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Investing.com -- International Consolidated Airlines Group S.A. (LON:ICAG) reported a 35.4% increase in second-quarter operating profit before exceptional items to €1,680 million, significantly exceeding analyst expectations by 16%, as the airline conglomerate benefited from robust travel demand, favorable fuel costs and currency tailwinds.
Revenue for the quarter grew to €15,906 million, beating analyst forecasts by 1% and increasing 8.0% compared to the same period last year.
Despite the strong performance, IAG shares fell 2% following the results as investors appeared concerned about potential softness in the second half of the year.
"Our strong performance in the first half of 2025 reflects the resilience of demand for travel and the success of our ongoing transformation, underpinned by the fundamental strengths of our Group," said Luis Gallego, IAG Chief Executive Officer.
The company reported a first-half operating margin improvement of 2.9 percentage points to 11.8%, driven by its transformation program. IAG also announced it would return €1.5 billion to shareholders in 2025 through dividends and share buybacks.
Looking ahead, IAG lowered its non-fuel unit cost guidance for 2025 to an increase of around 3%, down from the previous estimate of 4%. The company expects capacity to increase by approximately 2.5% for the full year, subject to operational challenges.
While IAG noted that demand remains robust across its core markets, it highlighted "some softness in US point-of-sale economy leisure" travel. The company reported being 57% booked for the second half as of July 29, with booked revenue in line with last year.
Jefferies analysts suggest the results could lead to approximately 4% consensus upgrades to full-year net profit forecasts, though concerns about potentially declining passenger revenue per available seat kilometer (PRASK) in the second half may temper expectations.