2nd Aug 2024 10:11
(Alliance News) - International Consolidated Airlines Group SA delivered a second-quarter earnings beat and said it has abandoned plans to buy Spain's Air Europa, citing regulatory concerns.
IAG also on Thursday announced its first dividend since 2019.
IAG will pay Air Europa owner Globalia a EUR50 million break fee as a result of the termination of the deal.
In February 2023, IAG said it would buy the remaining 80% stake in Air Europa for around EUR500 million, after it had taken a 20% stake in August 2022. IAG on Thursday said it will continue to hold the minority interest.
Chief Executive Luis Gallego said the decision was in the best interests of shareholders.
"IAG remains committed to its strategy, including competing effectively from its Madrid hub. This is a strategy which is delivering strong results. We will continue to develop our presence in Madrid so that the hub can develop as a rival to Europe's largest hub airports.''
IAG had offered concessions to the European Commission in June, after the watchdog warned the deal could reduce competition.
But Gallego told Reuters that the commission said the concessions offered by the group were not enough.
IAG said pretax profit in the second quarter fell 2.2% to EUR1.13 billion from EUR1.16 billion a year prior. Operating profit slipped 0.8% to EUR1.24 billion from EUR1.25 billion.
Revenue climbed 7.8% to EUR8.30 billion from EUR7.69 billion. Within this, passenger revenue rose 9.9% to EUR7.41 billion from EUR6.74 billion.
UBS noted revenue landed in line with consensus, but beat the Swiss bank's EUR8.2 billion forecast. Operating profit topped consensus of EUR1.1 billion, and the UBS prediction of EUR1.01 billion.
"Results [were] stronger than any of the major European airline competitors that reported," UBS said.
It added that IAG's numbers are "the most reassuring of the reporting season".
IAG also approved an interim dividend of 3 euro cents. IAG last paid an interim dividend in late 2019, months before the global pandemic grounded airlines around the world and sent their finances into a tail spin.
IAG shares were up 6.2% to 169.95 pence each in London on Friday morning.
By Eric Cunha, Alliance News news editor
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