British Airways owner beats estimates, trims 2024 capacity goal

IAG posted third-quarter earnings that beat estimates on higher demand for trans-Atlantic routes, and said it expects the strong financial performance to continue for the rest of the year.

Adjusting operating profit at the owner of British Airways rose by 15 per cent to more than 2 billion euros (S$2.85 billion), beating the analysts’ average estimate. Revenue for the quarter came in at 9.33 billion euros, also ahead of predictions. 

IAG’s earnings were fuelled by the North Atlantic market, where capacity advanced almost 4 per cent in the quarter. IAG separately announced a share buyback program of 350 million euros starting Nov 11 as the company puts some of its cash reserves to use.

The airline group revised its capacity outlook for the full year, now predicting a 6 per cent expansion from 7 per cent previously, citing “the impact of disruption and aircraft availability.” Capacity growth in the fourth quarter will be at about 5 per cent, the group said. 

Operations have recently been hurt by engine issues that have kept some of the Boeing 787 Dreamliners on the ground and forced the British Airways subsidiary to switch to some older 777 units. IAG chief executive officer Luis Gallego said the more muted capacity outlook is partly attributed to that factor.

IAG said it will continue to review network points and frequencies in Asia, which Galleo on a call with journalists said is “not right now a priority for us to have capacity” and that the company instead wants to “reinforce in the Atlantic.”

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IAG is the last of the major European airline groups to report earnings for the quarter. The stock has risen by 41 per cent in value so far this year, compared with a 41 per cent drop at Air France-KLM and a 22 per cent decline at Deutsche Lufthansa AG. BLOOMBERG