By Sarah Young
LONDON (Reuters) -IAG’s quarterly profit beat analyst forecasts by 40% and the British Airways owner said the outlook for summer travel was encouraging, although it was “mindful” of uncertainty in the wider economy.
Leisure travel has boomed since pandemic restrictions ended last year, driving up ticket prices and boosting profits for airlines despite the squeeze on household incomes from high inflation and rising interest rates.
Air France-KLM on Friday also reported higher-than-expected quarterly earnings.
But there are signs that momentum could be slowing and the winter could be tougher. Earlier this week, Ryanair was cautious on demand for the rest of 2023.
IAG, which also owns Iberia, Aer Lingus and Vueling, said it was “mindful of wider uncertainties that might affect the full year”, which chief executive Luis Gallego told reporters referred to a lack of visibility on the fuel price and demand.
But so far, IAG had not seen “any weakness into Q3 and Q4”, finance chief Nicholas Cadbury added.
Shares in IAG, which have climbed 25% this year, were up 2.6% to 159 pence in early deals, still well below the 400 pence level they were trading at before the pandemic in early 2020.
IAG did not provide an update on its full-year guidance on Friday. In May, it said it expected annual profit above 2.3 billion euros ($2.5 billion), and analysts’ consensus forecast stands at 2.8 billion euros.
For the three months to the end of June, the group recorded an operating profit before exceptional items of 1.25 billion euros, compared to the 895 million euros analysts were on average expecting.
“These numbers will help push expectations for this year strongly through the 3 billion euro operating profit level,” Goodbody analysts said.
IAG said it was 30% booked for the October-December period, which is typical for this time of year, and for now its focus was on delivering resilient operations over the summer given the air traffic control and labour dispute challenges in Europe.
($1 = 0.9106 euros)
(Reporting by Sarah Young; Editing by Kate Holton and Mark Potter)
