By Sarah Young
LONDON (Reuters) – British Airways owner IAG’s third-quarter operating profit jumped 15%, beating forecasts, as growth on its lucrative transatlantic routes helped it outperform rival airlines.
IAG’s shares were up 5% after the Anglo-Spanish group’s strong summer performance, which eclipsed European competitors Air France-KLM and Lufthansa, both of which posted profit declines in the July-September period.
“Demand remains strong across our airlines and we expect a good final quarter of 2024 financially,” Chief Executive Luis Gallego said.
IAG, which also owns Iberia, Vueling and Aer Lingus, said planes flying between London and the U.S. were fuller this year compared to last and it had added capacity of 4% on the North Atlantic, while also flying more on the South Atlantic.
Its competitors meanwhile have struggled with rising costs and other issues.
Lufthansa is more exposed to the tougher Asian market than IAG, where Chinese carriers are able to fly in Russian airspace, making their flights shorter and cheaper.
At Air France, the Paris Olympics caused international tourists to avoid the city and residents in France to postpone their holidays.
IAG’s focus on controlling costs, combined with higher ticket prices, lower fuel costs and surging demand for transatlantic flights, helped it press home its advantage.
“It’s not right now a priority for us to add capacity in Asia. We’re trying to reinforce our main markets, North Atlantic, South Atlantic and intra-Europe,” Gallego told reporters.
Davy analyst Stephen Furlong said it was tough for Air France and Lufthansa to play catch up with IAG given its geographic edge.
“IAG has, as it always has, much more of an exposure being west-facing which tends to be more profitable,” he said.
IAG shares are up 50% so far this year, compared with Air France-KLM and Lufthansa which have lost 40% and 20% respectively.
IAG also on Friday announced a 350 million euro ($376.95 million) share buyback.
For the three months to end-September, its busiest season, IAG posted operating profit of 2 billion euros, compared to a consensus forecast of 1.78 billion euros.
Analysts are expecting full-year operating profit to reach 3.7 billion euros, up from 3.5 billion euros last year.
($1 = 0.9285 euros)
(Reporting by Sarah Young, Editing by Paul Sandle, Tomasz Janowski and Jane Merriman)
