British Airways Owner IAG Shares Rally On Better Than Expected Q3 – Is It a Buy?

Shares of IAG (LON: IAG) continued to climb on Friday, up almost 3% at the start of the session after the company said Thursday afternoon that trading during the third quarter has been better than expected.

The airline business will report results for the nine months to September 30, 2022, on October 28.

IAG, which operates airlines such as British Airways, Iberia, Vueling and Aer Lingus, said in its release that trading was above expectations due to passenger revenue strength, and as a result, it now expects “pre-exceptional” operating profit for the third quarter to be in the region of €1.2 billion, compared to a loss during the pandemic last year.

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The share prices of European airlines have tumbled for much of the year as fuel prices, inflation, and staffing issues have impacted the industry. However, IAG is confident regarding future demand, with forward bookings showing no weakness.

“Forward bookings remain at expected levels for the time of year, with no indication of weakness, and accordingly our fourth quarter expectations remain unchanged as of today,” the company stated.

IAG shares jumped almost 8% in Thursday’s session, closing at 108.8p. At the start of the month, IAG shares fell as low as 90p per share.

Given the strength of the US dollar against the GBP, the company may be feeling the extra benefits of its transatlantic routes. British Airways’ route between New York and London is one of the most profitable for the company. While analysts are split in their ratings of the stock, the average share price based on eight Wall Street analysts is 143.87p, according to TipRanks. Out of those analysts, four have Buy ratings, three have Hold ratings, and one has a Sell rating on IAG shares.