Investing.com – International Consolidated Airlines Group (LON:) (IAG) shares rose on Friday after parent company British Airways reported better-than-expected first-quarter earnings, thanks in part to increased passenger demand.
IAG, which also owns Spain’s Iberia and Vueling, said growth was particularly strong in travel in Latin America and the Caribbean. The Easter weekend also contributed to revenue growth, especially in Europe.
IAG said the developments helped offset the “more challenging” situation in other regions. The weakness was noticeable in the Middle East, where geopolitical tensions affected flights, although CEO Luis Gallego later said its impact in the area was relatively limited.
Operating profit for the three months to March 31 jumped to 68 million euros, up from 9 million euros in the year-ago period. Analysts had expected revenue of 49 million euros, according to company forecasts cited by Reuters.
Gallego added in a statement that the company is also “well prepared for the summer.” He told Reuters that IAG had already secured more than 80% of expected orders for the current quarter and more than 40% for the third quarter.
“Strong demand for travel is a continuing trend,” Gallego said.
Stifel analysts noted some concerns about the expected rise in costs needed to meet robust travel demand, prompting them to forecast “broadly flat” pre-tax profit and lower margins in IAG’s 2024 fiscal year. However, they described the firm’s comment as “positive”, adding that they believed IAG benefited from a “clear focus on profitability” and an “unprecedented strong position on transatlantic routes”.
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