IAG posts higher than expected Q3 profit

The International Airlines Group (IAG) posted higher than expected Q3 earnings on Friday, with an operating profit of €2 billion for the period, marking a 15.4 per cent year-on-year increase.

The parent company of British Airways, Iberia, Aer Lingus, LEVEL and Vueling recorded total Q3 revenues of €9.3 billion, up 7.9 per cent year on year.

Passenger revenue increased 6.9 per cent to €8.3 billion for the three months to 30 September, largely driven by higher yields, “strong” leisure demand and increased capacity for the North Atlantic region, which the group described as “a major area of strength”.

Group capacity for the quarter, measured in available seat kilometres, increased 5.7 per cent year on year, while load factor increased 1 percentage point to 89.9 per cent. Passenger revenue per available seat kilometres also increased 1.2 per cent.

IAG chief executive Luis Gallego, said the group “achieved a very strong financial performance”. He added that “demand remains strong across our airlines, and we expect a good final quarter of 2024 financially.”

In Q3, IAG increased its capacity for the North Atlantic region by 3.9 per cent and, as a result, passenger unit revenue at British Airways was “particularly strong”. Meanwhile, Aer Lingus suffered from a pilots’ strike and increased competitor capacity to Dublin, according to the group.

IAG also reported “elevated” capacity growth for the quarter in the Latin America market, which saw a 10.7 per cent increase, driven in part by added frequencies into core cities at Iberia. However, passenger unit revenue in the region decreased by 2.8 per cent since “strong underlying demand mitigated the impact of the capacity growth,” the group said. In August, IAG also terminated – for a second time – its planned acquisition of Spanish carrier Air Europa due to regulatory concerns.

Meanwhile, “strong” customer demand was reported for the group’s intra-European network, where capacity increased 5.3 per cent in the quarter and passenger unit revenue increased by 1.4 per cent.

All short-haul European operations saw “good demand and revenue performance” in the quarter, however the group reported that “rest of the world continues to be more challenging, albeit as a smaller part (approx. 15 per cent) of IAG’s total capacity”.

In its financial statement, the group also announced a share buyback programme of €350 million, which it said, “reflects our confidence in the strategy and business model, as well as the long-term prospects of the business”.

Looking to the end of 2024, IAG said it expects its “strong” financial performance to continue, with a planned 5 per cent increase in capacity growth for Q4 and full-year capacity growth expected to reach 6 per cent.