- Dividend resumed
- Total revenue €14.72 billion
- IAG shares up 8% year-to-date
Shares in International Consolidated Airlines (IAG) rose over 6% in morning trading to 169p as the British Airways owner said strong demand for travel helped lift its results in the six months to 30 June 2024.
Total revenue increased 8% to €14.72 billion compared to €13.58 billion in the same year ago period.
EARNINGS BEAT
The airline group’s transformation programme helped to deliver strong margins and medium-term profit.
Bright spots included continued good operational and financial performance in Spain and further growth in the airline group’s capital light IAG Loyalty business.
Operating profit for the three months to 30 June was €1.24 billion, slightly lower than last year’s €1.25 billion but higher than analysts’ expectations of €1.08 billion, according to company-compiled consensus.
Luis Gallego, IAG CEO said: ‘We see continuing strong demand for travel in the attractive core markets in which we operate: North Atlantic, Latin America and intra-Europe.
‘We delivered a good performance in the first half of 2024, with operating profit €49 million ahead of the same period last year.’
Fuel costs however increased for the period by 7.4% to €3.81 million reflecting a small year-on-year reduction in the average hedged price and increased capacity.
DIVIDEND RESUMED
Shareholders welcomed news that the airline group, which also owns Iberia, Aer Lingus and Vueling with be paying a dividend again for the first time since the pandemic.
The airline group will pay an interim dividend of €0.03 per share.
Separately, IAG said it would not be buying Spain’s Air Europa as it would not be in the best interest for shareholders.
EXPERT VIEW
Russ Mould, investment director at AJ Bell said: ‘Against a backdrop of airlines slashing prices to fill planes and negative investor sentiment towards the sector, International Consolidated Airlines has issued a remarkably upbeat set of results.
‘Strong travel demand over the past few years has enabled the airline to pay down debt and get its finances in order after a traumatic pandemic. The balance sheet is now deemed strong enough to warrant recommencing dividends, something that investors will welcome with open arms.
‘Paying dividends also signals a big step forward for the company and effectively draws a line under previous fears about its financial strength. In essence, recommencing the dividend means the narrative can shift to how the business is growing, not simply how it is repairing previous damage.
‘While the likes of Jet2 (JET2) and EasyJet (EZJ) are heavily dependent on people flying off for their summer holidays, International Consolidated Airlines has a much wider range of customers as it has a mixture of short and long-haul destinations. That broadens its opportunities to make money.
‘Like many of its rivals, International Consolidated Airlines is upgrading its fleet to have more energy and cost-efficient aircraft and greater overall capacity.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
