International Consolidated Airlines (IAG) shares flew higher on Friday as the airline group announced forecast-beating results for quarter one.
At 294.4p per share, the FTSE 100 company was 1.4% higher in end-of-week trading.
The business – whose airline brands include British Airways, Iberia and Aer Lingus – saw revenues rise 9.6% between January and March, to €7 billion.
Operating profit swelled 191.2%, to €198 million, helped by a 17-basis-point improvement in operating margin which increased to 2.8%.
IAG said that rising profits reflected “strong revenue growth and a lower fuel price [which] offset expected cost increases.”
Net debt dropped by around €1.4 billion year on year, to €6.1 billion, pulling the firm’s net-debt-to-EBIDTA ratio to 0.9 from 1.1 in 2024’s corresponding quarter.
The company said it had completed €530 million worth of buybacks so far this year under its €1 billion share repurchase plan.
Fleet Expansion
IAG said that “we are continuing to see good demand for air travel across our core markets and for our brands, highlighting the strength of our portfolio.”
It described demand on its North Atlantic routes as “robust,” adding that demand in Europe and Latin America “continues to be strong.”
While some sales softness has emerged for its point-of-sale economy seats in the US, IAG said that this has been mitigated by healthy demand for its premium cabin offerings.
The business said it took delivery of five new aircraft during quarter one, and exercised options for a further 18.
It has also ordered 53 new aircraft today for its “medium-term long-haul fleet requirements.” These comprise of 21 Airbus A330-900neo planes and 32 Boeing 787-10 aircraft scheduled for delivery between 2028 and 2033.
IAG said that “the aircraft are mainly for replacement, with around one third for growth in [our] core markets.”
Strong Results
Chief executive Luis Gallego said “our strong first quarter results reflect the performance of our businesses and the effectiveness of our strategy and transformation.
We continue to deliver on our industry-leading financial targets.”
He added that “we continue to see resilient demand for air travel across all our markets, particularly in the premium cabins and despite the macroeconomic uncertainty.”
IAG kept its full-year guidance unchanged despite the turbulent economic and geopolitical landscape.
The business said it was around 80% booked for the second quarter as of 6 May, with revenues are ahead of the same time last year.
It added that bookings for the second half sit at 29%, roughly in line with levels seen at the same point in 2024.
Demand Strength
Analyst Aarin Chiekrie of Hargreaves Lansdown noted that “IAG shows no signs of slowing, and demand for its routes remains strong despite the current pressure on consumers’ incomes.”
He added that “the group’s market-leading networks, strong brands, and fierce operational focus continue to drive performance skyward [while] profitability’s also getting a helping hand from falling fuel costs.”
Chiekrie said that “after such a strong start to the year and demand holding up well, there could be room for markets to turn more positive on IAG and the industry as a whole.”
IAG’s share price is down 2.7% in the year to date.
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