Since we flagged the appeal of the stock in March, British Airways owner International Consolidated Airlines (IAG) has gone from strength-to-strength.
Passenger numbers have increased despite continued pressures on household budgets and the company has put in a strong financial performance which looks set to continue.
The airline’s shares have soared 56% over the past year, but they, are still below the 400p level seen prior to the Covid pandemic.
WHAT HAS HAPPENED SINCE WE LAST SAID BUY?
The company achieved a key milestone, paying its first dividend since the start of the pandemic on 1 August after beating expectations for the first half.
It subsequently announced a €350 million share buyback after third-quarter earnings beat estimates (8 November).
The group, which also owns Iberia, Aer Lingus and Vueling, booked a 7.9% increase in total revenue to €24.05 billion for the nine months to 30 September.
The revenue growth was attributed to higher passenger volumes as well as an improvement in cargo and MRO (maintenance, repair, and overhaul) related income at Iberia.
Planned growth in capacity for the fourth quarter is expected to be 5% to 6% with the business seeing strength in the North Atlantic region and Latin American market.
WHAT SHOULD INVESTORS DO NOW?
We remain upbeat about the business. It is growing revenue and seeing improved margins and cash flow which in turn is facilitating returns to shareholders and an improvement in its balance sheet position.
The company is doing a good job of ensuring its planes are as full as possible, getting more aircraft off the ground year-on-year and keeping costs on a tight leash.
Research house Edison’s Neil Shah says: ‘With liquidity at €13.3 billion, IAG is well positioned to withstand potential demand fluctuations. Looking forward, IAG is on a path to balance growth with cost efficiency, especially as passenger demand has seen a continuous rise.’
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