British Airways parent surges on summer earnings beat

British Airways parent IAG SA surged after saying earnings for the peak summer quarter exceeded analyst estimates and that there are no signs of waning demand.

Air France-KLM and Deutsche Lufthansa AG also rose as the surprise update and positive outlooked boosted optimism that European airlines can ride out a toughening economic outlook.

Shares of IAG jumped 9.8% after the London-based group said it expects to report an operating profit of about €1.2 billion ($1.17 billion) for the quarter through September, spurred by a bumper holiday season. That far exceeds the €814 million company-compiled consensus for the period.

“Trading during the third quarter has been better than expected due to passenger revenue strength,” IAG said. “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.”

As pent-up demand for travel fades following the removal of Covid curbs there’s been growing speculation that rising living costs in Europe could begin to put people off flying over winter and into next summer. EasyJet Plc, the region’s second-biggest discount carrier, also said Thursday that its bookings remain strong going into the current quarter.

IAG stock was trading 7.2% higher at 107.98 pence as of 2:02 p.m. in the UK capital, paring declines this year to 24%.

Full-service rival Air France-KLM was priced up 5% and Germany’s Lufthansa added 2.8%. EasyJet was 2.8% higher, while leading European discounter Ryanair Holdings Plc was little changed.

Heathrow Curbs

IAG, which also owns Spain’s Iberia and Aer Lingus of Ireland, will report full earnings on Oct. 28, according to the unscheduled update.

Uncertainty around the group’s earnings had been stoked by operational issues at British Airways, with a labor shortage compelling the carrier to extend curbs on flights from London Heathrow airport into the winter season even after the hub lifted its own cap.