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British Airways owner lifts profit forecast as travel needs rebounds

July 31, 2023: IAG’s quarterly profits topped analyst forecasts, and the British Airways parent company stated that the outlook for summer travel was encouraging. However, it cautioned it was “mindful” of uncertainty in the broader economy.

IAG, which also holds Iberia, Aer Lingus, and Vueling, did not provide an update on its full-year guidance. It had stated that it expected annual profit above the top end of a 1.8 billion euros to 2.3 billion euros range in May.

Leisure travel has roared since pandemic restrictions ended last year, driving up ticket prices and helping deliver enormous profits for airlines despite the squeeze on household incomes from high inflation and rising interest rates.

On Friday, Air France-KLM also reported higher-than-expected quarterly earnings.

But there are early indications that that momentum could be slowing, and the winter could be more challenging.

IAG said there was no weakness in forward bookings, but it was “mindful of wider uncertainties that might affect the full year.”

This week, Ryanair was careful on demand for the rest of 2023, saying fares for passengers booking close to their departure dates softened from late June, while British airport Heathrow warned of a second-half slowdown.

IAG said it was 30% booked for the October-December period, which is typical for this time of year, and for now, its focus was on delivering resilient operations over the summer, given the air traffic control and labor dispute challenges in Europe.

For the three months to the end of June, the group recorded an operating profit before exceptional items of 1.25 billion euros ($1.37 billion), reached to the 895 million euros analysts were on middle expecting.

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