Profits jump at British Airways' owner as rivals struggle with Boeing delivery delays

• British Airways owner IAG reported profits were up 15% from the same period last year.
• One analyst said the group avoided being affected by Boeing delivery delays like some rivals.
• Supply-chain constraints on engines have promoted some routes to be cut this winter.

The owner of British Airways posted bumper profits as it reported its third-quarter earnings on Friday that sent its stock higher.

International Airlines Group posted an operating profit of 2 billion euros ($2.15 billion) for the three months to September 30, 15% higher than the same period last year. Revenue rose 7.9% to 9.32 billion euros.

"This is due to the effectiveness of our strategy and group-wide transformation," said IAG CEO Luis Gallego. "Demand remains strong across our airlines and we expect a good final quarter of 2024 financially."

Sean Doyle, the CEO of BA, said in a LinkedIn post that the carrier had "faced a challenging operating environment this summer, driven by air traffic control restrictions, adverse weather and engine supply delays" and thanked customers for their understanding when delays have occurred. "We're already working hard with our industry and government partners to improve resilience across the sector ahead of next summer."

Julie Palmer, partner at management consultancy company Begbies Traynor, told industry outlet ARGS: "In contrast to its peers, heavily affected by Boeing delivery delays and falling ticket prices, the British Airways owner was able to materially increase passenger revenues leading to a near 8% uptick in overall revenues."

Analysts at Peel Hunt said the better-than-expected results were due to robust cash generation, the buildup of excess cash, and confidence in the strategy and long-term group prospects, and hailed a surprise 350 million buyback. "The outlook is positive, with sustainable demand for travel and attractive margins," they added.

The stock jumped more than 6% in London, bringing the year-to-date rise to almost 50% and valuing IAG at just over 11 billion euros.

The group also owns Iberia, Aer Lingus, and the budget carrier Vueling.

Europe's biggest airline, Ryanair, said on Monday that profits were down 18%. The budget carrier criticized Boeing, saying it relied on fuel savings to offset higher spending caused by delivery delays.

Problems with engines powering Airbus jets have also affected European carriers. Wizz Air reported that profits were down a fifth, as it grounded dozens of planes for inspections on Pratt & Whitney engines.

Route cuts

Some issues still lie ahead for British Airways.

Due to delays to Rolls-Royce engine parts for its Boeing 787 jets, the airline has canceled flights between London Gatwick and New York JFK from December to March.

It also plans to stop flying to Dallas-Fort Worth due to the same supply-chain issues, Simple Flying reported.

Nonetheless, BA announced that next summer, it will operate a record number of flights to North America.

Flights to the North Atlantic region made up the highest proportion, or 31.7%, of IAG's airline seat kilometers in the last quarter. British Airways' revenue in the region was "particularly strong," the company said.