IAG: Is this the week that British Airways owner’s share price takes off?
The aviation industry will be looking ahead to British Airways owner IAG’s quarterly results this week, as the airline conglomerate looks to close in on pre-pandemic profits.
Analysts at HSBC expect IAG to report this Friday that capacity sits at 96 per cent compared to pre-Covid levels in 2019.
The group has been eyeing a 90 per cent rise in profits this year to upwards of €2bn, as major airlines continue to gain from an uptick in demand and boost profit expectations for the year.
Bookings for this summer have skyrocketed, with the sector benefiting from pent-up demand and holidaymakers’ resilience to the cost of living crisis.
Despite the positive forecasts, analysts at HSBC are still anticipating that most European airlines will not yet reach pre-Covid levels of profit this quarter, due to ongoing cost pressures.
The IAG reported a “strong recovery” for its 2022 final year results in February, but the cost of living still posed questions for the airline group and its ability to weather high fuel costs.
IAG CEO Luis Gallego said of the results, that “2022 was a year of strong recovery, driven by sustained leisure demand and markets reopening. At this point of the year we continue to see robust forward-bookings, while also remaining conscious of global macro-economic uncertainties.”
“We are transforming our businesses, with the intention of returning IAG to pre-COVID levels of profit within the next few years.”
Friday’s quarterly results come after a busy few months for the group, which saw the row over the Civil Aviation Authority’s ruling on the Heathrow passenger price cap deepen.
IAG, which owns British Airways and Iberia amongst a host of others, currently controls more than half of Heathrow’s capacity, and has argued that the decision would make the UK “uncompetitive.”
The CAA decision to fix the maximum fee Heathrow can charge per passenger – until the end of 2023 – has prompted legal challenges from both groups.
Speculation over the financial implications of the group’s recent €400mn acquisition of Spain’s Air Globalia’s Air Europa carrier will also continue.
The IAG’s share price fell more than 5 per cent following the announcement amid concerns over debt, but analysts have predicted medium-term earnings from the investment will benefit.