British Airways proprietor IAG experiences greater than anticipated earnings | USAEMALL.com

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British Airways owner International Airlines Group has reported a second summer of strong profits as demand for travel in Europe and across the Atlantic remained robust.

The Anglo-Spanish company reported an operating profit before exceptional items of €2.01bn for the third quarter, 15 per cent higher than a year earlier and well above analysts’ expectations. Shares rose 6 per cent in early trading on Friday in London.

IAG, which owns five airlines including BA, also announced a €350mn share buyback programme, reflecting “our confidence in the strategy and business model, as well as the long-term prospects for the business”.

“Demand remains strong across our airlines and we expect a good final quarter of 2024 financially,” said IAG’s chief executive Luis Gallego.

IAG’s bullish outlook contrasts with its rivals in Europe, which have struggled to match last summer’s record-breaking profits.

It also comes despite BA facing major operational problems. Flight delays and cancellations have risen significantly at the UK-based carrier since the Covid-19 pandemic, even though the company put extra resources into this summer’s operations at Heathrow, which suffers from congestion and air traffic delays

Industry executives believe BA will have to do more, even at the expense of future financial returns, and the airline has trimmed back its winter flying schedule.

IAG said the group had an “ongoing focus on improving our customer propositions and operational resilience”, and cut its forecast for annual capacity growth from 7 per cent to 6 per cent.

The company pinned this on “the impact of disruption and aircraft availability”.

IAG’s direct rivals Lufthansa Group and Air France-KLM both reported a drop in third-quarter earnings amid higher costs and operational problems. Europe’s two major low-cost airlines Ryanair and Wizz Air also both reported substantial falls in quarterly profits.

IAG is not immune to the wider trends facing the industry, but its particular exposure to the transatlantic market and high-spending holidaymakers travelling in business and first class have left it particularly well-placed, analysts said.

Its strong quarterly performance was built on its two core markets: flying passengers across the Atlantic and on shorter regional trips in Europe.

IAG said passenger unit revenue, a rough proxy for ticket prices, rose 1.2 per cent, “despite an exceptionally strong comparative quarter in 2023“, again bucking a trend seen at many other airlines that have been unable to keep raising fares.

BA’s unit revenue across the Atlantic was “particularly strong”, but Ireland’s Aer Lingus suffered from a pilots’ strike and more competition in its Dublin base.