International Airlines Group, the owner of British Airways and Iberia, has announced a 27 percent increase in its operating profit for 2024 to EUR4.4 (PS3.6) billion. This is due to high-spending tourists driving strong demand on all core markets.
IAG’s share price rose by nearly 5% on early Friday trading after the announcement.
The revenue for the entire year increased by 9%, to EUR32.1billion (PS26.5billion), and an increase of 11.4% in just the last quarter.
IAG stated that “we have continued to see a strong demand for travel in 2024, and even now into 2025,” particularly within our core markets.
According to the company that also owns Ireland’s Aer Lingus it is delivering “world-class returns and margins” in accordance with its long-term goals.
The shares of IAG more than doubled in the last year due to strong financial results, and demand for transatlantic flights.
Aarin Chiekrie is an equity analyst with Hargreaves Lansdown. She says that demand for group routes continues to be strong, despite current income pressures.
The final dividend was six cents (EUR) per share. This brings the total amount of dividends paid for this year to EUR435million (PS359million).
IAG also plans to buy back EUR350 millions of shares, plus up to EUR1 Billion in excess capital.
IAG warns that business travel levels will not recover fully to pre-Covid-19 rates.
IAG has warned that despite its excellent financial performance, business travel will never return to the pre-pandemic level.
IAG stated that “we do not estimate it will fully recover to pre Covid-19 levels for short-duration and short-haul flights”.
The assessment is in line with the industry trend, where major firms, such as professional services companies PwC and EY or Marsh McLennan, continue to reduce emissions through corporate travel.
Last year, the head of Global Business Travel Association told Financial Times that the “new norm” for business travel was video conferences and fewer day trips.
Premium cabins are filled with leisure travelers
IAG, along with other major carriers, has relied more on leisure travellers to fill up premium class seats since the end of pandemic.
Leisure travel remains a “major priority” for many households, according to the company. This shift is attributed to consumers’ preference for experiences rather than material goods.
In recent years, we’ve seen a rise in the value of experiences as compared to material goods.
Strong demand was driven by IAG’s transatlantic routes between the UK, US and Canada.
British Airways’ operating profit grew 14% to EUR2 billion in the last year, largely due to these routes.
BA is facing operational challenges due to concerns about aircraft availability
British Airways is still struggling with its operations, especially at Heathrow in London.
Although IAG claimed that BA has improved its performance by 2024, it continues to have challenges with aircraft availability.
The reliability of BA’s Boeing 787 fleet is a major issue, as the engines on these jets have been plagued by problems.
IAG warned that the challenges may persist for a long time.
This article IAG shares surge on record EUR4.4bn profits, but the business travel outlook dims first appeared on The ICD
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