IAG announced a solid set of Q1 results on Friday, underpinned by strong performance in North Atlantic routes.
IAG has delivered smashed expectations in the first quarter, with revenue climbing 9.6% to €7.0 billion, exceeding market expectations of €6.8 billion, and operating profit nearly tripling to €198 million, significantly outpacing the forecasted €133 million.
The group pointed to British Airways showing notable improvement, and both Iberia and Vueling maintaining their positions amongst the world’s most ‘punctual’ airlines.
“IAG has been delivering for both passengers and investors alike after landing a big profit beat in the first quarter. The group’s market-leading networks, strong brands, and fierce operational focus continue to drive performance skyward. Profitability’s also getting a helping hand from falling fuel costs,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“IAG shows no signs of slowing, and demand for its routes remains strong despite the current pressure on consumers’ incomes.”
North Atlantic routes were the biggest area of strength in terms of passenger revenue per ASK (available seat kilometre) with 13% growth. Africa, the Middle East and South Asia also show signs of promise with 3% growth, while domestic lines in the UK and Spain were disappointing.
Investors will be pleased to see a bump higher in the dividend, whilst the company continued its commitment to shareholder returns by completing €530 million of its ongoing €1.0 billion share buyback programme during the quarter.
Looking ahead, IAG has reinforced its long-term strategic outlook with an order for 71 widebody aircraft, positioning itself for sustained growth despite anticipated cost increases.
“We continue to see resilient demand for air travel across all our markets, particularly in the premium cabins and despite the macroeconomic uncertainty,” said Luis Gallego, IAG Chief Executive Officer.
Fleet expansion
IAG has announced plans for a substantial expansion of its long-haul fleet, with orders placed for 53 new aircraft from aviation giants Airbus and Boeing.
The multi-billion pound deal includes 32 Boeing 787-10 Dreamliners earmarked for British Airways, whilst 21 Airbus A330-900neo aircraft will be flexibly allocated across the group’s other carriers—Aer Lingus, Iberia and LEVEL.
Further to the confirmed orders, the agreements include options for additional aircraft. British Airways may exercise rights to purchase up to 10 extra Boeing 787s, whilst IAG holds similar options for up to 13 additional Airbus A330-900neos.
These latest acquisitions follow previously announced orders disclosed today, comprising six Airbus A350-900s for Iberia, alongside six Airbus A350-1000s and six Boeing 777-9s destined for British Airways’ fleet.