British Airways owner IAG outperforms rivals with profits up 15%
Strong demand for transatlantic travel has boosted the profits of British Airways owner, International Airlines Group, (IAG), with the UK national carrier outperforming rivals despite widespread European flight delays.
Operating profits for the peak summer season were up about 15% on last year to €2bn (£1.7 bn) , with BA achieving a 20% margin, even with labour costs 14% higher than in 2023.
IAG’s chief executive Luis Gallego ascribed the last quarter’s earnings, which outstripped analysts’ expectations, to “the effectiveness of our strategy and group-wide transformation”.
Lower fuel costs also helped, with IAG’s bill down 4.2% through newer aircraft and the lower price of kerosene. While IAG did not comment directly on fares, a similar measure, passenger unit revenue, edged up 1.2% in a summer where Ryanair reported lowering its average fares.
The increased profit came primarily at BA, which earlier this year showcased its plans for a £7bn overhaul, after criticism of its cabins and inflight services in recent times.
IAG said it expected its “strong financial performance to continue for the rest of the year”, and announced a €350m share buyback scheme.
While BA has faced questions about its punctuality, Gallego and BA boss Sean Doyle said the airline was improving. An analysis of Heathrow flight departure data by the Financial Times found about 9% of BA flights in the year to July were cancelled or severely delayed, well above the airport average.
Doyle said punctuality had improved over the course of 2024 but conceded delays, largely caused by air traffic control issues, were a problem for BA. He said the airline had “invested a significant amount in resilience this summer, whether that was standby levels of aircraft and crews, and we increased our Heathrow teams by about 600 people compared to what we had in 2019.
“What have we learned from the summer is that the environment has been more difficult than we’ve been used to historically. We will want to be more resilient and better next summer, on the basis that I don’t think that external environment may improve too much.”
He said the transatlantic market remained “very strong” for BA, driven primarily by “robust” leisure demand on the lucrative routes to the US and a “recovering business market” leading to ever fuller planes.
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BA’s sister IAG airline Aer Lingus saw its North Atlantic business falter with a pilots strike and increased competition at Dublin airport.
Analysts said the results were at the top end of forecasts. Julie Palmer, partner at Begbies Traynor, said IAG appeared “in rude health”. She added: “There will be issues to navigate over the quieter winter period, and performance in Africa and Asia-Pacific is not going quite as well, but IAG expects momentum to continue for the rest of the financial year and the announcement of a €350m share buyback programme indicates just how strong a position IAG believes it is in.”