British Airways owner International Consolidated Airlines Group SA (LSE:IAG) has posted much stronger profits for the second quarter than expected as holidaymakers flooded back to the skies.
A quarterly operating profit before exceptional items of €1.25bn was reported by the Anglo-Iberian airline for the three months to end-June 2023, up from €295mln a year ago and some way ahead of the €895mln average analyst forecast.
This meant the FTSE 100-listed group was able to report a record first-half underlying operating profit of €1.26bn, a big turnaround from the loss of €446mln this time last year.
Demand was said to be strong across its network of brands, which also includes Iberia, Vueling and Aer Lingus, with particular outperformance from the Spanish businesses seeing Iberia deliver a record operating profit for any quarter.
With profits and net cash flow rising, to €1.9bn from €512mln a year ago, this enabled net debt to be cut to €7.6bn as at the end of June, down from €10.4bn at end-December.
IAG chief executive Luis Gallego said the profits were also helping fund investment and that the group is “aiming to be back to pre-pandemic capacity at the end of this year”.
A separate announcement confirmed orders for seven more widebody aircraft for British Airways and Iberia to restore capacity in its long-haul fleets, with overall group capacity in the first half of the year back to 94% of 2019 levels.
Roughly 80% of the third quarter's passenger revenue are already booked and 30% are booked for the fourth quarter.
The shares rose 2.2% to 158.35p.