British Airways parent company IAG reported a 15% increase in quarterly operating profit, surpassing market expectations, and expressed confidence in future travel demand.
The company's expanding focus on profitable transatlantic routes has positioned it ahead of its competitors.
IAG’s shares surged by 6% at market opening, reaching levels not seen since March 2020, prior to the pandemic's severe impact on the travel industry. The stock has climbed 50% year-to-date.
In addition to British Airways, IAG also owns Iberia, Vueling, and Aer Lingus. The company noted increased passenger numbers on flights between London and the U.S. compared to the previous year. It also expanded its North Atlantic capacity by 4% and boosted operations on the South Atlantic routes.
“Demand remains strong across our airlines, and we anticipate a solid final quarter of 2024 financially,” said Chief Executive Luis Gallego.
On Friday, IAG announced a share buyback program worth 350 million euros ($376.95 million).
The group's strong performance was supported by higher ticket prices, lower fuel costs, and its emphasis on cost management and efficiency, which counterbalanced an increased wage bill and contributed to the better-than-expected quarterly results.
This outcome contrasts sharply with IAG’s European rivals, Air France-KLM and Lufthansa, which faced challenges from rising expenses over the summer.
“IAG continues to shine as one of the highest-quality airlines in Europe,” commented Bernstein analysts.
Unlike its European peers, IAG has less reliance on Asian routes, where Chinese carriers benefit from shorter, more cost-effective flights due to their ability to fly over Russian airspace.
“At the moment, expanding in Asia is not a priority for us. We are focusing on reinforcing our key markets: North Atlantic, South Atlantic, and intra-Europe,” Gallego stated.
For the three-month period ending in September, IAG reported an operating profit of 2 billion euros, exceeding the consensus estimate of 1.78 billion euros. Analysts project a full-year operating profit of 3.7 billion euros, up from 3.5 billion euros achieved last year. Photo by Beata May, Wikimedia commons.