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British Airways owner International Airlines Group expects another record summer amid unrelenting demand from holidaymakers and as tech executives drive a recovery in business travel.
The airline company, which owns five carriers including Spain’s Iberia and Ireland’s Aer Lingus, said demand for travel “remains strong” and predicted it would fly more passengers this summer compared with last year. Passenger capacity would be up 7 per cent this year compared with 2023, IAG said.
“We had a very strong summer last year . . . We expect passenger numbers probably to grow . . . as we put more aircraft across the Atlantic and into leisure destinations in Europe,” said chief financial officer Nicholas Cadbury.
Lufthansa and Air France-KLM have also recently predicted another bumper summer as travellers brush off geopolitical fears and a weak economic backdrop.
IAG has not issued financial guidance for the rest of the year, but analysts forecast another €3.5bn in operating profit, on par with last year’s record.
Its shares were trading up about 1 per cent by early afternoon on Friday, at their highest levels in two-and-a-half years but 50 per cent below pre-pandemic levels.
That is partly because corporate travel has been slow to return. But on Friday IAG said this part of its business “continued to recover” in the first quarter, after reaching 70 per cent of 2019 levels in 2023.
IAG chief executive Luis Gallego said BA experienced a 25 per cent year-on-year rise in revenues from customers in the tech industry, which had been one of the weakest last year.
But he said corporate travel in banking, finance and pharmaceuticals was still “lagging behind” other sectors in the quarter.
The recovery in business travel had been quicker in Spain than the UK, because people returned to the office faster after the pandemic, and there was less remote working, Gallego added.
The buoyant summer forecasts came as IAG said that holidaymakers flying to the Caribbean for winter sun had lifted first-quarter profits.
The company reported operating profit before exceptional items of €68mn in the first three months of the year, beating analysts’ expectations and up from €9mn a year earlier.
IAG said it had increased flights to the “strongly growing” Latin America and Caribbean region. BA rival Virgin Atlantic also highlighted strong bookings for winter breaks in the Caribbean when it reported results last month, as holidaymakers continued to pack airlines’ long-haul routes.
IAG said that, while demand for flying in Europe and across the Atlantic was booming, “the rest of the world is currently more challenging”. It noted the impact of the war in the Middle East in particular and said revenues per passenger had declined on routes to Asia and Africa.
BA has typically been IAG’s profit engine, but its recovery has trailed behind the group’s other airlines, and it suffered operational problems at London Heathrow last year.
BA reported an operating profit of £22mn in the first quarter, compared with Iberia’s €70mn. Aer Lingus and Vueling, which are more reliant on summer leisure routes, were lossmaking.
IAG hopes to add a sixth airline to its portfolio after it agreed last year to buy the 80 per cent of Spain’s Air Europa it does not already own for about €400mn.
Amid concerns from officials in Brussels over the deal’s impact on competition, particularly in Spain, IAG on Friday said it was in talks with airlines including Ryanair, Avianca and Volotea over giving up some routes in response.
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