International Consolidated Airways (IAG) has made a strong start to the year with robudt travel spending from holidaymakers and business travellers enduring.
At 184.9p per share, IAG’s share price rose 1.1% in Friday trading.
Revenues at the British Airways owner rose 9.2% in the first quarter, to €6.4 billion, as passenger revenues increased 11.7% to €5.6 billion.
Cargo revenues dipped 12.4% year on year, to €283 million.
Strong Numbers
The FTSE 100 firm carried 26.4 million passengers between January and March, up 8.6% year on year. Meanwhile, its load factor improved to 83.1% from 81.5%
Operating profit rose to €68m, up significantly from €9m in the same 2023 period. The bottom line was boosted by lower fuel-related expenses. Fuel costs per available seat kilometer (ASK) dropped 4.9%.
Staff costs, however, shot 14.3% higher in the quarter.
Net debt has continued to crumble, and dropped to €7.4 billion as of March from €9.2 billion at the end of 2023. This prompted a 40-basis-point fall in the firm’s net debt to EBITDA ratio, to 1.3 times.
IAG said that the decline was “mainly due to the normal seasonal inflow of bookings for future travel periods during the first quarter of the year.”
“Good” Results
IAG chief executive Luis Gallego commented that “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.”
Lauding what he described as “the strength of our core markets – North Atlantic, South Atlantic and intra-Europe – and the performance of our brands,” he said that “we are well-positioned for the summer.”
Gallego added that “the high demand for travel is a continuing trend.”
Flying High
Javier Molina, analyst at eToro, said that “with the testing quarters following COVID now behind them, the company is demonstrating its capacity to enhance profitability and operational efficiency in a challenging yet promising environment.”
Molina added that “transformation initiatives and strengths in key markets… are poised to capitalise on this sustained demand and significantly impact revenues and results.”
Noting that IAG “has maintained altitude in the first quarter of the year,” analyst Derren Nathan of Hargreaves Lansdown said that “the timing of the Easter break no doubt helped but, even so, it’s an impressive start to the year.”
He added that “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.”
