7 months ago • 2 mins
What’s going on here?
Airline group IAG upped its profit outlook for the year on Friday, after a high-flying first quarter.
What does this mean?
The first quarter is usually a bumpy ride for IAG and its ilk, who count on lively, jet-setting Easter and summer seasons to balance out the lull in quieter months. But this time IAG bucked that trend, thanks to cheaper fuel and hot demand, helping ticket prices outpace inflation. The outcome: a surprise profit for the owner of British Airways, Iberia, and Vueling – the first time it’s wrapped the first quarter in the black since 2019. And with the quiet season in the rearview, IAG sees a booming period ahead: after all, a staggering 80% of this quarter's projected sales are already booked – and while mojito-sipping tourists will be filling most of those seats, the suited-and-booted crowd’s slowly making a comeback. That had IAG feeling pretty chipper, upping its profit forecast for the whole year.
Why should I care?
Zooming in: Summertime gladness.
IAG's optimism isn’t unique, with fellow European heavyweights Air France-KLM and Lufthansa also celebrating robust results and promising summer forecasts. And tourists need somewhere to snooze and to salve their sunburn, so hotels are winning too: IHG – the owner of Holiday Inn – is a case in point, posting some impressive first-quarter results last week. Just how much the “White Lotus effect” has helped is anyone’s guess, but one thing is clear: inflation can sear and economies might bow, but folks will fly come rain or shine.
The bigger picture: Goodbye, weekend breaks.
The near future’s looking bright, but airlines are confronting a daunting long-term challenge: decarbonization. See, aviation creates 2.5% of global CO2 emissions, and airlines are under pressure to hit net-zero targets by 2050 – which could cost almost $1 trillion. Someone’s going to have to foot that bill, and that might bring the era of low-cost airfares to a close…
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