IAG Q1 Earnings – What to Expect

International Consolidated Airlines Group (LON: IAG) is set to report its first-quarter earnings this week on Friday, May 10. The release will be closely watched and, if positively received, may provide IAG shares with the platform to continue its push higher.   

Investors in the British Airways owner have reason to be optimistic. The company's stock has shown resilience, with a 15% increase in 2024 and a 21% gain in the last three months. This positive trend is pushing the stock towards levels not seen since 2021/2022, despite its current underperforming status.

The travel sector's continued recovery, despite constant headwinds since the ending of pandemic restrictions, has been solid, and numbers continue to rise. 

IAG is operating in a competitive landscape. Its rival, Lufthansa, reported a 5% rise in revenue for the January to March 2024 quarter, with a 12% year-on-year increase in passenger numbers. Similarly, Delta Airlines exceeded consensus expectations in its first quarter, with revenue reaching $12.6 billion, surpassing the consensus estimate of $12.46 billion. These positive performances in the industry set the stage for IAG's upcoming earnings report.

In its full-year results, the airline group said demand continued to be robust into the first quarter, particularly in leisure travel. At the time, the airline was 92% booked for Q1 and 62% booked for the first half of 2024, ahead of its position last year.

Despite the lack of a significant share price push to the upside, IAG's business has been performing well, and analysts expect that to continue. The consensus mean for its operating result is EUR49 million, while for the full year 2024, it is seen rising to EUR3.51 billion. 

In March, analysts at RBC Capital upgraded IAG to Outperform from Sector Perform, raising the price target to 220p per share from 200p. 

The firm said IAG now has the second-highest margins in the group behind Ryanair. However, they noted that by some metrics, it trades on the cheapest valuation among the airlines. North Atlantic capacity was also said to suggest that it will be more of a tailwind than a headwind for IAG's British Airways and Aer Lingus this summer.

Elsewhere, investors may want to keep an eye on any mention of dividends, as they have yet to return. The company's debt load is another factor to watch.