British Airways owner IAG set for bumper summer

The owner of British Airways is gearing up for a summer boom after Caribbean getaways boosted business over the winter.

IAG, whose airlines also include Iberia, Vueling and Aer Lingus, said demand for travel ‘remains strong’ as it looks to fly even more passengers this year than last.

IAG yesterday posted revenues of £5.5billion for the first three months of the year, up from £5billion from the same period of 2023.

Profits hit £58m in the quarter – around £50m more than it raked in last year.

IAG said it flew more than 26m passengers during the first three months of the year – normally the least profitable period – as it cashed in on an early Easter holiday and strong demand for travel.

Flying high: Profits hit £58m in the quarter – around £50m more than it raked in last year

Particular hot spots included Latin America and the Caribbean as travellers splash out on the winter sun.

IAG has increased the number of flights to these regions to meet the ‘strongly growing’ demand. And the company is pinning its hopes on an even brighter summer.

‘We had a very strong summer last year ,’ said chief financial officer Nicholas Cadbury.

‘We expect passenger numbers probably to grow as we put more aircraft across the Atlantic and into leisure destinations in Europe.’

IAG’s airlines have already secured more than 80 per cent of projected bookings for this quarter and over 40 per cent for the third quarter.

Overall passenger numbers should be up 7 per cent this year compared with 2023, the firm said, with fuel costs also 5 per cent lower.

Content: IAG chief executive Luis Gallego

But despite buoyant performance in Europe and across the Atlantic, IAG did warn that other destinations were ‘currently more challenging’.

Revenues per passenger in its Africa, Middle East and South Asia markets declined in the first quarter as conflict in Israel continues. Business travel has also been slower, IAG said, as it struggles to rebound from Covid.

In 2023, corporate getaways were still at just 70 per cent of pre-pandemic levels as BA struggles to lure back the high flyers.

IAG chief executive Luis Gallego said: ‘Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvements to both revenue and operating profit.

‘We are well-positioned for the summer. The high demand for travel is a continuing trend.’ Derren Nathan, head of equity research at Hargreaves Lansdown, said it was still an ‘impressive start to the year’.

‘There was little in the way of forward guidance but the tone was confident, with IAG well positioned for the summer, against a backdrop of continuing high demand for leisure travel,’ he said.

‘Although the shares have performed well recently, the valuation is still below the historic average as a multiple of revenue.

‘With the outlook for inflation, rates and the economy in Europe pointing in the right direction, IAG could fly higher still.’

Victoria Scholar, head of investment at Interactive Investor, said: ‘Clearly individuals and families are prioritising their summer holidays where they can, most likely at the expense of other discretionary spending.’

IAG’s share price is still reeling from the pandemic – down about 60 per cent from the highs in January 2020.