British Airways owner International Consolidated Airlines Group SA (LSE:IAG) is set to report half-year results next Friday, 1 August, following a strong start to the year, with shareholder returns and rising costs two of the key items in focus.
Revenue and profits in the first quarter came in ahead of expectations, driven by higher ticket prices, increased capacity and lower fuel costs.
However, analysts have flagged recent cost pressures. Jet fuel prices have risen since the start of Q2, and easyJet recently warned that industrial action in France and fuel price inflation could reduce profits by £25 million this year.
Meanwhile, Heathrow Airport has announced a 17% rise in landing fees, which could add to operating costs across the sector.
Last month, the Anglo-Spanish group's Iberia division upgraded its medium-term outlook, targeting €1.4 billion in operating profit, up from €1.0 billion in 2024.
JP Morgan this month placed IAG on its ‘positive catalyst watch’ list, expects the FTSE 100 airline to outperform European transatlantic peers in the second half of the year, citing tight capacity on transatlantic routes, strong premium seat demand, and resilient passenger volumes to and from the US.
Analyst Aarin Chiekrie at Hargreaves Lansdown said investors will be "watching closely" to see if profit guidance for the full year will be changed, as the strong start to 2025 was partly based on lower fuel costs, but there has been a rise in jet fuel prices, and it’s proving to be stickier than crude oil.
He says there will also be a focus on forward bookings for the rest of the year, with around 80% of Q2 seats already sold at the last update.
Second-quarter operating profit is expected to rise 16% to €1.4 billion, with some market watchers anticipating IAG could announce further shareholder returns.