Aer Lingus and British Airways owner IAG has today beaten first quarter earnings expectations, helped by rising demand over the Easter holiday and said it was seeing strong summer bookings.
Chief executive Luis Gallego said the group, which also owns Iberia and Vueling airlines, had already secured more than 80% of projected bookings for the second quarter and over 40% for the third quarter.
IAG's exposure to the Middle East was very small so it had not seen a big impact from the conflict there, he said.
Shares in IAG rose 1.2% in early trade after the group said operating profit totalled €68 in January-March.
That topped analysts' forecasts of €49m, according to a company-compiled consensus, and compared with a €9m profit in the same quarter of last year.
"Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvement to both revenue and operating profit," Gallego said in a statement.
The first quarter is often weak for airlines, with fewer bookings at the start of the year.
European rivals Lufthansa and Air France-KLM reported worse than expected first quarters as they struggled with a range of issues.
"Lufthansa had strikes which was the big problem. Air France-KLM had some one-offs, but IAG was still better. IAG is the higher-margin group anyway: double digit margins vs single digits at the others in general," Bernstein analyst Alex Irving said.
Gallego pointed to the group's smaller exposure to Asia, where traffic has recovered slowly, compared to rival European airline groups and to particularly strong results in its core markets like Southern Europe.
Airlines have also complained that delayed deliveries from planemakers will further constrain capacity and limit their ability to meet record demand this year.
In its statement, IAG said it was expecting slightly higher costs this year, but that it saw 7% growth in passenger capacity in 2024.
Non-fuel unit costs increased by 3.7% in January-March from a year earlier, driven by investments in the business and the impact of wage settlements agreed during the course of 2023, IAG said.
Meanwhile, IAG said today it is in talks with other airlines about ceding routes in order to address EU regulators' concerns that its bid for Air Europa may reduce competition and lead to price increases.
IAG aims to secure full control of Air Europa, but the European Commission last month warned about the impact on Spanish domestic routes as well as long-haul routes.
"Regarding Air Europa's acquisition, we continue to make progress with the European Commission and have already shared with them the potential airlines that would take over the routes renounced as part of the remedy package," IAG said in a statement in a call with Spanish media outlets.
It added that "as shared before, we have received a lot of interest from different carriers and are working with Avianca, Binter, Iberojet, Ryanair, Volotea and World2Fly as potential remedy takers both on long-haul and short-haul routes".
IAG has until June 10 to submit remedies.
In February 2023, IAG said it had agreed to pay €400m to Spanish tourism company Globalia for the 80% of Air Europa it did not already own in a bid to improve its Latin American market share, expand into Asia and allow its Madrid hub to compete with other major airports in Europe.
IAG CEO Luis Gallego told analysts today that the group could pull the plug on its bid for Air Europa if conditions demanded by regulators prove too cumbersome, but he said that IAG was not yet at that point.
