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Investing.com -- International Airlines Group (LON:ICAG) (IAG) reported a second consecutive year of record profits, benefiting from sustained demand for air travel, especially on transatlantic routes. The company also outlined plans to return more cash to shareholders.
The parent company of British Airways, which also owns Iberia, Aer Lingus, Vueling, and Level, posted a 22% increase in annual operating profit, reaching €4.3 billion in 2024. That figure surpassed the previous record of €3.5 billion set in 2023.
The company’s shares rose more than 3% in London trading Friday.
For the fourth quarter of fiscal 2024, IAG reported a net profit of €392 million, missing the consensus projection of €498 million.
However, adjusted EBIT for the quarter came in at €961 million, well above the company-complied and Visible Alpha consensus estimates of €755 million and €746 million.
Revenue rose 9%, which IAG attributed to its "market-leading network, strong brands and operational focus."
“We have seen ongoing strong demand for travel throughout 2024 and now into 2025, particularly across our core markets,” the company said on Friday.
Passenger revenue per available seat kilometre increased by 3.1%, while fuel costs per unit fell by 5.2%. British Airways contributed significantly to the group’s performance, delivering an operating profit of £2.0 billion, up from £1.3 billion the previous year, with a margin of 14.2%.
IAG expanded its capacity in 2024, with available seat kilometres (ASK) rising by 6.2%.
Looking ahead, the company expects ASK to grow by 3% in 2025, in line with market expectations.
Non-fuel unit costs are projected to follow a "similar trend to 2024," with a 2% negative foreign exchange (FX) impact, compared to consensus expectations of a 1.7% increase.
The company also forecasts gross capital expenditures of €3.7 billion for the year, coming in below the consensus estimate of €4 billion.
“Guidance implies 2025 EBIT consensus could move to €4.6bn, which partly banks the FY24 beat, but factors in stronger FX cost headwinds and lower ASK guidance,” Jefferies analysts said.
“We see value in IAG shares, given further self-help opportunities, relatively small carbon headwinds and strong cash generation,” they added.
Alongside the results, IAG also proposed a final dividend that would bring total shareholder payouts for the year to €435 million (£359 million).
Moreover, it intends to return €1 billion in “excess capital” over a 12-month period starting from November last year, with a full-year dividend of €0.09 per share.