British Airways’ owner IAG raises profit guidance as it sees capacity at 97% of pre-pandemic level
The parent company of British Airways has raised its forecast for annual operating profits due to stronger bookings, saying it expects capacity to be at 97% of the 2019 pre-pandemic year.
International Airlines Group (IAG), which also counts Iberia and Aer Lingus among its stable of brands, said its focus on restoring earnings on key transatlantic routes was paying off.
The company said leisure travel was the driving factor while lower fuel prices were boosting its bottom line.
It reported that Latin America and North America traffic had already exceeded the levels seen before the COVID public health emergency kicked in to devastate international travel.
Revenue over the first three months of the year, its first quarter, came in at a better than expected €5.9bn (£5.2bn) compared to the €3.4bn (£3bn) achieved in the same period last year as flying abroad was getting back in gear.
It reported a small first quarter operating profit before exceptional items of €9m (£7.9m). Financial analysts had expected to see losses, as are typical for the three-month period, of almost €180m (£157.4m).
The group said that it now expected annual profit to come in above the top end of a €1.8bn (£1.6bn) to €2.3bn (£2bn) range given in February.
At the top level, such a performance would represent an improvement of 90% on 2022.
It called the outlook for the summer “encouraging”.
The update chimes with reports from rivals that demand for holidays abroad is high despite the impact of the cost of living crisis on family budgets.
Shares rose by 4% at the open.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said of the figures: “British Airways owner, IAG, has landed a first quarter underlying operating profit for the first time since 2019.
“While all pandemic headwinds aren’t fully in the rear-view mirror, namely that business travel, which IAG is highly exposed to, remains sluggish, the group’s in much better shape overall.”
She added: “Being more long-haul focused, it has taken a very long time for normality to come into view for IAG, but all things considered, back-to-normal is now officially on the menu.
“The main fly in the ointment is continued workforce disputes at major hubs, including Heathrow, which could dent demand and brand appeal if queues and disruption are worse than expected going into the important summer season.”