IAG Shares Surge after Optimistic Q3 Forecast

DALLAS - International Airlines Group (IAG) shares surged today after the London-listed company announced that Q3 results would be better than expected.

On Thursday afternoon, shares in the FTSE 100-listed company and parent company of British Airways (BA) and Iberia (IB) were trading 8.3% higher at 109.07 pence each.

Following a preliminary earnings statement, the Anglo-Spanish multinational airline holding company revealed that its 2022 third-quarter operating profit is expected to be approximately €1.2bn due to passenger revenue.

IAG turned a profit in its second-quarter earnings, owing to the resurgence of the tourism business following the COVID-19 outbreak. In the first half, operating profit before exceptional items was €467m, up from a €2.18bn deficit the previous year.

Comments from IAG, Analyst

The company poised that "Forward bookings remain at expected levels for the time of year, with no indication of weakness, and accordingly our fourth quarter expectations remain unchanged as of today," IAG explained that it had anticipated the profit would increase when compared to the second quarter and forward bookings are unchanged for this current period with no indication of weakness.

As per the above, fourth-quarter estimates will most likely remain the same.

Hargreaves Lansdown equity analyst Sophie Lund-Yates stated, "Despite the rampant cost-of-living pressures facing consumers, the British Airways ticket desk has been keeping very busy it seems. IAG has been one of the hardest hit carriers since the pandemic, with long-haul and business trips taking a lot longer to take off back towards pre-Covid levels than its short-haul counterparts."

She also explained that consumer behavior is yet to fully adjust to the high inflation climate and as such, forward bookings may come under pressure if spending is stifled. Furthermore, the airline group is facing high debts stemming from actions taken to alleviate the impact of the pandemic as such, IAG is not completely out of the woods as yet.

The full set of third-quarter results will be published by IAG on Friday, October 28, 2022.

Featured image: British airways G-XWBB Airbus A350-1041. Photo: Joao Pedro Santoro/Airways