Shares in British Airways owner IAG closed more than 7% higher on Friday after the group announced bigger-than-expected profits for the third quarter of the financial year.

The carrier’s key North Atlantic, London, and New York routes continued to be a major strength for IAG during the three months to the end of September, with unit revenue at its flagship BA brand particularly strong. Aer Lingus was hit by the impact of a pilot strike and increased capacity from Dublin airport but domestic flights in the UK and Spain, the latter the home of the Iberia brand, rose by 4.1%.

“We achieved a very strong financial performance in Q3 2024, with a 15.4% increase in operating profit compared to the same period last year and improving our margin to 21.6%," IAG chief executive Luis Gallego said. "This is due to the effectiveness of our strategy and Group-wide transformation.”


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Third quarter operating profit came in at just over €2 billion (£1.6bn) on revenues of €9.3bn. That took total profit and revenue for the first nine months of the year to €3.3bn and €24bn respectively.

Based on these robust numbers, IAG has announced a new buyback program that will return about €350m to its shareholders. Management said this reflected the group's confidence in its strategy, business model, and long-term prospects.

The company's shares are up by 50% so far this year, taking them to the cusp of levels not seen since 2020.

“Nearly five years on from the pandemic which clobbered the airline industry, investors are still tentative despite most key financial metrics at IAG surpassing pre-pandemic levels," eToro analyst Mark Crouch said.

"Poor share price performance has largely been psychological rather than fundamental, as IAG’s balance sheet reflects one of strength. Operating margins are above 2019 levels and the business have slashed debt while at the same time building a substantial cash position.

“The fact IAG waited so long to reinstate their dividend, while frustrating for shareholders, demonstrated strict capital discipline, so this morning’s announcement IAG plan on buying back €350m of its own shares suggests the business is well and truly back to firing on all cylinders.”

Shares in IAG closed Friday's trading in London 15.7p higher at 234.5p.