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Investing.com -- British Airways parent IAG on Friday posted a modest rise in third-quarter operating profit, narrowly missing expectations, but cautioned about softer demand for its U.S. economy-class seats.
Operating profit for the three months to September 30 came in at €2.05 billion ($2.4 billion), up 2% from a year earlier and slightly below the company’s consensus forecast of €2.1 billion.
Shares in IAG slumped more than 8% in London trading after the release.
Total revenue was flat at €9.33 billion, as strong Latin America and Asia Pacific performance offset a weaker North Atlantic and European market.
The company joined other carriers in flagging a slowdown in transatlantic travel, noting that passenger volumes from Europe to the United States have weakened since President Donald Trump took office. Analysts attribute the decline in part to perceptions that his administration’s policies are unfriendly toward foreign visitors and trade.
IAG said its passenger load factor slipped across all markets, with the steepest decline—a 2.4 percentage point drop—on its profitable North Atlantic routes. The group cited softness in U.S. point-of-sale economy leisure demand, while premium and long-haul routes in the South Atlantic and Asia Pacific remained resilient.
“We delivered a strong performance in the third quarter and remain on track to deliver another year of growth in revenues, profit and shareholder returns," said CEO Luis Gallego.
He added that adjusted earnings per share rose 27% in the first nine months of 2025 and that the company has nearly completed a €1 billion share buyback.
Non-fuel unit costs increased only 0.2% in the quarter, helped by favorable exchange rates, while fuel costs fell 8.8% year-on-year, improving margins.
IAG raised its interim dividend to €0.048 per share and reaffirmed its full-year outlook, saying it remains on course for another year of revenue, profit and margin growth.
The company’s outlook remains unchanged, with revenue "positively booked for the further quarter," IAG said.
“The demand for travel remains strong,” Gallego said, highlighting IAG’s “strong business model with great brands and a best-in-class network,” though he acknowledged the group remains “mindful of the macroeconomic and geopolitical backdrop.”
RBC Capital Markets analyst Ruairi Cullinane said the third-quarter results were unlikely to trigger major changes to full-year (FY25) profit forecasts.
"We don’t expect FY25E consensus operating profit to significantly change following 3Q results, given a slight miss in 3Q, although with 4Q positively booked and FY unit cost commentary implying another quarter of flattish ex-fuel unit costs," he wrote.