- Year-to-date IAG shares up 48%
- New €350 million share buyback
- 15.4% increase in operating profit to €2.01 billion
Shares in International Consolidated Airlines (IAG) took off this morning after the British Airways owner booked a 7.9% increase in total revenue to €24.05 billion for the nine months to 30 September.
The airline group which also owns Iberia, Aer Lingus and Vueling said its strong financial performance would continue for the rest of the year.
IAG attributed revenue growth to higher passenger revenue with an improvement in cargo revenue and MRO (maintenance, repair, and overhaul) revenue at Iberia.
Planned growth in capacity for the fourth quarter is expected to be 5% and 6% for the full year with strength in the North Atlantic region and Latin American market.
‘We continue to see strong customer demand in our intra-European network, where capacity increased by 5.3% in the quarter and passenger unit revenue increased by 1.4%. All of our short-haul airlines saw good demand and revenue performance across Europe in the quarter,’ said the company.
SHARE BUYBACK ANNOUNCED
It was good news for IAG shareholders again as the company announced a new €350 million share buyback ‘reflecting our confidence in the strategy and business model, as well as the long-term prospects of the business.’
In August, the airline group said it would be paying a dividend for the first time since the pandemic.
EXPERT VIEW
Russ Mould, investment director at AJ Bell said: ‘Revenue growth mixed with stronger margins gave a nice boost to profit, which in turn has driven cash flow and continues IAG’s journey in strengthening its balance sheet. That puts it in a stronger position to crank up shareholder returns or potentially start thinking about making more acquisitions.
‘It’s a radically different situation to three years ago when IAG was struggling under the weight of the global pandemic.
‘The key to success in the airline industry is ensuring that planes are as full as possible, there are more planes in the sky than the previous year, costs are kept under control, and customers are spending more money across a range of items covering air fares, charges, and consumables.
‘IAG has been ticking all the right boxes, including more bums on seats per flight across all of its routes apart from the Africa, Middle East and South Asia region, and even then, it was only a small decline year-on-year.’
Neil Shah, executive director of content & strategy at leading investment research and consultancy firm Edison said: ‘While the company is maintaining a bullish outlook, shown by the announcement of a €350 million share buyback, its strong performance contrasts with more tempered results from European competitors, who have faced challenges in sustaining last summer's peak profit levels.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
