Shares of the airline holding company International Consolidated Airlines Group, S.A. (GB:IAG) are gaining momentum today after the carrier delivered solid H1 results and reinstated dividends. The company announced an interim dividend of 30 cents per share, marking its first payout since 2019. IAG shares gained over 6% as of writing.
IAG is a parent company managing the operations of major airlines in Ireland, Spain, and the UK. British Airways is its primary revenue source.
IAG Drops Air Europa Deal
IAG announced yesterday that it had dropped its planned acquisition of Spain’s Air Europa on regulatory grounds. During an investigation, European Union (EU) officials cautioned that the deal could weaken competition, resulting in fewer choices for consumers at higher prices.
The company stated that its decision was in the best interest of its shareholders.
IAG Shines with Strong H1
In the first half, IAG’s revenue rose 8.4% year-over-year to €14.7 billion, with a 7.8% increase reported in Q2. This growth was primarily driven by sustained travel demand in the company’s key markets. Meanwhile, operating profit grew 3.9% year-over-year to €1.3 billion in the first half. However, the profit after tax declined to €905 million as compared to €921 million a year ago.
IAG also reported a big jump in its free cash flow to €3.2 billion in the first half from €2.7 billion a year ago.
Moving ahead, the company expects strong travel demand in North Atlantic, Latin America, and intra-Europe. IAG also maintained its capacity growth guidance at 7% in 2024. The company recorded capacity ASK (available seat kilometres) growth of 7.5% in the first half.
Is IAG Share a Buy?
Following the results, analysts from Bernstein and RBC Capital confirmed their Buy ratings on IAG stock, predicting upside of 26.4% and 35%, respectively. Meanwhile, UBS reiterated a Hold rating on the stock, with a comparatively modest upside of 8.7%.
IAG stock has a Moderate Buy rating on TipRanks, backed by seven Buy and four Hold recommendations. The IAG share price forecast is 214.92p, which is 26.3% higher than the current trading level.
