Highlights
- IAG's third-quarter profit fell 2.3 per cent to 1.4 bn euros amid weaker US demand.
- Share price dropped 7 per cent following results, mirroring sector-wide challenges.
- Company announces free Starlink Wi-Fi partnership despite quarterly headwinds.
International Airlines Group (IAG), the parent company of British Airways and Iberia, reported a profit decline in third-quarter net profit on Friday, citing softer demand on transatlantic routes and heightened competition in European markets.
The aviation giant posted a 2.3 per cent drop in profit after tax, to 1.4 billion euros ($1.6 bn) for the July-September period, down from the same quarter last year. Total revenue remained flat at 9.3 bn euros, despite what the company described as a "good performance" following a record third quarter in 2024.
The group acknowledged weakness in the North Atlantic market, while increased competition forced it to lower airfares on European routes, squeezing profit margins.Cargo revenues also disappointed, falling short of last year's elevated figures which benefited from increased volumes ahead of the US presidential election.
Following the results announcement, IAG shares tumbled 7 per cent on London's FTSE 100 index during morning trading, mirroring a broader malaise in the European aviation sector.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, noted that "IAG's steep ascent levelled off in the third quarter, as growth failed to soar to the heights the market expected."
The company's struggles echo challenges faced by rivals Air France-KLM and Lufthansa, which have also reported declining demand for US flights. Industry analysts attribute this partly to tighter American visa regulations making travel more difficult.Strategy amid setbacks
Despite the quarterly setback, IAG chief executive Luis Gallego remained optimistic, stating the group remains "on track to deliver another year of growth in revenues, profit and shareholder returns."
The company, which also owns Aer Lingus and Vueling, announced plans on Thursday to offer free high-speed internet connectivity on flights through a partnership with Elon Musk's Starlink satellite service.
IAG had enjoyed a strong start to the year, with first-half net profit surging 44 per cent.
