International Consolidated Airways (IAG) has kicked off the year on a strong note, as robust travel spending from both holidaymakers and business travelers persisted. The company’s share price saw a 1.1% increase in Friday trading, reaching 184.9p per share. Revenues at IAG climbed by 9.2% in the first quarter to €6.4 billion, with passenger revenues rising by 11.7% to €5.6 billion. However, cargo revenues experienced a 12.4% dip year on year, reaching €283 million.
During the first quarter, IAG carried 26.4 million passengers, marking an 8.6% increase from the previous year, while the load factor improved from 81.5% to 83.1%. Operating profit also surged to €68 million, a significant jump from €9 million in the same period of 2023. The boost in the bottom line was attributed to lower fuel-related expenses, as fuel costs per available seat kilometer (ASK) dropped by 4.9%. On the other hand, staff costs shot up by 14.3% in the quarter. Additionally, net debt decreased to €7.4 billion by March, down from €9.2 billion at the end of 2023, resulting in a 40-basis-point decrease in the firm’s net debt to EBITDA ratio, now standing at 1.3 times.
IAG explained that the decline in net debt was primarily due to the normal seasonal inflow of bookings for future travel periods during the first quarter of the year. CEO Luis Gallego praised the company’s transformation initiatives and increased demand, particularly over the Easter holidays, which led to a strong set of results with improvements in both revenue and operating profit. Gallego highlighted the strength of IAG’s core markets, such as the North Atlantic, South Atlantic, and intra-Europe, expressing confidence in the company’s position for the upcoming summer season. He noted the continued high demand for travel as a favorable trend.
Analyst Javier Molina from eToro noted that IAG has successfully navigated the challenging post-COVID quarters, demonstrating its ability to enhance profitability and operational efficiency. Molina pointed out that the company’s transformation initiatives and strengths in key markets are well-positioned to capitalize on sustained demand and make a significant impact on revenues and results. Similarly, analyst Derren Nathan of Hargreaves Lansdown praised IAG for maintaining its altitude in the first quarter of the year, despite the favorable timing of the Easter break. Nathan mentioned the company’s confident tone and positioning for the summer season amidst a backdrop of high demand for leisure travel, signaling a positive outlook for IAG’s future performance.
