IAG lifts guidance on summer demand as Q1 beats forecasts
British Airways-owner IAG on Friday lifted its full year earnings forecasts on the back of strong summer demand as first-quarter profits beat expectations.
The group, which also owns Iberia and Aer Lingus, now expects annual profit to be higher than the top end of its previous €1.8 - 2.3bn range published in February.
Operating profit for the traditionally quieter three months to March was €9m, compared with a €718m loss a year earlier and smashing the €179m loss forecast by analysts as lower fuel prices provided a boost. Revenue surged by 71% to €5.9bn.
IAG said the summer outlook was encouraging, adding that capacity in the North Atlantic and Latin American markets was now back at pre-pandemic levels, driven by leisure demand with around 80% of expected second quarter revenue now booked.
“We are seeing healthy forward bookings, with leisure demand particularly strong, while business travel continues to recover more slowly," said chief executive Luis Gallego.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said the group was in "better shape", but that Covid pandemic headwinds still persisted with the sluggish return of business travel "which IAG is highly exposed to".
"Being more long-haul focused, it has taken a very long time for normality to come into view for IAG, but all things considered, back-to-normal is now officially on the menu."
"The main fly in the ointment is continued workforce disputes at major hubs, including Heathrow, which could dent demand and brand appeal if queues and disruption are worse than expected going into the important summer season."
Reporting by Frank Prenesti for Sharecast.com