €2.5 billion in spite of a 1.3% decline in revenue to €22.5 billion.
The Group said it expected operating profit for 2017 “to show an improvement” based on current fuel prices and exchange rates.
In total, Group airlines carried more than 100 million passengers – an increase of 12 million from 2015 - with passenger load factor seeing improvement across three out of its four carriers.
Selling costs increased 2.4% excluding currency.
In a statement Walsh said: “In the quarter, we made an operating profit before exceptional items of €620 million, up from a €530 million operating profit last year, with an improvement of our underlying passenger revenue trend.
“For the full year, it was a good performance in a challenging environment with an operating profit of €2,535 million before exceptional items, up 8.6% versus last year.
“Our performance was affected by an adverse currency impact of €460 million. In particular, this was due to the weak pound following the UK’s EU referendum.
“However, despite that, we’ve made good progress and continue to build on all we’ve achieved in our first five years.”
He added: “In 2016, we carried more than 100 million passengers – double the number British Airways and Iberia carried in 2010, a year before IAG was created.
“We’re committed to providing a sustainable dividend for our shareholders and are pleased to confirm that the board is proposing a final dividend of 12.5 euro cents per share.
“This brings the full year dividend to 23.5 euro cents per share, subject to shareholder approval at our AGM in June.
“Also today we’re announcing that we intend to carry out a share buyback of €500 million during the course of 2017 which may be implemented through one or more share buyback programmes.
“We have great confidence in IAG’s future prospects and are increasing cash returns to our shareholders.”
