British Airways owner IAG to buy back shares after strong recovery

The recovery at the British Airways group IAG following the mortgaging of the company during the pandemic is so strong that it is to begin buying back its own shares.
A €350 million share buy back, a device used by companies with excess cash to boost the rating of their stock price, is to commence in addition to the already announced resumption of dividend payments to shareholders.
Having flatlined for much of the previous three years, shares In IAG rose after the dividend announcement in August and this week touched their highest levels since the market collapses that greeted the arrival of Covid-19 in early 2020.
IAG shares, which have risen by nearly 50 per cent so far this year, added 14p to 233p, a rise of 6.5 per cent.
IAG, or International Consolidated Airlines Group, is a stable of carriers based at Heathrow, Madrid-Barajas and Dublin airports consisting of the formerly state-owned national flag carriers British Airways, Iberia and Aer Lingus plus a short-haul Spanish holiday airline Vueling. Its core markets are flying the north and south Atlantic to the USA and Latin America and within Europe.
Business is booming. In the third quarter of the year, the peak summer season, IAG reported a 15 per cent increase in operating profits to just over €2 billion on revenues that rose nearly 8 per cent to €9.3 billion. That means the company achieved profit margins of 21.6 per cent in the quarter, the sort of returns much sought after in the airline industry but rarely achieved.
For the first nine months of the year IAG reported pre-tax profits of €2.34 billion, an increase of nearly 9 per cent.
Although by no means a comparator in whom or where it flies the short-haul carrier Ryanair, Europe’s biggest airline, reported an 18 per cent slump in profits this week because of passengers pushing back on fare rises.
IAG appears to have had no such problems and reported revenues per passenger per kilometre flown up 1.2 per cent.
It reported “strong customer demand in our intra-European network … a structurally growing Latin America market [and] the North Atlantic region [which] continues to be a major area of strength”. British Airways flights between London and New York are one of the world’s marquee routes and highly lucrative in the good times.
With cash cascading into the business it has eliminated more than €3 billion of its net debt position, taking its net borrowing down to less than €6.2 billion. In its darkest days during the groundings and travel restrictions of Covid-19, IAG’s net debt topped €12 billion.
Luis Gallego, the chief executive who steered the company through those darkest days, said: “We achieved a very strong financial performance in the third quarter. Demand remains strong across our airlines and we expect a good final quarter of 2024 financially.”