IAG, the owner of British Airways, anticipates record profits for the third quarter due to a robust booking period.
The London-based company informed investors on Thursday afternoon that it anticipates an operational profit of around £1 billion (€1.2 billion) for the period.
The unexpected revelation caused IAG’s share price to increase by as much as 10%, reaching a high of 110.53p shortly after midday on Thursday, before higher-than-anticipated US inflation figures cut gains in half.
Looking ahead, BA stated in a statement: ‘Forward bookings are at expected levels for the time of year, with no indication of weakening; thus, our fourth quarter estimates are unchanged as of today.’
The company will release its nine-month consolidated results for the period ending September 30, 2022, on October 28.
Commenting on the upcoming third-quarter results for IAG Sophie Lund-Yates, an equities analyst at Hargreaves Lansdown, stated, “Despite the escalating cost-of-living challenges affecting customers, it appears that the British Airways ticket counter has been extremely busy.”
IAG has been one of the airlines hardest hit by the pandemic, with long-haul and business journeys taking much longer to return to pre-pandemic levels than short-haul flights.
Despite the optimistic data, Lund-Yates cautioned that the cost-of-living crisis could hurt the overall picture.
She stated, “There is still more work to be done before any champagne can be burst.” The adjustment of consumer behavior to a world of increasing inflation and increased prices is not yet complete.
“If expenditure begins to moderate, the robust forward order book could come under pressure.” Then there’s the issue of IAG’s eye-popping debt, which was incurred to weather the worst of the pandemic storm.
‘Finally, this boost from expectations is a really pleasant surprise, but whether the lively mood music can be maintained is an entirely different topic.’
Heathrow reclaimed its position as Europe’s busiest airport early in the week, which boosted IAG’s stock price.
The airport in west London announced on Tuesday that between July and September it served more passengers than its competitors in Paris, Amsterdam, Frankfurt, and Madrid.
The news helped increase the share prices of several British-based airlines.
A year ago, Heathrow cited the United Kingdom’s relatively stringent coronavirus travel restrictions for its dip in the rankings to become Europe’s tenth busiest airport, after being the busiest in 2019.
Heathrow has seen an upsurge in passenger traffic since March when travel restrictions in the United Kingdom were eased.
In September, around 5.8 million passengers traveled through Heathrow. However, demand was 15% below pre-virus levels in September 2019 last month.
The airport claimed that future demand projections remain “uncertain.”
This is the result of “increasing economic headwinds, a fresh wave of Covid, and the rising crisis in Ukraine.
However, we anticipate Christmas peak days to be extremely busy.
Heathrow reported that the “great majority” of passengers who traveled through the airport throughout the summer “had a very excellent experience” because a cap on the number of leaving passengers “effectively maintained supply and demand balance.”
This follows lengthy lines and baggage handling issues at the beginning of July, which was attributed to staff shortages.
The limit will be removed on October 29.
