- IAG said travel demand ‘remains strong’
- The airline seeks to transport even more passengers this year than last
- IAG reported revenue of £5.5bn for the first three months of the year
The owner of British Airways is preparing for a summer boom after Caribbean getaways boosted business over the winter.
IAG, whose airlines also include Iberia, Vueling and Aer Lingus, said travel demand “remains strong” as it expects to carry even more passengers this year than last.
IAG yesterday reported revenue of £5.5bn for the first three months of the year, up from £5bn for the same period in 2023.
Profits hit £58m in the quarter, around £50m more than it took in last year.
IAG said it carried more than 26 million passengers during the first three months of the year – typically the least profitable period – as it capitalized on early Easter holidays and strong travel demand.
Flying high: Profits hit £58m in the quarter, around £50m more than they took in last year.
Particularly hot spots included Latin America and the Caribbean, where travelers enjoy the winter sun.
IAG has increased the number of flights to these regions to meet “sharply increasing” demand. And the company is pinning its hopes on an even brighter summer.
“We had a very good summer last year,” said CFO Nicholas Cadbury.
“We expect passenger numbers are likely to grow as we put more aircraft across the Atlantic and to leisure destinations in Europe.”
IAG airlines have already secured more than 80 percent of projected bookings for this quarter and more than 40 percent for the third quarter.
Total passenger numbers should increase 7 percent this year compared to 2023, the company said, and fuel costs would also be 5 percent lower.
Content: Luis Gallego, CEO of IAG
But despite strong performance in Europe and across the Atlantic, IAG warned that other destinations were “currently more challenging”.
Revenue per passenger in its African, Middle Eastern and South Asian markets declined in the first quarter as the conflict in Israel continues. Business travel has also been slower, IAG said, as it struggles to recover from Covid.
In 2023, corporate getaways were still at just 70 per cent of pre-pandemic levels, as BA struggles to attract back the A-listers.
IAG CEO Luis Gallego said: “Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvements in both revenue and operating profit. .
‘We are well positioned for the summer. The high demand for travel is a constant trend.’ Derren Nathan, head of equity research at Hargreaves Lansdown, said it was still an “impressive start to the year”.
“There were few forward-looking forecasts, but the tone was confident, with IAG well positioned for the summer, against a backdrop of continued high demand for leisure travel,” he said.
‘While the stock has performed well lately, the valuation remains below the historical 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 even higher.”
Victoria Scholar, chief investment officer at Interactive Investor, said: “Clearly, individuals and families are prioritizing their summer vacations whenever they can, most likely at the expense of other discretionary spending.”
IAG’s share price is still reeling from the pandemic – it’s down about 60 per cent from January 2020 highs.