In major news on UK stocks, shares of British Airways owner International Consolidated Airlines Group, S.A. (GB:IAG) or IAG trended higher after delivering solid Q1 results for 2024. In the first quarter, the net loss after tax decreased to €4 million from €87 million in the first quarter of 2023. The company emphasized robust travel demand as the driving force behind the results, affirming its favorable positioning for the upcoming summer season.
Following the announcement, IAG shares gained 0.55% today as of writing. In 2023, the stock rose 26%, largely due to improved global travel demand.
IAG is a group company overseeing the operations of prominent airlines in Ireland, Spain, and the UK, offering extensive support to strengthen their market positions. The predominant source of the company’s revenue is British Airways.
Highlights from IAG’s Q1 Results
The highlight of IAG’s results was its operating profit, which rose to €68 million from €9 million recorded in Q1 2023. Also, the Q1 2024 operating profit surpassed the company-complied forecast of €49 million.
IAG’s total revenues surged by 9.2% year-on-year to €6.43 billion. Meanwhile, passenger revenue per available seat kilometre (ASK) for the first quarter saw a 4.4% increase compared to the same period in 2023. This growth was attributed to the timing of Easter and a robust recovery in leisure traffic. However, business traffic showed a slower recovery pace.
Looking forward, the company remains optimistic about sustaining this momentum, with 80% of bookings secured for the second quarter and 40% for the third, providing a solid foundation for future performance.
Analyst Reaction
Following the release of the results, Stifel Nicolaus analyst Johannes Braun reiterated his Hold rating on IAG stock, projecting a downside of 6.6%. While acknowledging IAG’s strong emphasis on profitability, Braun expressed concerns regarding rising costs, leading to lower margins. He also noted that free cash flow is expected to be below pre-pandemic levels due to increased investments.
The company’s non-fuel costs rose by 3.7% in Q1 compared to a year ago.
Is IAG a Good Share to Buy?
IAG stock has a Moderate Buy rating on TipRanks, backed by nine Buys, three Holds, and one Sell recommendation. The IAG share price forecast is 215.05p, which is 16.6% higher than the current trading level.
