The International Airlines Group (IAG) posted higher than expected second-quarter earnings on Friday (1 August), with an operating profit of €1.7 billion for the period, marking a 35.4 per cent year-on-year increase.
The parent company of British Airways, Iberia, Aer Lingus, LEVEL and Vueling recorded total Q2 revenues of €8.86 billion, up 6.8 per cent year on year.
European carriers have largely been shielded from market turmoil caused by US tariffs, with aviation groups Lufthansa and Air France-KLM this week also posting Q2 gains.
IAG’s passenger revenue increased 4.9 per cent to €7.8 billion for the three months to 30 June, driven by “strong” leisure demand with favourable foreign exchange impacts.
Group capacity for the quarter, measured in available seat kilometres, increased 2.2 per cent year on year, while load factor fell 1.3 percentage points to 85.4 per cent. Passenger revenue per available seat kilometres increased 0.7 per cent.
“These results give us confidence that we will deliver good earnings growth and margin progression for the full year,” said IAG chief executive Luis Gallego in a statement.
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For the six months to 30 June, overall capacity at IAG increased 2.7 per cent year on year, reflecting growth in its airlines’ fleets, including the introduction of Airbus A321XLR aircraft at Aer Lingus and Iberia. Passenger revenue per ASK also increased 2.9 per cent year on year.
British Airways, Aer Lingus and Iberia all posted year-on-year profit increases. Vueling, however, saw profit fall €2 million to €95 million. BA recorded a £269 million uptick in profit to £824 million, driven by a 2.1 per cent increase in capacity. This is despite the 21 March shutdown of its London Heathrow hub, which had an estimated adverse effect of £40 million.
The group said it will continue to invest in its core markets, namely the North Atlantic and Latin American markets, despite some “weakness” in US point-of-sale economy leisure demand in the second quarter.
“We remain focused on our market-leading brands and core geographies, where we continue to see robust performance, allowing us to invest in fleet as well as technology to improve operational efficiency and customer experience,” Gallego said.
IAG secured more than 200,000 tonnes of alternative aviation fuel in the year’s first half, marking a 25 per cent year-on-year increase, according to its earnings report. It also inked a deal with Microsoft to reduce the latter's Scope 3 emissions from business travel.
From a policy perspective, the group said it supports the UK SAF Revenue Certainty Mechanism, and that it also continues to engage with the EU “to improve reporting and disclosure requirements through the EU Omnibus directive”.
The group’s full-year outlook remains positive, however its forecast capacity growth was adjusted down from 3 per cent to 2.5 per cent due to geopolitical uncertainties. As of 29 July, second half bookings are “in line with last year”, with 57 per cent of capacity already booked.